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It's been stated many times: Small Business is the backbone of America's economy.
But, for the life insurance industry, the small business market segment faces a critical threat. As baby boomer entrepreneurs continue to retire, the professionals who help them safeguard their legacies are disappearing as well.
The life insurance industry is grappling with a severe shortage of qualified advisors skilled in guiding business owners through succession, risk identification and long-term wealth planning.
Training gaps, outdated compensation models and the explosive threat of AI are colliding at a time when business owners need help more than ever.
The result? Thousands of companies — and the livelihoods they support — may be left without a strategic compass.
This problem isn't emerging. It's here.
Compounding the demographic challenge is the industry's persistent negative stereotype.
For decades, the life insurance and financial services machine has been viewed as a place for "salespeople" who are focused primarily on commissions. This perception deters potential advisors who are more likely to explore other employment opportunities.
And let's not overlook the skilled worker career option, which continues to gain momentum. There's plenty of demand, and more individuals are (now) willing to get their hands dirty.
Everyone in advanced markets is painfully aware of the problem.
When advisors lack specific soft skills, they struggle to engage with business owners whose needs extend far beyond a simple insurance quote. There will be no sale if a "solution" is introduced before the business owner has embraced a "problem."
This understanding was fundamental to the insurance industry decades ago.
Compensation Reform
Home offices manufacture products.
Advisors are compensated (almost exclusively) on the sale of products.
This fosters a distorted incentive to prioritize quick, transactional deals over the time commitment required to engage with business owners.
A typical case — structuring a buy-sell agreement, optimizing executive benefits, or coordinating estate planning — can take months to mature.
Yet the advisor's compensation rewards speed, not depth. Why spend months untangling a client's circumstances and desires when a commission-driven annuity sale closes quickly?
You can't buy groceries with great listening skills.
Instant Gratification
Working with business owners is not for the impatient. Business owner problems share commonalities, but each case is an individual endeavor. Advisors must act as part strategist, part therapist.
Yet the industry's current training infrastructure fails to prepare them for this challenge. Without ongoing education (and practice) about the emotional drivers affecting the business owner community, advisors are ill-equipped to carry the weight of these conversations.
How important is assembling a qualified team of specialists who share a common objective (advisor, exit planner, CPA, attorney, banker)? Very.
What Needs to Change
The life and financial services industry should evolve from a product-centric machine into a trusted advisory profession.
Here are four ideas about how to make that happen.
1. Training: Develop programs that teach advisors about the major influence of control and risk tolerance in the minds of entrepreneurs. Adopt methodologies that can simplify complex issues and drive meaningful conversations. Help professionals learn the skills required to make individuals feel comfortable discussing their mindset.
2. Compensation models: Pay advisors while they learn. Compensate them for planning services, not just sales. Accentuate the importance of building long-term client relationships.
3. Mentorship: Identify rising stars. Pair retiring advisors with ambitious recruits to pass on knowledge. Create and foster career paths.
4. Perception: Position advisors as trusted partners who are empathetic. Focused on helping business owners achieve their goals.
A $1.4 trillion annual wealth transition is underway as business owners age out. This staggering sum represents not only a flow of assets but the future of families, companies, jobs, and communities.
Business owners will benefit from — and gravitate to — advisors who understand that protecting a company isn't just about insurance: It's about preserving legacies.
It's 2025. We live and work in a profoundly different marketplace. Every market sector needs to adapt.
Michael J. Mainardi is managing partner of Selling Technologies in Radnor, Pennsylvania.
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