Tuesday, February 23, 2010

(No.80) London Life blood-letting & other emails

Below are several recent emails to RickardsRead.com in response to my comments in column No. 79: "Pt.3 - Financial services deficits: a screed".

Column Nos. 76 and 78 provided email comments from readers on Parts 1 & 2 about the "accountability" and related "deficits" in the financial services industry, particularly involving the life insurance business.

For reasons of privacy I have withheld the email writers' identities. However in order to provide some context for the views expressed I have preceded each email with a brief reference to the writer's role or business connection.

Words with square [brackets] and italics are mine.


Ref. column No. 79 on RickardsRead.com:
"Pt.3 -- Financial services deficits: a screed"

1. from a former longtime London Life person who remains active in the life insurance business:

I was [..] years with London Life when I was terminated, along with a 1,000 plus others in 1996. I had an experience a year ago that speaks to the deficits you describe -- and then some!

The blood-letting I was part of was [London Life] cleaning house before they absorbed Pru [i.e., the Canadian retail operation of Prudential of America]. The second was was when GWL [Great-West Life] took over.

I still have some inside contacts and they tell me as you outlined in your blog [column No. 79] (1) it's not the same company I remember, e.g., you can shoot a cannon through the place at 4:35 p.m. and not hit anybody and (2) there are a lot of 35 and 40 year employees now retiring -- the big brain drain we read about.

2. from an American of long experience in the life insurance business:

Well said, as always [ref. column No.79]

I believe that a well run mutual life insurance company should in the long run do a better job for policyholders and employees than a stock company. A few mutuals in the States refused to unduly enrich management by turning stock (in whatever form).

I believe that these [mutual companies] will show their heels to the stocks when it comes to individual life sales in the future. Of course management is aware of this but temptations are too great.

3. from a Canadian life insurance executive with extensive international experience:

Once again you are right on the money [ref. column No.79].

Right now many very disgruntled employees at all levels want out of the [life] insurer they are currently working for but the economy is keeping them tied. Once the economy returns to some semblance of order the exit for the doors of the best talent will be a major blow to the big [life insurance] companies who right now rely on "money" to tie their staff down. Since most staff want more than money they will leave for environments that are more employee friendly.

Right now many [life insurance company employees] hate to go to work every day which, to me, results in a quality of work that is far from stellar and more importantly an attitude to service in particular that is felt by the customer -- be that advisor or consumer.

The days of an insurance leader preaching successfully the mantra of "we are all in this to protect the well-being of the company and the policyholder long after you have retired" are but memories for those of us who cannot shake those all too true words.

The downside is we sit helpless as the modern reward junkies get their next fix at year end.

4. from a former senior executive of a Canadian life insurance company:

Excellent article [No.79] and so very true.

Another aspect of the devaluation of the "currency" is the increasing emphasis in [employee] recruiting on experience with several companies over relatively short time periods compared with extended work experience with one or very few employers.

I was increasingly convinced that a choice between two equally competent candidates (experience, age, etc) applying for a position would favor the one who had experience with several companies rather than those who had been a long time employee of one or two other employers.

Loyalty was viewed [by company management] as less valuable than multi-company exposure.

5. from a life insurance sales person of long experience in Canada:

Nice job of articulating my feelings [ref. column No. 79].

I rather think that it is a shame that people are talked about as company "capital" or "assets". [It] changes the game and makes them "commodities" that can be bought, sold or traded. I rather resent that. Wonder when someone will clue into the fact that it takes all of us-- management, employees and customers -- to keep the place going.

Being an optimist I hope there will be enlightenment or perhaps legislation. Don't think they can do the latter as it's hard to legislate stupidity.

The sad part is that it takes the customer a long time to clue in; the good part is that they sometimes do and they have long memories.

Alastair Rickard


email: Alastair.Rickard@sympatico.ca