RickardsRead.com received a number of interesting and thoughtful responses to the views I had expressed. I have selected excerpts from several of them. As in previous columns presenting excerpts from reader emails, for reasons of privacy I have withheld the email writers' identities unless they wrote in an official capacity. However in order to provide context for the views expressed I have preceded each excerpt with a brief reference to the writer's role or connection to the subject.
Words in italics are mine.
1. from an experienced Canadian career agent:
Timely comments on a subject you are so well equipped to discuss based on both your experience and knowledge of insurance distribution. I was "invited" to attend a regulatory update put on by PPI and the [life insurance] company they recently aligned with, whose name escapes me now.
How disappointing it was to listen to them tell the group of grey-haired brokers about their new and exciting capital needs analysis [software] tool. So, not only are these companies not adding to the pool of real agents who "sell stuff" they provide no [financial] planning support to allow these 'brokers' to do real comprehensive client-needed planning.
What a mess when MGAs [managing general agents] are trying to attract advisors with basic needs analysis software that we on the career side take for granted from our companies.
Oh yes. The regulatory update was that regulators are looking at commission disclosure and we need to be vigilant with them. DUH.
2. from an experienced career system agency manager in Canada:
.... your article [was] bang on the mark, as always.
Too many claiming to be truly in the life insurance industry (by way of licensing) with far too few actually engaged or competent or supported by a well-structured career agency system.
3. from a senior life insurance business insider with a wide variety of experience in the industry both in Canada and outside:
Right on and certainly far from an exaggeration. Selling is the name of the game.
In 2008 the life insurers of Canada reinsured about 77.1% of all life risk written. That was after those of us who know thought 2007's 75% was the watershed year and amounts reinsured would decline. Note that the USA saw the watershed year in 2002 and the amount of reinsured has decreased there from 62% to 33%.
Thus the risk [in Canada] is now resident in three main reinsurers (94% of all reinsured amounts are with Swiss Re, Munich Re and RGA Canada).
So, let me get this right: our "life insurers" are not training well, not recruiting well and not taking risk but getting rid of it well -- so yes they are mere sellers or manufacturers, dependent on perspective.
They are certainly not risk takers, preferring the safety of asset management -- which we all know they do so well!
4. from a highly qualified career agent:
The dark side of active prospecting [for life insurance ] is the 'hard sell'. One sales person I know, a top producer (and one my [agency] manager would like to clone) leaves a prospect's home in 20 minutes if he feels the people will not sign a life insurance contract in that meeting.
Let me digress: the vacuum cleaner sales person is selling a 'stand alone' product. The vacuum cleaner does not have to be integrated with the dishwasher, the fridge, the stove and the laundry appliances. In contrast the insurance sales person is selling a product that MUST be integrated with the client's bank account, tax statement's estate issues, cash flow, registered and non-registered assets, etc. etc.
I'm in agreement with your perspective, if the development of the prospecting life insurance sales person includes training in all disciplines of a client's finances.
On the other hand I'm weary of the accolades poured out on (successful?) life insurance sales people who peddle the product as if it is a stand alone vacuum cleaner. Yes, their sales numbers are high, they have telemarketing and/or prospecting methodology down to a science, but they make my stomach turn.
Teaching people how to be active sales prospectors is one aspect of the life insurance sales cycle. Another skill that must co-exist with prospecting is the ability to analyze in the manner of a CFP professional -- a skill all too often missing from the 'sales heroes' held in high regard by company [agency] managers.
5. from a longtime Canadian career agent:
It is nice to be validated by an "outside voice". However I fear that your voice is just static to the industry.
Sometimes I sit and think about the decline of the "life insurance agent" in favour of the "financial planner". There seems to be an embarrassment to call oneself an insurance agent. The industry talks about "holistic advice" (my company in particular) but the focus is on controlling the money and of course the "affluent client".
Just read any trade magazine; it's all about the "affluent client" and focusing on the best clients in terms of return to the advisor.
What happened to the average Canadian? From my point of view they are great clients. Provide decent service and they stick with you and they don't cancel their business. They also provide multiple generations of new clients. They may be 'small potatoes' with no bragging rights to the companies but they are profitable to them. It's a fact that companies seem to miss.
I cannot tell you how many average families lived in dignity and then retired because a life insurance policy was paid out. I'm prouder of that than the wealth that I helped clients grow.
Perhaps I live in a fool's world or maybe I am just old-fashioned. I am here to serve and serve the client before myself. It's worked out for me.
Thanks for listening and thanks for your voice in the wilderness. Perhaps if the rating agencies and the stock reviewers can be convinced then the [life insurance] companies would take heed. We do need to sell new life insurance. It is the life blood of the industry.
[More reader comments on the agency system will appear in the next column, No.101, on RickardsRead.com]