Wednesday, March 23, 2011

(No.142) Sun Life reactions pro & con

From time to time I write columns for about the financial services business and in particular Sun Life Financial, a company with which I was associated for a few years following its takeover of Clarica Life (the demutualized Mutual Life of Canada). It is therefore not surprising that some Sun Life agents, branch managers and head office executives (past and present) read the columns, some of which have been critical of Sun.

On Feb.23, 2011 I posted to a column (No.138) "Sun Life's Canadian jewel". It was, in part, positive about aspects of Sun's Canadian operation (especially recent improvements in the performance of its career agency distribution system) but again pointed out aspects of Sun's operation that were problematic. As usual I received a variety of email responses from current and former Sun people. In this column I will share excerpts from several.

A former member of Sun Life management said that "I think these comments indicate how thoroughly essential, indeed necessary, your blog is, for so many reasons." This flattering comment was more than balanced by an objection from a Sun Life agent in its Canadian career agency distribution system. Although a member of Sun's career system he is not a happy camper. Nor does he seem to have read, for example, my 5 column series on Sun's distribution and agency problems (column Nos. 50,52,60,61 & 62; posts began Sept.10, 2009)

"I read your columns with a grain of salt," he declared. "The following statement [from column N0. 138] is something I must wholeheartedly disagree with and I have found that there's a serious bias towards the career or captured sales force vs brokers are bad, just because they are bad.

"The statement in question is 'like selling and writing profitable insurance business, or the professionalism and productivity of Sun's Canadian career agents compared with policy pedlars overseas flowing in and out of the system monthly by the thousands [sic], are not synonymous ...

"You seem to have lost touch with the CSF in Canada [ i.e., Sun life's career sales force - ed.]. If you had current experience with the Sun crop, which is really the Clarica crew as most former 'Real' Sun agents are now in MGAs, you would realize that the professionalism which you talk of is a little different than what you remember.

"For instance in [my] branch, since I was contracted, 9 out of 10 new hires left in under 2 years, most of whom left within 8 months of signing. Further the Regional Training School which I attended has a retention rate of 3 for 22. Which when looking at Quickstart winners who have all left the company BEFORE they would be vested and therefore failed I would find it funny that you hold the system so high.

"Outside of a reasonably even handed approach to other things I think you are seriously biased towards the the CSF in Canada. We have been told that the [Sun] CSF has underperformed the [Sun] MGAs by quite a margin in 2010.

"Now if you are a member of the CSF how do you go to a client and tell them that now you are selling Permanent Policies and how great they are when 10 years ago you told them to cash them in [Sun recently reintroduced a participating whole life policy - ed.]?

"Not to mention the ridiculous commission structure that no one can explain, your group contracts don't count towards your bonuses, and that if you sold the same product with another carrier, say Investors Group, Investment Planning Counsel or MGAs etc, you would have made 15 years of your CORe in 2 years [ a reference to delayed commission under the Mutual Life now Sun Life lifetime level commission system - ed].

"The CSF has warts, they are numerous. Call it down the middle."

My reply to the agent began with my declaration that "I am indeed in favour of the career system -- although not only that system of distribution -- for a host of reasons about which I have written in various publications (including my own Canadian Journal of Life Insurance beginning 30+ years ago).

"For years some people in the [life insurance] brokerage business disliked as much as you apparently do certain comments I made about certain realities of the life insurance marketplace. For that matter so did executives of the then more numerous career companies. Disagreement with my views comes with the territory.

"I have spent as much time criticizing the management of the career system (including Sun's, going back to when Sun [pre-Mutual/Clarica] had a career system of its own in Canada) as I have 'brokerage'. Indeed I have written more paragraphs of criticism of agency distribution of all types and subsets than most agents (or brokers) have had hot dinners.

"You will search in vain for any argument made by me publicly or privately that career distribution is "perfect" or anything close to it. Indeed besides being an even smaller part of agency distribution in recent years, career agency has even more problems than ever. But then so does individual life insurance distribution generally; it is the industry's achilles heel."

There were a variety of errors and false assumptions stated by this disgruntled Sun career agent that I did not address in my reply. For example: the statement that the Sun Life MGA (managing general agent) distribution system outperforms Sun's career system in Canada; the reality is that its MGA system in a good year might aspire to account for 20% of Sun's individual total by selling a great deal of Sun's original universal life the profitability of which is at best degraded.

Sun's career system exceeded sales expectations in 2010; its recruiting is again in significant net gain territory; its 4 year agent retention rate should be approaching twice the industry average if it is not there already. The response by many of its career agents to the new Sun par whole life policy has been positive, not surprising since it is a policy type that many experienced agents had long wanted. In short Sun's CSF has not for some time had as good a year as it had in 2010.

A different reaction to Column No. 138 came from a member of Sun's current management: "I wanted to thank you for your vote of confidence. I feel that we are getting back on track to have the best career system in the country. I also just read your comments being captured in [ two articles published in the Feb 2010 issue of] Insurance and Investment Journal. A very important message to get out."

Finally, a former member of Sun's management team emailed in response to column No. 138 that "one may hope that either [Sun's] executive management or the analysts acting as advocates for the company shareholders will take some of your wisdom to make ongoing investments in the Canadian career system.

"I have distilled this down into the theorem," he concluded, "that to hit more home runs all you need is a bigger bat. Bigger bats look like product, [agent] support and well aligned [agent] compensation/recognition programs."


Alastair Rickard



Access to previous columns on RickardsRead:

Any of the previous 141 columns (numbered consecutively beginning Dec, 2008) posted to RickardsRead can be accessed by going to

In the left margin (positioned beside each column) are shown the years during which the columns have been posted as well as the individual months of the current year.

For example:
to access column No. 50 ("Pt 1 - Sun Life: comments on its performance") posted Sept.10, 2009:

1. go to
2. the columns for the current month will be shown by number and title in the left margin
3. also in the margin, below the months for the current year, are links for the years 2009
and 2010
4. for column No.50 which was posted on Sept.10, 2009: click on "2009", then click on the month of "Sept" and finally click on "No.50".