Insurer carriers fight to keep agents from leaving

Insurance carriers are attracting record numbers of new agents, but they are fighting to keep them as they lose top producers to independent firms and to retirement.

And as banks expand their services, they will compete with the insurance carriers for new agents.

“We’re going to lose a significant portion of our producer channel, and we have to do something,” said Faye Williamson, director of U.S. client services at Limra International Inc. of Windsor, Conn. “We really need companies to grow the next generation of sales reps, and it needs to be a combination of those coming out of college, as well as early career changers.”

Retention rates have improved slightly, but they remain low. In 2006, insurance carriers retained about 15% of their new recruits into the fourth year of employment, up from 14% in 2005, according to data from Limra.

Insurance companies hire new agents, and this is typically the springboard for producers who eventually become independent, Ms. Williamson said. However, a dearth of these agents means that further down the line, the independent-firm side will also be affected.

LIMITED POOL

“As agents mature, they leave, but if there’s no feeder pool of recruits, it’s harder to grow more independent agents,” said Michael J. Vietri, executive vice president, agency distribution group, at MetLife Inc. in New York. The firm employs producers, who sell MetLife products exclusively, as well as independent agents.

The bulk of new hires are career changers in their early 30s, executives say.

Northwestern Mutual Life Insurance Co. of Milwaukee added 1,837 people to its sales force last year, bringing its total number to 6,970 by year-end.

“What makes us different is that 96% of our reps say that this is their first career in financial services,” said Bill Beckley, executive vice president of agencies for the company. The average age of a new recruit is 32, so the representatives identify with the next wave of investors who are in the same age range and who want to establish a relationship with a financial professional, he added.

Job changers join the business with a fresh attitude, though they may not come with a book of clients, said Gerard Rocchi, senior vice president and chief operating officer for New York Life Insurance Co.’s agency department. The insurer added a record number of 3,200 agents last year, surpassing its goal of 2,800.

Hiring is the easy part, but keeping those individuals is problematic. In the first four years, candidates become disenchanted when they realize that they are salespeople first and fail to build a strong book of clients, either due to lack of incentives or insufficient networking.

“If you don’t get to that next level, your third and fourth years become dead and you look for other things to do,” said Bellaria Jaramillo, a certified financial planner and agency sales director at Strategic Planning Group in New York. She has been a MetLife agent for five of her 13 years in the business.

TEAMWORK

To prevent those departures, MetLife has focused on teamwork and mentoring to guide young representatives through those difficult first years. Ms. Jaramillo has mentored associates one-on-one, helping them build leads.

That is the wave of the future for carriers who want to keep that pool of agents, Ms. Williamson said.

“It’s about developing relationships,” she added. “Companies with a personal touch are the ones new recruits want.”

Sensing agents’ need to become credible and well-rounded reps, carriers such as Northwestern Mutual will pay for their CFP, chartered financial consultant or certified life underwriter designations. Interns who are getting their securities licenses become familiar with insurance.

“They want to stay because they know risk products aren’t a commodity,” Mr. Beckley said. Although its focus is on risk products, Northwestern wants to build its investment business as well.

Securities offerings via a strong broker-dealer platform is the way to keep agents in place, said Jodie Papike, a vice president of Cross-Search, a Jamul, Calif.-based recruiter for reps in search of broker-dealers.

But few carriers invest their resources into their broker-dealers to attract and keep their reps — and that is why they leave.

‘REPS GRIPE’

“[Reps] gripe about feeling like their investment business has taken off and they have outgrown the insurance company,” said Janice Hart, vice president of national field development at Commonwealth Financial Network of Waltham, Mass. In turn, these advisers are punished for not meeting sales quotas, regardless of how successful their investment business becomes, she said.

New York Life has tried to combat that by permitting agents to sell what they want to once they get out of their fourth year, Mr. Rocchi said.

“We want agents to meet all of the client’s demands,” he added. “The primary products are life insurance and annuities, but to meet the complete picture, we need a competitive broker-dealer.”

Independent agents who had broken away decades ago are eyeing the insurance companies and their new hires.

A subsidized CFP designation, along with a sales background means these reps will do a better job when they fly solo, said Charles Stevens, president of Park East Planning Group Inc. of Snellville, Ga. The firm is an affiliate of Royal Alliance Associates Inc. of New York.

“If I’m going to bring someone in, I’m more apt to bring in an insurance agent with some background in securities,” Mr. Stevens said. Carriers’ retention and recruitment improvements make them a better training ground, but that is all they will be, he said.

“I don’t think it matters what the insurance companies do — the top producers will want to go independent,” Mr. Stevens said.

“The independent adviser is more substantial in the eyes of the client,” he said. “It’s just a matter of reality.”

Darla Mercado can be reached at [email protected].