Allianz Preferred perks strike nerve with agents

A new Allianz Life distribution program, which rewards high-producing indexed-annuity sellers with exclusive products, is ruffling feathers among agents and marketing groups.

The sales model, Allianz Preferred, was introduced by Allianz Life Insurance Co. of North America last week and provides qualifying field marketing organizations — groups that license agents — with more support and access to special products, provided they submit to greater oversight by Allianz.

“We want to see that distribution channel thrive, and we want to make sure we’re aligning with them,” said Eric Thomes, senior vice president at Allianz Life. “We’re providing more resources and dollars to those who can best represent us.”

The new arrangement could shake up the indexed-annuity world as agents and FMOs rethink their alliances and consider partnering with firms that qualify for the new program. Meanwhile, FMOs that don’t participate could lose agents and relationships with other marketing groups.

Advisors Excel, an FMO that teams with insurers to create products as part of a “distributor group,” will not be permitted to participate in the new Allianz program, because the arrangement isn’t open to distributor groups, said David Callanan, a company founder.

“Since we can’t participate, I have concerns that some of our member producers may want to leave,” Mr. Callanan said.

Advisors Excel will continue to sell current products from Allianz Life, but not the new products to be created for the Preferred network, he said.

Other distributor groups affected by the Allianz ban include The Annexus Group and The AltiSure Group LLC.

POWER GRAB?

Some agents resent what they view as Allianz’ attempt to control independent distribution.

“To put a market limitation on someone flies in the face of doing what’s right for the client,” said one West Coast agent, who asked not to be identified, as he wants to maintain his selling agreement with Allianz.

“Allianz Preferred members are and will continue to be independent,” Mr. Thomes said in response to the unidentified agent’s concerns. “They will continue to market products for multiple carriers competing with Allianz in the market.”

Critics are upset mainly with the exclusivity of the new program. In order to join Allianz Preferred, an FMO is required to sell $75 million worth of annuities for Allianz, a threshold that is considered high by most standards.

It must also be willing to bring field suitability and compliance officers into its practice and subject its non-Allianz marketing materials to review and approval by a third-party paid for by Allianz.

Agents need to have qualified for the Allianz Masters Forum at least once in the previous three years, selling a base minimum of $600,000 in annuity premiums or to have had at least $60,000 in annual income in the current or previous year from selling life insurance and annuities or providing investment advisory services. Agents who are Series 6- or 7-registered don’t have to meet these sales requirements.

The Allianz move is seen by some as essentially creating a quasi-captive sales force to fortify the company’s position as the No. 1 seller of indexed annuities. Indeed, the move would fend off competition from American Equity Investment Life Insurance Co. and Aviva USA, the No. 2 and No. 3 players, respectively, in terms of sales.

Allianz controls 21% of the market for indexed annuities, according to data from AnnuitySpecs.com, with $1.5 billion in first-quarter sales. The insurer’s MasterDex X is the top-selling indexed annuity.

“Allianz is drawing a line in the sand, and what they’re trying to do is engender greater loyalty and more-consistent production,” said Jack Marrion, president of Advantage Compendium Ltd.

The Allianz Preferred program could help the insurer cut costs by allowing it to focus its marketing efforts on only a few FMOs, he said.

Allianz’s dominance in the market, coupled with the fact that it offers an array of other insurance products, offers distinct advantages over its competitors. The insurer also owns FMOs that distribute its product, another advantage.

“FMO ownership helps, but if you have a broad array of fixed and indexed annuities like Allianz or Aviva, then it’s easier to give that company more of your business,” Mr. Marrion said.

For the select group of 20 to 25 marketing organizations that will have access to the new indexed annuity, the program provides an opportunity to recruit agents from FMOs that aren’t participating.

“We’re going to attract agents regardless of where they are, whether they’re with an FMO that decided not to be “preferred’ or a rep that hasn’t been exposed to fixed indexed annuities,” said Scott Wheeler, a founder and partner at American Financial Marketing.

The firm will participate in Allianz’s program and is owned by the insurer, but it offers annuities from 21 carriers.

Sure enough, agents are receiving pitches from Preferred FMOs, touting webcasts and opportunities to learn more about the program.

“As a leading producer, you deserve to be rewarded for your performance,” read one e-mail pitch. “That’s why you should consider becoming Allianz Preferred.”

Some producers are listening.

Joseph M. Santore, president of Postema Marketing Group LLC, said that his firm is considering joining with a Preferred FMO. The arrangement would help his independently owned firm compete against others that sell exclusive indexed annuities.

“The large FMOs do billions of dollars in production, and we do only $20 million to $30 million,” Mr. Santore said. “The big guys with the larger pockets won’t have this product, because of how it’s structured, and that will help us a little.”

Although it remains to be seen how successful the Allianz Preferred program will be, some firms that are interested in participating will proceed cautiously.

“This is something you have to navigate around, because it’s not pure independence: They start dictating what the channel of distribution will do,” said W. Andrew Unkefer, president and chief executive of Unkefer & Associates Inc., an independent-marketing organization.

The firm is considering partnering with a Preferred FMO.

“As an agent, you can sell for other carriers, but this encourages your independent agent to only go to a Preferred partner,” Mr. Unkefer said. “Agents want to be with the group that’s going to stay with Allianz and have access to all the products.”

E-mail Darla Mercado at [email protected].