What do you find most exciting about the insurance business?
John Davis: Change is the operative word when it comes to life insurance brokerage business, which really adds a level of excitement to day-to-day efforts because the changes are fast and frequent.
The agency force is changing from the traditional agency system doing the largest share of new business to the brokerage side of the equation. In that brokerage mix are independent agents, career agents, property/casualty agents, broker/dealers, banks and others.
Products change with the environment as well. We are seeing this in the prolonged low interest rate environment: the rise in popularity of indexed products, the guarantees of variable products, and the pricing of more traditional guaranteed products.
Also, life insurance companies change with management changes, i.e., acquisitions of new companies, exiting or entering new markets (long term care).
Our offices are changing the way we do business; communications of every kind have changed—today we scan applications, we have e-applications as well as e-delivery of applications.
What hasn’t changed—and is still the most exciting part of our business—is helping clients solve problems and having the opportunity to work with them and their professional agent representatives.
Matt McAvoy: I continue to gain energy and excitement seeing insurance agents place life insurance, long term care insurance, disability insurance and fixed annuities through our firm. To me, a recently placed insurance policy implies our business model is continuing to be relevant; our agents have provided a plan of personal security for families, businesses or estates; and quite possibly their sales efforts will provide benefits for future beneficiaries. A suitable insurance sale that has been paid is a satisfying moment for me.
Greg Nemec: In today’s economic uncertainty, life insurance is the one constant, stable product that is crucial to a family’s financial independence. In an era of big government control, where the main objective of the politicians is to create dependency among the masses in order to retain their power, life insurance is one of the few instruments which, if properly designed, can create generational non-reliance on the government.
The enthusiasm and reassurance that is generated when we plan for multigenerational financial independence is second to none in the financial services industry. There is no greater satisfaction in our business than a client receiving a tax-free check after a tragedy occurs. Instead of a family becoming dependent on entitlement programs, they can live with dignity and realize the American dream.
In the retirement planning world, insurance can be used as a permission slip to spend down assets, so financial independence and legacy planning can be accomplished. With proper design through life insurance, pensions can also be maximized.
In a nutshell, the power of life insurance, which provides countless benefits to our society, is truly exciting—on a daily basis. Furthermore, there has not been a better time to be in our industry because of the amount of wealth controlled by boomers. Look at it from this perspective: Boomers want to allocate about $880 billion to the types of products we provide because of the inherent guarantees.
John Rucker: After 40-plus years…nothing! That’s not true. I still come to the office each day wondering where our next big case will come from. This excitement comes from helping producers make the sale and delivering the best value for the buyer. In our shop we tend to focus on underwriting; this creates a new opportunity for gaining knowledge daily, and I find that very exciting.
Finally, in the larger case marketplace, I believe sales still depend on personal relationships. The chance to work with producers daily and developing that level of personal relationship makes this business both fun and exciting. There is a challenge in getting the first piece of business from a producer, but there is excitement when you get the second sale.
What about the life insurance business keeps you up at night?
McAvoy: Not too many things keep me up at night. Some of the things I do get restless about are the concerns voiced by the media and some public commentators about the insurance industry’s image regarding sales practices with consumers, regulators’ management of insurer solvency, and the federal government’s regulatory and tax approach to the products we distribute.
Loud talk by a vocal minority is often heard over the voice of very satisfied and proud owners of life, long term care, disability and fixed annuity policies. Our industry needs to continue the positive reinforcement of personal ownership benefits provided by insurance products to a media market that often seeks the negative and extreme deviations of a very few unscrupulous agents or the extremes in insurer conduct.
As a director of the LIFE Foundation, I would like to remind agents, distributors and insurers of the foundation’s good work in this area. However, we need more media advocates and financial support from nonprofit organizations such as LIFE so our business can be elevated to the level that it so deserves.
Another item that causes occasional short nights is the lack of new agents entering the insurance business. The independent distribution system and life insurance companies need to find ways to motivate and deliver insurance products to modern agents who are not dependent on insurance product revenue as their primary source of professional income. Gains have been made in delivering insurance sales through financial planners, wealth managers, property and casualty agents, lawyers, bankers, CPAs and others licensed to sell insurance. However, as an industry we are still not as productive in these alternative sales channels as we can be. For the insurance industry to grow, these alternative agent channels will have to fill the void of an aging and shrinking pool of full-time insurance agents. Most in the industry can see the full-time agent head count problem. This is the independent market’s greatest opportunity for growth.
Nemec: My sleepless nights these days are a direct result of over-regulation by our government and the creation of a nanny state. Thirty years ago when I entered the financial services industry, entrepreneurialism and a tremendous work ethic ruled all employment sectors. In today’s world that fire has decreased considerably. There seems to be a sense of entitlement. The employer, who creates jobs and fuels our economy, has been vilified. In many ways the world has been turned upside down. Those who should be respected and admired have become the enemy. Each and every day politicians preach that the ultimate solution to any challenge is government intervention. Our free market system that made us the greatest nation in the history of mankind is being replaced by high-paid bureaucrats who are creating a recipe for disaster.
My greatest fear regarding the insurance industry is the removal of tax-free death benefits and tax-deferred build-up in our life and annuity products. If the tax benefits of our products were removed, it would have a devastating effect on our country. As an industry, we must do a better job of promoting the miracle of life insurance and the benefits of products like long term care insurance, disability, annuities, etc. The Dodd-Frank bill is crippling many sectors of the economy, including our industry. We can’t let politicians destroy our industry, because the consequences for our country will be catastrophic.
Rucker: Two things. I learned a long time ago that a successful product is one that is fair to all three parties in the life insurance transaction: the client, the producer and the carrier. It has always bothered me that, too often, our industry builds products that do not meet the fairness test. For example, an annuity that pays a producer 10 or 15 percent commission and is still profitable to the carrier cannot possibly be fair to the consumer. There has to be a hook—usually onerous surrender charges and/or payout options. Selling products built to succeed on greed will ultimately harm the industry.
The second thing is also one I learned a long time ago. You can be very successful in this business by doing one thing extremely well, but you will fail if you try to do all things. There are BGAs that focus on transactional business—offering the latest in technology, ultra-fast processing and streamlined execution—and they are very successful at it. There are also BGAs that have a boutique business—built on underwriting, advanced sales capability or a single large production source—and they are also successful. The ones who fail are those who keep thrashing around from idea to idea and never seem to develop a focus; they actually create a distraction in the marketplace.
Davis: There are two areas of concern for me: (1) where are we going to find more people who choose insurance as a career, and (2) brokerage general agents who add little to no value to the equation.
It has been my experience that we all need help in formulating the right application of the right product to clients. Yet, in my opinion, when a BGA can add no value to a transaction because margins have been eliminated, the true losers are the carrier (primarily), the agent and the client.
What advice about building an insurance business do you have for producers?
Nemec: There is no magic formula for creating a successful insurance practice. It all starts with a burning desire to succeed. It is backed up with a commitment to hard work and excellence. Obviously the more knowledge you have the better, but nothing replaces interpersonal relationship skills. Understanding how to leverage technology and marketing is also crucial. Networking with other professionals such as CPAs and attorneys is a key ingredient to success.
Too many times I see brokers who try to sell clients by stating that their products are better. In my career I always acknowledge that there are many great products and carriers. What we attribute our success to is that we are different. We specialize in certain areas and have expertise that many consumers do not possess. In my humble opinion, using disparaging remarks about companies, advisors, plans, etc., only creates a negative atmosphere. The preference should be to offer alternatives that create a positive mindset for prospects and clients.
One other crucial component of a successful practice is responsiveness. The common courtesy of simply returning a phone call goes a long way. In today’s world, we are all addicted to emails and text messages. The art of verbal communication and personal letters will never be replaced as the most effective method of communicating in our industry. [GEN]
Rucker: Clearly it has to start with focus. Let’s face facts, young agents who start by making sales to classmates, friends and relatives and grow that into a lifelong practice as the group ages hardly exist anymore. Further, generations X, Y and those to come will buy transactional life products in ways we cannot even conceive—and that probably will not include an agent.
Given those facts, I believe the way to build a practice today begins with becoming very focused on a particular client base. If you want to work with dentists, learn everything there is to know about dentists and their particular problems (e.g., a propensity for back injuries); develop a portfolio of solutions unique to their problems; make yourself known to them (speaking, networking, newsletters, etc.); and build your practice.
Equally important, develop a focus on what you do. The best producers I know are very clear about the fact that they sell life insurance. They don’t dress it up in other words or hold themselves out as something else.
I have a son-in-law who is a doctor. When he was in medical school I introduced him to a cardiologist friend of mine. His advice to my son-in-law was very simple: “I hear you’re going to be a doctor—be a good one.” I would say the same thing to a producer or prospective BGA—be a good one and you will succeed. [JTR]
Davis: My advice for building an insurance practice is fourfold.
First, build upon your strengths and prospect to them. If an agent enjoys community service, let the people in your civic clubs, churches and associations know what you do for a living. Tell them how you can help them secure their businesses and families.
Second, delegate the routine. Enough said.
Third, be a student of the business. Study the technical aspects of planning and selling. Study underwriting or become associated with individuals who know that science so you may guide your clients’ expectations as well as your own.
Last, learn the huge array of products so you can better see sales opportunities and tailor the solutions for your clients. The proper application of products will leave your clients with a good feeling about you and they will be much more apt to share referrals with you.
I’ve worked with thousands of agents in my career; the best seem to possess these characteristics as well as use the team approach to the life insurance business. [JMD]
McAvoy: My advice for any agent is that the best of your career is ahead of you—regardless of your age or experience. One of my friends says, “Our best work is the last sale we made.” In other words, we are always growing and learning, and our skill levels are enhanced every day we show up to work. This outcome, if you believe it to be true, is attained through the process of fact-finding, selling and engaging in higher level sales. With focused daily personal development, tomorrow’s success will be greater than yesterday’s. [MJM]
