The Future of Independent
Agent Distribution
Jamie Green
Vice President, Market Strategy
National Underwriter
Summit Profe...
Profile of Today’s Independent Professional
Purpose: to better understand the profile and preferences of
independent profe...
Baby Boomers represent 6 in 10
independent producers
Producer Generation

Producer age group

59%
33%
29%
26%

12%

20%

1...
Diversity still a challenge in the
independent channel
Producer age group & ethnicity

Producer age group & gender
Male

9...
Business Mix by Age
Among older producers:
 Advisory services make up a smaller amount of revenue
 Health insurance sale...
Business Mix by Focus
As a percent of sales or revenue
Life insurance

Health insurance

P&C

Annuities

Investments

3%
1...
Two-thirds of clients are 50 or older
35%
29%
22%

10%
3%
Under 35 yrs

35 – 49 yrs

50 – 64 yrs

65 – 79 yrs

Source: LIM...
Age of Clients
Under 35 yrs

35 – 49 yrs

50 – 64 yrs

65 – 79 yrs

3%

4%

3%

25%

27%

30%

38%

39%

80+ yrs

3%

37%
...
What is the current state of your
practice?
30%
28%
25%

12%
5%

Still establishing itself Established and has
a stable cl...
Insurance Focus

Investment Focus
37%

31%

24%

24%

26%

24%

15%
9%
6%
4%

Still establishing itself

Established and h...
WHAT INDEPENDENT
PROFESSIONALS VALUE
What attracted you to a career in
financial services sales?
Under 50

50 and
older

Income potential

90%

78%

Opportunit...
Why Independent?
“Ability to offer multiple solutions. Able to offer my clients the best product I can,
able to provide th...
Producers are split on how they prefer to
place their business
How do you prefer to place your fixed life insurance and/or...
Independent producers turn to intermediaries to
drive efficiency and achieve scale
How do you prefer to place your fixed l...
More than half of independent
producers find support useful
How useful is the support you receive from your primary wholes...
Majority of independent producers are happy
and unlikely to move their business
I am very pleased
with the support I
recei...
Value Proposition
Rating of various factors, regardless of whether they are received or not.
35%

6

1: Training and educa...
Meeting clients’ needs top independent
producers’ priority list
Factors rated extremely or very important when
placing bus...
The Future of Independent
Agent Distribution
Robert A. Kerzner
President and CEO
LIMRA, LOMA, LL Global
More than a quarter of advisors plan to leave
the business within 10 years
1-3 years

6%

4-6 years

10%

7-9 years

26 pe...
What Will Most Influence Distribution
in the Future?
Regulation
Demographics
Technology
Increased Regulation Worries Advisors
Q: What needs to happen to sustain and/or
grow the independent agent model?

“Reduce...
Commission Advice Under Pressure
Commissions Banned in 2007 and 2008:

Finland

Norway

Countries Where Commissions Will B...
Regulators Believe:
Commission sales are inherently “conflicting”
— lead to lack of objectivity.

Fee-based sales remove a...
Consumers Say They Prefer Flat Fees
Commissions

Develop and implement a
plan for retirement income

9%

Flat Fee

Annual ...
1 in 5
80 percent of U.S. consumers
will pay less than $100

Consumers are willing
to pay more than $100
for advice

Consu...
Americans owning individual life
insurance is declining
% of households

72%
65%

62%
55%

50%

50%

44%
1960

1976

1984
...
History: U.S. Growth in Numbers 2000-2010

15.2

2.2
White

3.8

4.1

African American

Asian

(all numbers in millions)
S...
Projected Growth Over the Next 20
years …
36
million

Hispanics

Asian

African
American

White

9 million

8 million

10 ...
Younger Generations Are Increasingly
Diverse…
Percent of Americans Who Are Hispanic and/or Non-white
Gen Next

46%

Genera...
Hispanics More Acculturated More
Likely to Own Life Insurance
Percent Owning Individual
Percent Owning
Percent Not Owning
...
Wives earning more than husbands
29%

4%

1970

2009

Source: Pew Research Center
Household financial decisions
When Husband Earns More

When Wife Earns More

Husband
21%

Share
28%

Husband
35%

Share
33...
In their own words…
“Keep up with new products and technology but still
keep a personal interest in the client.”
“Technolo...
Will the face-to-face of the future be
the same?
These People are 57 Today
Top reason

consumers shop for life
insurance

41%

cite life event

Source: LIMRA 2011 Buyer Nonbuyer Study
Millennials Moving Toward Mobile
2008

2008

2008

52%

of Millennials
preferred to bank
at Branches or
ATMS

25%

2012

2...
But What is Face-to-Face These Days?
From Surfer to Sale….
You seem to need more information on
term life insurance. Would you like help
calculating how much you need?
Click here fo...
Leverage technology to issue in
real-time
MetLife Partners With Walmart to Sell Life
Insurance in Stores
“If you are in the way of a steam roller,
either get out of the way or become part
of the road…”
Phil Billingham, strategy...
Bradesco using POS machines to sell life
insurance
Employees Prefer Buying at the Workplace
Employer

Agent or
Broker

Insurance
Company

Internet

No
Preference

Life insur...
Who has the data?
NY Life Launches Regional Pilot to Generate
Leads for Producers through AARP

Pilot was so successful that NY Life launche...
3 50   james green & robert kerzner
3 50   james green & robert kerzner
3 50   james green & robert kerzner
3 50   james green & robert kerzner
3 50   james green & robert kerzner
3 50   james green & robert kerzner
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3 50 james green & robert kerzner

  1. 1. The Future of Independent Agent Distribution Jamie Green Vice President, Market Strategy National Underwriter Summit Professional Networks
  2. 2. Profile of Today’s Independent Professional Purpose: to better understand the profile and preferences of independent professionals. The results will help organizations provide the products, services and support that will maximize advisor productivity and strengthen relationships with independent agents and advisors. Methodology: In November and December of 2013, LIMRA and National Underwriter conducted an online survey of approximately 750 independent professionals, representing all experience levels. Seventy percent of respondents were independent agents and the remaining were other independent professionals such as registered representatives of independent broker dealers.
  3. 3. Baby Boomers represent 6 in 10 independent producers Producer Generation Producer age group 59% 33% 29% 26% 12% 20% 18% 3% Under 50 50 to 59 60 to 69 70 and over Gen Y Gen X Baby Boomers Only one quarter of independent producers are under 50 Source: LIMRA/National Underwriter Advisor Survey, 2013 Silent
  4. 4. Diversity still a challenge in the independent channel Producer age group & ethnicity Producer age group & gender Male 93% 80% White Hispanic Other Female 93% 92% 84% 83% 73% 20% African American Asian 16% 7% Under 50 50 to 59 60 to 69 7% 70 and over 12% 4%3% 3% Under 50 74% 7%4%5% 1% 50 to 59 7% preferred not to respond Source: LIMRA/National Underwriter Advisor Survey, 2013 3% 2%2% 1% 60 to 69 1% 2% 1% 2% 70 and over
  5. 5. Business Mix by Age Among older producers:  Advisory services make up a smaller amount of revenue  Health insurance sales increase  Life insurance remains pretty steady Life insurance Health insurance 6% 14% 14% Investments Other 3% 14% 20% 2% 4% 3% 4% Advisory 4% 20% 19% 16% Annuities 4% 9% 11% 5% 12% 14% P&C 12% 14% 18% 24% 35% 34% 34% 33% Under 50 50 to 59 60 to 69 70 and over As a percent of sales or revenue Source: LIMRA/National Underwriter Advisor Survey, 2013
  6. 6. Business Mix by Focus As a percent of sales or revenue Life insurance Health insurance P&C Annuities Investments 3% 1% 3% 11% 6% Advisory Other 8% 22% 27% 25% 83% 28% 50% 16% Insurance focus 3% 13% Investment focus Insurance focus: 50% or more of revenue comes from health, life or P&C insurance Investment focus: Less than 50% of revenue comes from health, life or P&C insurance Source: LIMRA/National Underwriter Advisor Survey, 2013
  7. 7. Two-thirds of clients are 50 or older 35% 29% 22% 10% 3% Under 35 yrs 35 – 49 yrs 50 – 64 yrs 65 – 79 yrs Source: LIMRA/National Underwriter Advisor Survey, 2013 80+ yrs
  8. 8. Age of Clients Under 35 yrs 35 – 49 yrs 50 – 64 yrs 65 – 79 yrs 3% 4% 3% 25% 27% 30% 38% 39% 80+ yrs 3% 37% 30% 33% 27% 22% 15% Under 50 19% 20% 9% 9% 7% 50 to 59 60 to 69 70 and over Age of Advisors Source: LIMRA/National Underwriter Advisor Survey, 2013
  9. 9. What is the current state of your practice? 30% 28% 25% 12% 5% Still establishing itself Established and has a stable client base and revenue stream Established, has a stable base and is now looking for opportunities for expansion Established but has had some years of negative growth Source: LIMRA/National Underwriter Advisor Survey, 2013 Other, describe:
  10. 10. Insurance Focus Investment Focus 37% 31% 24% 24% 26% 24% 15% 9% 6% 4% Still establishing itself Established and has a Established, has a stable Established but has had stable client base and base and is now looking some years of negative revenue stream for opportunities for growth expansion Other Insurance focus: 50% or more of revenue comes from health, life or P&C insurance Investment focus: Less than 50% of revenue comes from health, life or P&C insurance Source: LIMRA/National Underwriter Advisor Survey, 2013
  11. 11. WHAT INDEPENDENT PROFESSIONALS VALUE
  12. 12. What attracted you to a career in financial services sales? Under 50 50 and older Income potential 90% 78% Opportunity to be my own boss 62% 56% Opportunity to make a difference in people’s lives 58% 52% Career potential 34% 36% Flexible work schedule 33% 39% I like to work independently 16% 26% Challenge of selling financial services 5% 10% Opportunity to work as part of a team 4% 5% Other 5% 7% Percent ranking item Source: LIMRA/National Underwriter Advisor Survey, 2013
  13. 13. Why Independent? “Ability to offer multiple solutions. Able to offer my clients the best product I can, able to provide the best product for my clients, without having to push one product over another…customize a plan that fits their needs today and into the future.” “I am a mother of 4 and need to have a flexible schedule which I am allowed as an independent advisor. I am a self-started and I like the freedom and flexibility of running my own business. I like the financial industry and enjoy helping people.” “Having access to a lot of different products so I can design the right solution for my clients with products from different carriers if necessary. Also I like the income potential and not feeling pressured to make sales quotas or push certain products. I also like the ability to develop my own niches including specialized service offerings. I am a CPA as well so like to integrate the two disciplines.” “After working as a career agent and enjoying some of those benefits, I started to lose business to independent agents. I decided that I wanted to stop losing business and I like the idea of putting my client first and an insurance company second.” Source: LIMRA/National Underwriter Advisor Survey, 2013
  14. 14. Producers are split on how they prefer to place their business How do you prefer to place your fixed life insurance and/or fixed annuity business? 51% Directly with the insurance company 49% Through an intermediary (e.g., brokerage general agency) Source: LIMRA/National Underwriter Advisor Survey, 2013
  15. 15. Independent producers turn to intermediaries to drive efficiency and achieve scale How do you prefer to place your fixed life insurance and/or fixed annuity business? by What is the current state of your practice? Is it… Growth Decline Still establishing itself Established and has a stable client base and revenue stream Established, has a stable base and is now looking for opportunities for expansion Established but has had some years of negative growth 57% 57% 57% 51% 49% 43% Directly with the insurance company 43% 43% Through an intermediary (e.g., brokerage general agency) Source: LIMRA/National Underwriter Advisor Survey, 2013
  16. 16. More than half of independent producers find support useful How useful is the support you receive from your primary wholesale insurance brokerage agency? 4% Not useful  77% have used a wholesale insurance brokerage agency in the past 12 months 54% 42% Somewhat useful Very useful  53% of producers have been working with their primary brokerage agency for 5 years or less Source: LIMRA/National Underwriter Advisor Survey, 2013 16
  17. 17. Majority of independent producers are happy and unlikely to move their business I am very pleased with the support I receive and am very unlikely to move my business elsewhere. 6% 52% I am not happy with the support I receive and plan to move my business elsewhere. 43% I am generally happy with the support I receive but would consider moving my business elsewhere if a better offer comes around. 65% expect to contact at least one brokerage agency they’ve never worked with before to inquire about their products and services. Source: LIMRA/National Underwriter Advisor Survey, 2013
  18. 18. Value Proposition Rating of various factors, regardless of whether they are received or not. 35% 6 1: Training and education % not receiving enough 30% 25% 2: Coaching and mentoring 2 5 4 3: Remote sales support 3 20% 4: In-person sales support 15% 1 5: Technology management and support 10% 5% 7 6: Marketing services 7: New business processing support 0% 1 1.5 2 Not at all important 2.5 3 3.5 Source: LIMRA/National Underwriter Advisor Survey, 2013 4 4.5 5 Extremely important
  19. 19. Meeting clients’ needs top independent producers’ priority list Factors rated extremely or very important when placing business Extremely important Ability to meet client needs Very important 78% 18% Ease of doing business Financial strength/ratings 58% 34% 34% Product selection Underwriting flexibility Compensation Speed of policy issue Technology support Training/development 38% 40% 43% 34% 34% 34% 39% 27% 37% 21% 26% 57% 51% Source: LIMRA/National Underwriter Advisor Survey, 2013
  20. 20. The Future of Independent Agent Distribution Robert A. Kerzner President and CEO LIMRA, LOMA, LL Global
  21. 21. More than a quarter of advisors plan to leave the business within 10 years 1-3 years 6% 4-6 years 10% 7-9 years 26 percent of advisors plan to retire or sell their practices 10% More than 10 years I don’t plan to retire or sell my practice 41% 33% Source: LIMRA/National Underwriter Advisor Survey, 2013
  22. 22. What Will Most Influence Distribution in the Future? Regulation Demographics Technology
  23. 23. Increased Regulation Worries Advisors Q: What needs to happen to sustain and/or grow the independent agent model? “Reduce the burden of government regulation.” “Less regulation & oversight...too much to deal with now.” “Less government restriction on Internet applications.” “Less regulations.” Source: LIMRA/National Underwriter Advisor Survey, 2013
  24. 24. Commission Advice Under Pressure Commissions Banned in 2007 and 2008: Finland Norway Countries Where Commissions Will Be Banned in 2013: United Kingdom Australia Source: Bye-Bye Commissions, LIMRA 2012 Netherlands
  25. 25. Regulators Believe: Commission sales are inherently “conflicting” — lead to lack of objectivity. Fee-based sales remove all bias. Consumers are willing to negotiate & pay for advice. Low-cost, free advice will be more available. Source: Bye-Bye Commissions, LIMRA 2012
  26. 26. Consumers Say They Prefer Flat Fees Commissions Develop and implement a plan for retirement income 9% Flat Fee Annual Fee 55% 13% Develop and maintain a financial plan Advice on insurance type, amount, and options 10 55 13 9 58 8 Advice on which types of investments to buy or sell 11 54 11 Source: Bye-Bye Commissions, LIMRA 2012
  27. 27. 1 in 5 80 percent of U.S. consumers will pay less than $100 Consumers are willing to pay more than $100 for advice Consumers are willing to pay far less than the cost of providing advice. Source: Bye-Bye Commissions, LIMRA 2012
  28. 28. Americans owning individual life insurance is declining % of households 72% 65% 62% 55% 50% 50% 44% 1960 1976 1984 1992 1998 Source: LIMRA Life Insurance Ownership Survey, 2010 2004 2010
  29. 29. History: U.S. Growth in Numbers 2000-2010 15.2 2.2 White 3.8 4.1 African American Asian (all numbers in millions) Source: U.S. Census Bureau Hispanics
  30. 30. Projected Growth Over the Next 20 years … 36 million Hispanics Asian African American White 9 million 8 million 10 million Source: U.S. Census Bureau
  31. 31. Younger Generations Are Increasingly Diverse… Percent of Americans Who Are Hispanic and/or Non-white Gen Next 46% Generation Y 41% Generation X Boomers 39% 28% Source: U.S. Census Bureau
  32. 32. Hispanics More Acculturated More Likely to Own Life Insurance Percent Owning Individual Percent Owning Percent Not Owning Life Insurance Group Life Insurance Any Life Insurance Less Acculturated No Child in Household At Least One Child 29% 28% 29% 47% 47% 46% 48% 53% 50% More Acculturated No Child in Household At Least One Child 53% 47% 59% 59% 53% 63% 32% 35% 29% General Population 58% 68% 23% Source: Financial Protection for Hispanics, LIMRA, 2013
  33. 33. Wives earning more than husbands 29% 4% 1970 2009 Source: Pew Research Center
  34. 34. Household financial decisions When Husband Earns More When Wife Earns More Husband 21% Share 28% Husband 35% Share 33% Wife 46% Wife 37% Source: Pew Research Center
  35. 35. In their own words… “Keep up with new products and technology but still keep a personal interest in the client.” “Technology needs to be infused at a greater rate to attract new agents.” “Technology advances to reduce time spent on administrative tasks.” “Support must be easily available from carriers who use independents…and from companies that provide technology to the independents.” Source: LIMRA/National Underwriter Advisor Survey, 2013
  36. 36. Will the face-to-face of the future be the same?
  37. 37. These People are 57 Today
  38. 38. Top reason consumers shop for life insurance 41% cite life event Source: LIMRA 2011 Buyer Nonbuyer Study
  39. 39. Millennials Moving Toward Mobile 2008 2008 2008 52% of Millennials preferred to bank at Branches or ATMS 25% 2012 25% of Millennials preferred to bank online 45% 2012 of Millennials said mobile was their preferred channel 15% 2012 0% Source: American Bankers Association, A18-34 preferred banking methods
  40. 40. But What is Face-to-Face These Days?
  41. 41. From Surfer to Sale….
  42. 42. You seem to need more information on term life insurance. Would you like help calculating how much you need? Click here for more information.
  43. 43. Leverage technology to issue in real-time
  44. 44. MetLife Partners With Walmart to Sell Life Insurance in Stores
  45. 45. “If you are in the way of a steam roller, either get out of the way or become part of the road…” Phil Billingham, strategy consultant at IFA support provider Threesixty
  46. 46. Bradesco using POS machines to sell life insurance
  47. 47. Employees Prefer Buying at the Workplace Employer Agent or Broker Insurance Company Internet No Preference Life insurance 44 15 19 4 17 Disability insurance 58 9 13 4 17 Long term care insurance 78 12 16 4 20 Dental insurance 65 5 11 4 15 Vision care 63 5 12 4 17 Source: What is $1 Billion an Hour Worth?, LIMRA (2011)
  48. 48. Who has the data?
  49. 49. NY Life Launches Regional Pilot to Generate Leads for Producers through AARP Pilot was so successful that NY Life launched a nationwide campaign this year.
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