LIMRA and McKinsey & Company recently released a study about distribution in the life insurance industry. The study, surveyed more than 1,200 advisors last year across a broad range of distribution channels to identify the challenges facing the industry.
“Advisor-based distribution is under stress,” said Vivek Agrawal of McKinsey, a member of the team that conducted the study. “The number of advisors has remained stagnant and their average age is on the rise. While advisor income has grown over the past four years, drones for sale & stagnant sales and the shift toward investment products, with their lower margins, have put pressure on carrier
“Our research with McKinsey pinpoints a number of concrete steps that companies can take to overcome these challenges and increase the success of their advisory distribution,” said Pat Leary, LIMRA analyst and also a member of the research team. “Companies can use this information to enhance productivity and retention among financial advisors.”
According to InsuranceNewsNet, the LIMRA/McKinsey study identified five areas of critical importance:
- (1) Education and the right experience matter when recruiting advisors. According to the study, advisors with a higher education (at least a Bachelor’s or Master’s degree) earn approximately 40 percent more than those without it.
- (2) Launching advisors into team-based practices is by far the most important factor in their success. The LIMRA/McKinsey study reveals that advisors placed in team-based practices are 10 times as likely to succeed. This factor was the single most important predictor of advisor success, eclipsing even the impact of the individual’s attitudes.
- (3) Tailoring the services they offer advisors can help home offices achieve enhanced productivity and retention, as well as significant cost savings.
- (4) Ensuring that field managers provide the support services that advisors value most improves a carrier’s offering. According to the study, field managers are investing their time in those support services that advisors value least.
- (5) Migrating experienced advisors who have been operating as solo practitioners to multi-advisor teams can significantly increase the likelihood of their success