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.
“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