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LIMRA INSIGHTS

Turning To Teaming To Get The Job D

For years, the insurance companies have grappled with the problem of developing and maintaining an effective distribution strategy to help them reach their targeted market. But as the world changed, the traditional insurance agent who was affiliated with one company was not necessarily the best business strategy for every company. Some companies turned to independent agents or advisors, brokerdealers and banks - or some combination of these - to meet their distribution needs.

Nonetheless, every company is feeling the crunch as current producers across the board are getting older and approaching retirement, and recruiting qualified candidates has become difficult. Over the past 10 years, the net growth of the insurance industry's sales capacity has been flat.

In a 2008 LIMRA producers' study, more than a quarter of producers said they wanted to retire within the next five years - and nearly 50 percent wish to do so within the decade. Who will be able to fill the gap when these experienced producers retire? Right now, there are not enough new recruits learning the profession to replace the exiting professionals.

Conventional industry wisdom maintains that it takes at least several years for a recruit to become productive. In a collaborative study with McKinsey & Co., LIMRA looked at ways to hasten this learning curve and improve productivity for its younger producers.

One of the most surprising findings was that launching advisors into teambased practices is the most important factor in their success. In fact, this factor was the single most important predictor of advisor success, eclipsing even the impact of the individuals' attitudes.

Of the producers surveyed, more than half employed some sort of partnering arrangement, with 75 percent sharing clients; more than 70 percent sharing revenue; 57 percent sharing sales and marketing costs; and almost one-third sharing operating costs.

Aside from the obvious benefits of leveraging resources and sharing costs, 90 percent of producers in a team-based practice felt they were able to provide for a broader array of clients' needs as a result of teaming.

But what was also very interesting was that more than 76 percent of producers in a teaming arrangement felt that their personal production improved through better mentorship. Could teaming inexperienced producers with their experienced counterparts propel the learning curve and help fill the distribution gap we anticipate?

In order for this to work, experienced producers need to feel that teaming provides some sort of benefit as well. Earlier LIMRA studies identified succession planning as a key concern for producers as they approach retirement. Yet almost 60 percent of all producers indicate that succession planning support is not provided or is worse than the other support services they receive. Without an adequate succession program, companies risk losing their best agents, and possibly their clients. The LIMRA/McKinsey study found that 70 percent of producers thought teambased practices made succession planning easier.

Bottom line: there are significant short-term and long-term benefits to team-based practices for both producers and insurance companies. As the world and, more important, the business environment evolve, team-based practices may be the optimum way to attract new talent, retain experienced producers and better serve the needs of today's consumer.

Patrick T. Leary, MBA, is associate tmanaging director, Distribution Research, for LIMRA. He may be contacted at [email protected] [email protected].


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