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In an industry that prizes independence, the happiest advisors can be found at firms that offer the best support with the fewest strings. But there is more than one road to success. The top firms in this year’s Insurance Advisors’ Report Card have earned rave reviews from their advisors with three distinct approaches to running an insurance distributor.

“I’m in business for myself, but not by myself,” says one satisfied advisor at this year’s Report Card champ, Equinox Financial Group Inc. — a network of 1,500 independent agents owned by Manulife Financial Corp.

“We have independence, with all the support of working for an agency,” says another Equinox advisor in the Maritimes.

State Farm Canada and Great-West Life Assurance Co. agents also say their firms are successfully striking a balance between independence and support. “We have the freedom and independence to run our own businesses, with the products and services we need to serve our clients,” says a State Farm advisor in Alberta. The firm has a captive agency force of 450 independent contractor agents.

“The Gold Key contract is the best contract of its kind in Canada,” boasts a Great-West Life advisor from the Prairies, who is one of 1,250 agents who have signed
“independent” contracts with the brokerage-style firm. “It provides a balance between objectivity in the market and the services agents need.”

There is no doubt that Equinox, State Farm and Great-West Life are all doing something right. However, aside from a happy advisor force and the shared desire to simplify the process of selling insurance, there are few things these three firms have in common.

“Our model is not similar to many others,” says Daniel Dessureault, general manager of Toronto-based Equinox, which has contracts with 36 independent insurance agencies. “By joining the network, agencies are given access to tools, solutions and services to help them with their profitability and productivity.”

An Equinox contract buys an agency entry to one streamlined process for accessing insurance-licensed products from the firm’s four affiliated suppliers: Manulife, RBC Insurance, AIG Life Assurance Co. of Canada and Standard Life Assurance Co.
There is one contract, one commission grid and one software application that runs the quotes from all four carriers. Additional support, such as the new VirtGate back-office system scheduled to roll out this summer, is available on a fee-for-service basis. Agencies are responsible for hiring advisors and for other office expenses.

“We want to simplify the processes so advisors have more time to spend face to face with clients,” says Dessureault.

It’s working. Equinox advisors gave their firm first-place scores for compensation (8.7), quote and information systems (9.0) and sales support (8.5). “They’re great people who make doing business easier,” says a New Brunswick-based agent.

Equinox doesn’t offer mutual funds, but, although the firm encourages its agents to run business through the four affiliates, there is nothing to stop agents from sourcing a product elsewhere. “That’s out of our control,” says Dessureault.

It’s a different — but nonetheless successful — story at second-place State Farm, at which agents can sell only proprietary products. “We feel this benefits the customer because there are no competing demands from various companies,” says Derek Fee, the Toronto-based firm’s senior public affairs specialist. “The agent can focus on what is best for the customer.” He notes State Farm is first and foremost a property and casualty company with a burgeoning focus on financial services. Its mutual funds arm, State Farm Investor Services (Canada) Co., is a partnership with AIM Funds Management Ltd.

The services State Farm provides to its agents differ from Equinox’s system. “We set up their offices,” says Fee. “We also roll out new computer systems on a three-year life cycle.” After that, agents can opt for fee-for-service perks, such as access to a 24-hour call centre. There may be additional costs associated with some equipment provided, and all advisors pay their assistants and support staff.

Fee says advisors find value in State Farm’s proposition, and the numbers in this year’s Report Card back this up. State Farm placed first in nine “important” categories (see table, above), including legal and compliance (9.5), back office (8.2), support for insurance planning (8.8), client account statements (8.2), Web tools for advisors (8.4) and prospecting materials (8.6). “State Farm is willing to support the agent in any
way it can,” says an Ontario advisor.

@page_break@When it comes to independence vs a captive/career agent model, third-place Great-West Life takes a middle road. “When you join Great-West Life, you become important to us,” says Leander Dueck, the firm’s senior vice president of individual distribution in Winnipeg. “But if you use different manufacturers, you dilute that leverage.”

The firm offers life products from Great-West Life, Sun Life Assurance Co. of Canada and Manulife, along with Great-West Life living benefits, a proprietary shelf of seg funds and both proprietary (through London, Ont.-based Quadrus Investment Services Ltd.) and third-party mutual funds. “We want to make it easier for the advisor to do business with us,” says Dueck.

In doing this, the company has 26 resource centres with marketing and product specialists for its four lines of business, along with a team of tax- and estate-planning specialists and private wealth counsellors for high net-worth advisors. A new advisor portal, Your Key Connection, includes order entry for seg funds, sales ideas and client information.
Downloads are available for advisors using outside vendors. “It has everything under one roof,” says an advisor in Nova Scotia.

The remaining companies surveyed in this year’s Report Card — The Co-operators Group Ltd., Clarica Financial Services Inc.
and Freedom 55 Financial — aren’t doing anything radically different than the top three firms. But they also aren’t doing anything radically right, either.

Fourth-place Co-operators, with 450 captive, self-employed, exclusive-contracted agents, bills itself as the “better version” of State Farm’s model, according to Jim Wingrove, director of the agency department at the firm’s Guelph headquarters. “We can offer the client a variety of product lines,” he says.

Co-operators offers auto, home, farm, commercial business, travel and life insurance, as well as mutual fund products through Investia Financial Services Inc. and disability insurance through Federated Agencies Ltd.

Co-operators’ agents pay to run an office, including hiring a support team of associate agents. “Our average agency has a principal agent and a staff of four or five,” says Wingrove.

Technology costs are split between the firm and advisors, but the current platform is a source of ire. “It’s a dinosaur,” says an Ontario advisor, although Wingrove says the firm recently upgraded from an OS2 platform to Windows.

Fifth-place Clarica is another firm of independent contracted agents with an exclusive distribution channel. But, unlike State Farm, its advisors complain about lack of freedom. “We’re not free to do what’s best for the client,” says an agent from the West.

“There is pressure from head office to achieve unattainable goals,” adds a colleague in Central Canada.

It’s not surprising that Clarica advisors gave the firm the lowest score (4.3) for freedom from pressure to sell proprietary products.

The firm offers insurance from Sun Life and products through marketing treaties with RBC Insurance, Great-West Life and Transamerica Life Canada. Mutual funds are available through Clarica Investco Inc.

Jack Garramone, Clarica’s president in Waterloo, Ont., says his firm offers “industry-leading training and development,” with 40 estate- and financial planning specialists on staff and 300 sales managers who assist with market development.

Proprietary products are also a burden for Freedom 55 advisors, another exclusive sales force. “They want us to sell only products they make a profit on,” says a Western agent. Advisors sell London Life Insurance Co. insurance, as well as products available through relationships with Manulife, Sun Life and Great-West Life.
“We treat all four firms’ products the same in our advisor-recognition programs,” says Nick Pszeniczny, London Ont.-based Freedom 55’s senior vice president.

Chargebacks are another frustration (with a category-low score of 6.1) for Freedom 55 advisors, who ante up for office space, marketing support, benefits and technology.
Undoubtedly, some of that cash went toward a new advisor portal that launched this year.
“Everything about our processes, our tools, our compliance — you name it — is in this portal,” says Pszeniczny. “We’ve spent millions on it.”

At least one agent wishes the company hadn’t. “They charge us as if we were self-employed, but manage us as if we were employees,” bemoans the West Coast agent.

And therein lies the rub. This Report Card proves a firm can rate highly with its advisors whether it is captive, independent or a combination of the two. But striking a balance between freedom and support is the shortest route to success. IE