Insurance advisors struggle constantly with shaking off the preconception among potential clients that advisors are commissions-driven salespeople. And those advisors surveyed for this year’s Insurance Advisors’ Report Card say that task is becoming increasingly more difficult because of the limitations they face in making objective choices for clients.
“Many people still think of us insurance guys as greasy salesmen,” says an advisor in Ontario with London, Ont.-based Freedom 55 Financial. “It can be an extremely daunting task to change that [perception] when you can’t offer a client something the competition can just because it’s not in your company’s policy [to do so].”
In fact, advisors with five of the insurance firms rated their firm substantially lower this year in the “freedom to make objective product choices for clients” category – that is, at least half a point lower – causing the overall performance average in that category to fall by the same margin.
Many advisors with Freedom 55, like their counterparts at the other dedicated sales agencies, say that even though they are able to offer third-party products to clients, they’ve still felt pressured by their managers to focus on what’s available in-house.
Firm’s proprietary focus
“There’s a suffocating proprietary focus of the firm,” says a Freedom 55 advisor in Atlantic Canada. “You have to fill out a ton of paperwork when you offer third-party products. And, if you offer too many of them, your manager will call you in and have a talk with you. That’s definitely not the way to put clients first.”
In response to such criticism, Mike Cunneen, senior vice president of Freedom 55’s wealth and estate planning group, says advisors are in no way micromanaged in the way they do business. Still, he notes, the firm operates as an exclusive distribution channel; thus, there are advantages – and limitations – to doing business in that manner.
“Our products are sold exclusively through our advisors,” Cunneen explains. “They cannot be purchased through the independent channel. That’s really a distinct advantage for our advisors and sales force. We have our proprietary products; we have third-party life products; we have third-party mutual funds – but they’re all on our shelf. They’re put on the proprietary shelf through us. What advisors are not allowed to do is to sell through an MGA [managing general agency] and distribute our exclusive products.”
For some advisors, like those with Winnipeg-based Great-West Life Assurance Co. (GWL), the pressure to sell certain products may not be as explicit as it may be in firms with a formal corporate policy. That said, GWL advisors cite constant emails, memos and meetings focusing on selling in-house products vs external offerings, and they note they strongly disagree with how one product is promoted over another.
“We get reminders all the time about selling our in-house products,” says a GWL advisor in Alberta. “I don’t like the fact that it feels like they keep trying to ram them down our throats.”
But Hugh Moncrieff, senior vice president of GWL’s Gold Key distribution network, says the firm considers its advisors to be completely independent: “Obviously, we prefer that advisors sell our products, and we promote those products and features very strongly because we believe in them. But our advisors are free to sell whatever product that they’re licensed to sell. There are no barriers to offering any kind of product.”
Objectivity among mgas
And although advisors who do business with one or more MGAs say one of the best parts of being an independent agent is the freedom to do business the way they choose, these advisors also say they sometimes have doubts about just how much of an emphasis MGAs put on objectivity in the product-selection process.
“I wouldn’t exactly call our analysis tools objective,” says an advisor in Alberta with Woodbridge, Ont.-based MGA Hub Financial Inc. “You input the data and sometimes the suggestions you get are questionable. I’ve had results in which a client would’ve had to pay an unreasonably high premium for not a lot of coverage. It makes me wonder just how objective the recommendation process is, as there are often much better choices out there.”
But John Lutrin, Hub’s executive vice president and chief marketing officer, defends the process, noting that there are no biases whatsoever in the recommendations – and that more than just the cost to the client is considered.
“It’s an objective analysis we provide; it’s a process of elimination for the [advisor], which comes down to one or two scenarios we recommend, based on the client’s merit and suitability,” Lutrin says. “The factors we consider when making our recommendations include: policy price, conversion options, underwriting and the carrier’s level of service. Our priority is objectivity, and every circumstance is different.”
But despite advisors’ dissatisfaction with the way their firms promote certain products, many advisors also say they realize that only they can ensure their clients are getting the most suitable products.
“At the end of the day, it’s really the advisor’s responsibility to make sure clients are getting what they need,” says an advisor in Ontario with Waterloo, Ont.-based Sun Life Financial (Canada) Inc. “Sometimes, it means having to go against your manager or not relying on what products are listed on your screen. People are very smart now, and they can tell whether you’re truly looking after their best interests.”
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