A new approach for Transamerica

The result is a business model that is a hybrid between the independent brokerage model and the career channel, the latter of which has become substantially less prominent recently. Convergis targets advisors who want the best of both worlds: the training, support and sense of community of the career channel, but with the independence of the MGA model.

“It’s a perfect balance,” says Terri DiFlorio, president of Woodbridge, Ont.-based MGA Hub Financial Inc., which has partnered with Transamerica in the program, “between valuing independence and allowing the broker to maintain that independence and providing some of the support that’s necessary, that’s really been lacking since the career channel started to deteriorate. [Convergis] definitely combines the good of the brokerage and career channels.”

It’s a model that’s new to the insurance sector, DiFlorio adds: “This is pretty unique.”

Convergis provides advisors with support in a variety of areas, such as developing a business plan, marketing support and improving efficiency. In addition, a coach selected by the MGA will offer guidance and advice on an ongoing basis.

Through the Convergis website, participants also will have access to the network of other Convergis advisors. In that respect, the program aims to establish a sense of community – something that’s lacking in the day-to-day reality for most independent advisors, says Ray McKenzie, senior vice president of sales and distribution with Transamerica: “Because [many advisors are] independent, they’re sole proprietors, and they’re on their own. Some of them miss that sense of community, that sense of network.”

Advisors in the Convergis program will have a slightly different compensation structure than most insurance advisors. The agreement incorporates long-term incentives that are designed to reward advisors who achieve growth in their practice over time.

Says DiFlorio: “The contract’s been written to attempt to put some long-term value in the contract, so that everybody is winning.”

Advisors participating in Convergis will have to surrender some of their independence in order to benefit from the support the program offers, as they’ll be encouraged to conduct most of their business through Transamerica and the MGA they join. But advisors still will have more freedom than they would in the career channel. “They still have the opportunity, where necessary, to do business outside of Transamerica,” McKenzie says. “But the majority of their business would be with Transamerica through their [MGA].”

Advisors participating in Convergis also will maintain their independence, in the sense that they’re not required to make a long-term commitment to the program, DiFlorio says. For instance, if an advisor decides a year after joining the program that it’s not a good fit, that advisor can shift his or her practice back to a completely independent model. “It’s still, very firmly, an independent brokerage model,” says DiFlorio.

The Convergis program is not for everyone. Transamerica does not intend to mass market Convergis; rather, it will rely on the MGAs to identify suitable candidates. “This isn’t for all of our advisors,” says DiFlorio. “In fact, this wouldn’t even be appealing to the great majority of our advisors; but it is appealing to a big number of our advisors.”

Although many advisors enjoy the independence of the brokerage channel, others could benefit from a support system of some kind. “Some brokers are very, very successful,” says DiFlorio, “and have the tools and ability to be self-motivating and seek out what they need in terms of support to advance their practice. And there are others that work much more effectively and efficiently in a different type of environment.”

McKenzie describes the ideal Convergis advisor as someone who has ambitious growth plans, sees benefit in being part of a community of like-minded individuals and is comfortable working “primarily” with one carrier and distributor.

Although the Convergis program is designed for established insurance advisors, Transamerica plans to expand it eventually to cater to rookies. That second phase of the program will aim to help new advisors get their start in the insurance business as part of an effort to attract new talent into the industry.

Although many carriers and MGAs offer some training for new advisors, what they offer generally is less comprehensive than the support previously offered by career companies – which DiFlorio says, has left a gap in the industry.

“Without the ongoing support, it’s tough to be successful,” she says. “Convergis will provide [advisors] with that support.”

© 2012 Investment Executive. All rights reserved.