“No news is good news” may be the best way to describe Investment Executive’s 2007 Insurance Advisors’ Report Card. With overall scores holding steady from last year, advisors don’t have much to gripe about — but not a lot to shout about, either.
Yet there is one exception: underwriting. Among the 300 advisors at eight firms surveyed by IE‘s research team, many took the time to tell tales of delays, detours and even lost clients. But even this isn’t news to the insurers and MGAs, who say they are doing their best to fix the problem.
Generally, however, advisors gave good scores to the firms with which they do business. Toronto-based World Financial Group Inc. landed in the top spot again this year with an average overall score of 8.6 (see table, page 20). The firm focuses mainly on the middle market, one that president Richard Williams says has been “very much underserved in Canada.”
World Financial advisors share his conviction; they praise the firm’s “no family gets left behind” mentality, saying they feel as if they are really making a difference in their clients’ lives. “We’re focused on recruiting and growing the business, and we are taking the time to help middle-income families free up their money and become financially stable,” says a World Financial advisor in the West.
“The best thing about World Financial is definitely its leadership,” says another of the firm’s ad-visors in the West. “We are out there trying to make a difference for people. We have a great mission.”
Williams describes the firm — which is part of the Netherlands-based Aegon Group — as a hybrid: it acts as part MGA, part career distributor. “Our field force has the independence to sell any product and service it feels is right for the client, but with the support and backing of a very large parent,” he says.
With more than 3,500 advisors who sell everything from mutual funds to all lines of insurance, the firm is looking to grow to 5,000 advisors by the end of the year. Much of that growth stems from the very clients the firm serves: middle-market Canadians.
“We are a little different than the traditional industry, and that difference has given us a huge competitive advantage over organizations that have not been able to grow as quickly as we have,” Williams says. “We don’t just focus on people who are in the business right now; we focus on people who are brand new, people who have not worked in this field before and are looking for a career change.”
Also on the MGA side, Toronto-based PPI Financial Group Inc. held on to the No. 2 position despite its overall score slipping to 8.3 from 8.5 last year. Chairman and CEO Jim Burton classifies the firm as a full-service operation that has in excess of 200 salaried employees — including an array of actuaries, tax lawyers, accountants and administrative staff — to support the advisors who do business with it.
Many PPI advisors say competing firms may offer better compensation, but the MGA’s outstanding support services more than make up for this. “It is more about the value of support services that I get than what my actual compensation is,” says a PPI advisor in Toronto. “I combine the whole package and look at it as an overall benefit. Some places may pay more but they lack support.”
London, Ont.-based Freedom 55 Financial, a division of London Life Insurance Co., scored the most significant increase, placing third in the overall running and landing the top position among insurers with dedicated sales forces. In 11 categories, the firm’s scores were more than 0.5 points higher this year than last — most notably, in corporate culture, consumer Web site and online account access.
With more than 3,000 advisors, Freedom 55 has been busy rolling out its new online account access for clients, as well as upgrading its proprietary technology program to include electronic order entry, which allows advisors to send in orders online. “We are always updating our technology; we’re always making sure it’s market-competitive,” says Nick Pszeniczny, senior vice president of wealth and estate planning for Freedom 55. “We’re always making sure it satisfies the needs of our advisors and that it provides information on their clients in a timely fashion.”
@page_break@Firms with dedicated sales forces saw a general upswing in scores for online access for clients, consumer Web site and branch management. In terms of what they say is important to their business, they gave the highest importance scores to firm stability and ethics, firm’s delivery on promises, product choice and product offering.
Despite the dedicated sales agents ranking their freedom to make objective product choices a solid 8.8 rating overall, some agents were vocal about their limited ability to sell products outside their firms’ offerings.
“We’re pretty restricted when it comes to product selection,” says an advisor in Alberta with Guelph, Ont.-based Co-operators Group Ltd. “I can honestly say we have zero freedom when it comes to that.”
That sentiment is echoed by a Sun Life Financial (Canada) Inc. (formerly Clarica) advisor in British Columbia: “We choose what we want from the Sun Life product offering, but sometimes I’d like to look outside if I feel the product isn’t a good fit for my clients.”
Meanwhile, scores among the MGAs improved for all support services, including tax planning, insurance planning, and wills and estate planning. But the importance scores indicate those categories aren’t nearest and dearest to insurance advisors’ hearts. What independent advisors really value is their MGA’s delivery on promises, which scored 9.4 in importance, firm stability (9.3 in importance) and back-office support (9.2).
Despite middle-of-the-road scores in back-office technology, which encompasses underwriting capabilities, advisors were vocal in describing their firms’ downfalls.
“The back-office timing is terrible,” says a PPI advisor in Ontario. “There is lack of responsibility on certain issues. It doesn’t provide resolutions when it says it is going to. I’ll hound it over and over again, but I shouldn’t have to do that.”
Such frustrations aren’t exclusive to PPI. Advisors of all stripes griped about their firm’s underwriting processes, noting delayed requests, long lags in medical underwriting and painfully slow turnaround in issuing policies.
“Underwriting is the worst aspect of this company,” says a Sun Life advisor on the East Coast. “There are inconsistencies among underwriters. The time I spend talking about underwriting constitutes about 10% of my life.”
The cumbersome “submission to commission” process isn’t only on advisors’ minds. Executives are aware that underwriting and turnaround times are a problem in the industry, and say they are looking for ways to make improvements.
Terri DiFlorio, president of Hub Financial Inc. in Woodbridge, Ont., says the firm recently rolled out a back-office system that allows true data exchange with a number of its carriers. She admits that the back office has been problematic, but says improvements are on the way: “Our goal in a few years is to be able to do real data exchange with all our carriers and really improve the turnaround time on the applications we process.”
Winnipeg-based Great-West Life Assurance Co. has added a life insurance case unit to try to minimize underwriting problems. These cases are identified as ones that require more hand-holding and may take longer to process, says Leander Dueck, senior vice president of individual distribution.
Sun Life, which saw the lowest back-office score (6.9), recently reorganized its underwriting team to enhance the process. “We have brought over one of our most senior leaders to take the responsibility for the operational side of underwriting,” says Jack Garramone, vice president of the career sales force in Waterloo, Ont. “Underwriting has been a challenge, but there are no other companies issuing more contracts than us.” IE