Insurance advisors as a group, much like their brethren in all other channels of the financial services industry, are aging. And, as a result, the importance insurance advisors place on succession planning is also increasing.
The average age of the advisors surveyed for this year’s Insurance Advisors’ Report Card is 48.7 — more than a year older than 2009’s 47.6 and almost two years older than the 2008 average of 46.8. So, it’s no surprise that advisors rated the importance of their firms’ succession program at 8.4, half a point higher than the 7.9 rating in 2009.
And as advisors are now paying more attention to this area, they said their firms could do more, in terms of creating formal succession programs. In fact, an advisor in Ontario with Toronto- and Calgary-based PPI Financial Group Inc. said the industry needs to “wake up to the fact we are getting old … and that we need to deal with succession planning in a better way.”
Perhaps there’s no firm answering that call better than Waterloo, Ont.-based Sun Life Financial (Canada) Inc., as its advisors rated the firm highest among the dedicated sales agencies in this year’s survey in the “firm’s/MGA’s succession/retirement program for advisors” category, with a rating of 8.6 — a half-point increase from 8.1 in 2009.
Sun Life advisors praised the firm’s succession program for its quality and clarity. Says an advisor in Alberta: “[The firm] guarantees to buy the business from you when you retire.”
Sun Life helps advisors who are planning to retire partner with another advisor who will eventually take over the book of business. In some cases, an associate advi-sor — who will eventually buy the book from the retiring advisor — is hired. Says Vicken Kazazian, Sun Life’s senior vice president, career sales force: “We have a very good succession program because it is tied to compensation … Sun Life is a guaranteed buyer of the [book].”
Another firm that saw an increase in its succession planning rating is London, Ont.-based Freedom 55 Financial — albeit by only 0.2 of a point, to 7.4 from 7.2 in 2009.
That firm has recognized the increasing demand from its advisors for succession planning. “We’ve invested a lot of time and effort into it,” says Mike Cunneen, senior vice president of Freedom 55 and its tax and estates planning group. “A lot of it is advisor-driven, but we have spent a lot of effort over the past few years working in a more structured type of program to provide coaching to advisors on succession strategies, creating tools and process for it.”
Freedom 55 advisors have certainly noticed. Says an advisor in Ontario: “[We have stock] options, a share-purchase program, a group RRSP, a pension plan and a planner to assist me. That’s a lot.”
@page_break@However, although the firm’s rating improved, it is the lowest in the category, revealing that more work needs to be done. A Freedom 55 advisor in Alberta noted that “there’s no funding for reps, and [the succession program] seems restrictive.”
Advisors with Winnipeg-based independent direct sales agency Great-West Life Assurance Co. also pointed to funding-related issues as the cause of their disappointment with their firm’s succession program. Its rating fell by 0.7 of a point year-over-year, to 7.9 from 8.6.
Says a GWL advisor on the East Coast: “All the succession [planning support] in the world doesn’t make up for the fact you can’t get the funding for it.”
Although GWL advisors were rather down on their firm’s succession program, Hugh Moncrieff, senior vice president of GWL’s Gold Key distribution network, says the firm has been working on this issue for some time and has had great success with it. He points out the practice-development program is currently being enhanced, which will help advisors attract, train and develop new associates into the business.
As for the managing general agencies in the survey, four out of the five don’t have a full-fledged succession program. However, an increasing number of advisors said they are looking closely at what their MGAs offer in this area as they age — with many admitting they’d like to see a formal program put in place.
But the one MGA that offers a succession program, the Vaughan, Ont.-based Canadian operations of World Financial Group Inc., does, indeed, stand out; advi-sors rated it at 9.1. They praised the plan, which is available to those who reach the “qualified marketing director” level, which in turn is based on achieving certain sales targets.
“When we decide to retire, we own the book,” says a WFG advi-sor in Alberta. “We can continue receiving dividends on the business or sell it. If we pass away, the [firm can transfer it to my] family, [who] can continue receiving dividends.”
Although none of the other MGAs offer a formal succession plan, advisors with Woodbridge, Ont.-based Hub Financial Inc. say it is a growing priority — they gave it an importance rating of 7.8, much higher than the 5.9 importance rating they gave in 2009.
Although Hub advisors say there’s no formal succession plan in place, the firm does offer some support. Says an advisor in Alberta: “They are on top of it and realize that older advisors need to have a plan in place.”
In order to do that, Hub offers a “new broker school,” to which existing advisors bring future advisors so the firm can train them on the essentials.
Hub has also been proactive in helping retiring advisors on a case-by-case basis, says its president, Terri DiFlorio: “There are a couple of instances in which we put brokers together, where one is looking to buy and one is looking to sell and transition out of the business.”
IE