As the average age of advisors surveyed for the 2006 Insurance Advisors’ Report Card increased to 48 from 47 in 2005 — with only 4% of advisors in their 20s — insurance firms are using a variety of approaches to attract and retain new talent.
The most common method is referrals from existing advisors. Vaughan, Ont.-based World Financial Group Inc. — whose agents are younger than average — employs a “network marketing” business model, says president Richard Williams.
Almost all the firm’s new advisors are first brought in as potential clients. They are typically family members, friends or acquaintances of existing WFG advisors. But these individuals usually don’t have backgrounds in financial services.
So, while this may be an effective way of attracting new people, some survey participants say it doesn’t always mean getting the best candidate for the job. “Anyone can get into the business,” says an Ontario advisor, while a colleague complains about WFG’s inability to “attract quality people.”
PPI Financial Group takes the opposite approach to recruiting. “We tend to be fairly selective when it comes to inviting advisors,” says PPI chairman and CEO Jim Burton, “based on the type and amount of business they are doing.”
The result is that PPI advisors tend to be older, averaging 54 years of age. They have also been working in the industry for an average of 26 years.
The Co-operators Group Ltd. has 440 agents, but it is looking to expand that to 500 over the next five years, says Jim Wingrove, director of agency and sales support: “The fact that we are a multi-line insurer provides a diversity of income flows that other organizations don’t have or can’t offer.”
Wingrove also says the firm promotes its ranking among the top 50 Canadian employers in Report on Business magazine’s annual survey and its 100% Canadian ownership to attract potential advisors and keep existing ones. “The agents that are leaving the organization, frankly, are doing so because they are retiring,” he says.
But retention rates are also high at firms such as Co-operators because the company owns the advisor’s book of business. As a result, some advisors feel stuck. Co-operators’ advisors gave the company a 3.6 in freedom to move firms in this year’s Report Card, vs the average of 6.1. Other companies that scored low in that category were Freedom 55 Financial, with a 5.0; Clarica Financial Services Inc., with a 3.8; and State Farm Insurance Cos., with a mere 2.2.
“There is no moving firms,” says a State Farm advisor in Ontario.
“Leaving State Farm is kind of like getting a divorce, except you don’t get half,” a colleague in Alberta adds. “You pack a suitcase and a bit of cash, and that’s about it.”
Pete Karageorgos, public affairs supervisor at Aurora, Ont.-based State Farm, estimates about a 90% retention rate for advisors who have worked at the firm for a few years. “We have a recruiting department,” he says. “We usually don’t solicit people who are already advisors and ask them to come over. We advertise, we appear at career fairs, we’re open to referrals. We typically work with [advisors] and track them when they’re new.”
At London, Ont.-based Freedom 55, however, 67% of advisors hired in Year 1 will be terminated by the end of Year 4, whereas 33% “survive and thrive,” says Nick Pszeniczny, senior vice president. Among the firm’s top advisors, the retention rate is almost 100%.
Freedom 55 pays for licensing, making it unique in the industry, according to Pszeniczny, who adds that 80% of advisors come from “warm leads from our current force.”
Even though 93% of advisors surveyed say they would recommend their firm, Clarica might have trouble with this recruitment method, as 22% of its advisors say they wouldn’t recommend their firm or are ambivalent about doing so. But the company’s retention rate “is one of the strongest in the industry,” says Jack Garramone, vice president of the Clarica sales force, who puts the firm’s five-year retention rate at 90%.
Nevertheless, John Lutrin, chief marketing officer and executive vice president of Woodbridge, Ont.-based Hub Financial Inc., sees a real need to recruit younger advisors because the average broker at the firm is over 50 years old. “There is not a lot of youth following them into the industry, so we have to train new blood to be the next generation in the business,” he says.
@page_break@Like most firms, Hub relies on referrals from existing brokers to bring in younger people, but “when this dries up, we’ll have to be a lot more proactive and approach schools,” he says.
Advisors in the managing general agent stream have the ability to be flexible. “Given the nature of the MGA industry, people could have moved on to another place without ever telling you,” says Lutrin. IE