MGAs earn accolades from their advisors: Includes main chart

Advisors affiliated with the four MGAs surveyed this year lauded their MGAs’ efforts, sending their overall scores higher. Dedicated sales agents, however, were not as generous with their carriers. (See table on page 20.)

The MGA model is one that advisors are quick to compliment. Not only do advisors at MGAs report a noticeably smaller number of households served per advisor and higher compensation than dedicated sales agents (see story on page 1), they also say the independence and freedom of product choice offered at MGAs are top-notch.

“Not only is IDC Financial Inc. focused, but it communicates to us and talks to us about its goals and targets,” says an advisor in Ontario with Mississauga, Ont.-based IDC, which tied with Toronto-based World Financial Group Inc. for top spot in the survey. “Its business plan actually means something.”

Advisors at MGAs also handed out higher scores in categories related to support services, which implies that these firms are realizing that they have to spend more dollars in order to retain advisors and attract new ones.

“When people want independence, it can also become a very lonely business,” says Ron Madzia, IDC’s president. “So, we work hard at giving our advisors a home. They feel like they belong to this place.”

IDC, a newcomer to this year’s Report Card, provides its advisors not only with support for insurance planning and high net-worth clients but also seminars on how to run a successful client education or appreciation event. IDC also runs sales campaigns and rewards programs to ensure affiliated advisors have a chance to be recognized.

Both Woodbridge, Ont.-based Hub Financial Inc. and WFG stood out this year. Advisors at both MGAs awarded higher scores, lifting their firms’ IE rating by 0.6. And in just two years, Hub has moved off the bottom rung in the Report Card and into the top four this year.

Hub advisors seem to be a much happier bunch; they gave the firm increases of at least half a point in 11 of the 19 categories in which advisors with MGAs were asked to rate their firm — the most of any firm in this year’s Report Card, including the dedicated sales agencies.

Dedicated sales advisors were asked to rate their firms in 28 categories.

“The firm has experts on hand from whom I can get help anytime,” says a Hub advisor in Alberta.

Adds a Hub advisor in Ontario: “It’s a growing organization that knows what it’s doing and knows what it’s looking for in the advisors it works with.”

Consolidation among MGAs has been rampant in the insurance industry in the past few years. In many cases, the merged firms have enjoyed economies of scale that have reduced costs and freed up money to be spent on support services and compensation for advisors. That may account, to some extent, for the upswing in numbers at the MGAs, as could the sense of stability that grows among advisors in the years following a merger.

Hub, one of the MGA giants within Canada, is a case in point. Over the years, Hub has acquired a number of smaller MGAs — Victoria-based TILCO Financial Services Ltd. in 2004; Vancouver-based Independent Brokerage Group Inc. in 1998; and Edmonton-based Affinity Brokerage Group and London, Ont.-based Brokerage Underwriting Services Inc., both in the late 1990s.

While the acquisitions have fuelled Hub’s growth, the firm may not have won over advisors.

“Any firm needs to work hard within the first two years of an acquisition,” says Byren Innes, senior vice president and director with insurance consultancy NewLink Group Inc. in Toronto. “You need to retain your advisors as well as make an impact on the ones you just brought in. It is obvious that post-merger satisfaction levels will decrease; but, eventually, they will start to rise again. Hub is one of those firms whose scores we will continue to see rise as time goes on.”

Although post-merger satisfaction may be a key reason for Hub’s increased scores, Toronto-based PPI Financial Group Inc. — which came in second behind the top two firms with an IE rating of 8.7, a 0.4-point rise over last year — saw its IE rating increase for other reasons.

@page_break@When asked what the best aspect of the firm was, one PPI advi-sor in Alberta says it was the fact he has contractual rights to complete ownership of his book of business, and that the firm provides education on the issue of succession planning if he wants to buy another book or sell his own.

“PPI’s focus is the reason I’m in business,” says another PPI advisor in Alberta. “It is always coming up with new and innovative ideas, including products. You are an equal partner with PPI, and it is willing to work with you.”

Advisors with IDC, which has 1,200 affiliated advisors and plans to continue growing by 250 to 300 advisors a year, feel much the same. The MGA attracts advisors because of its strong focus on relationships, Madzia says: “We work really hard at building relationships with our advisors. I don’t mean the ‘pat on the back, take you golfing’ relationships. I mean a relationship that provides advisors [with] opportunities to expand and grow their practices.”

Although it’s evident advisors at the MGAs were happy with their firms, the sentiments were more mixed on the dedicated sales side of the insurance industry. And even though the insurers’ big brand names consistently earned positive comments from the dedicated sales agents, it wasn’t enough to make the agencies shine.

An advisor in Alberta with Mississauga, Ont.-based RBC Life Insurance Co., a subsidiary of Royal Bank of Canada, made note of a little sibling rivalry, complaining that the parent bank considers the support services offered to its brokerage arm, RBC Dominion Securities Inc., to be more important. “RBC Life needs to improve support for the advisors, especially in the back office,” he says. “It is very inconsistent.”

RBC Life, also a new entrant in this year’ Report Card, received the lowest score of the nine firms surveyed in the back office and administrative support category, even though its advisors gave the category a 9.1 in importance.

Like Hub, RBC Life is the product of a decade of mergers and acquisitions — which could explain the problems advisors are finding with its operations. In 1997, Toronto-based RBC Life bought the Canadian operations of Mutual of Omaha Insurance Co., then went on to acquire Westbury Canadian Life Insurance Co. and Unum Provident Canada.

One step that RBC Life has already initiated is bringing the different systems together, not only to increase efficiency but also to put all advisors on the same page.

During the past three years, RBC Life has made a significant investment in building up its individual insurance administrative platforms, says John Young, president and CEO of RBC Life: “We had quite a number of administrative systems around the company. And now, with our new program, our intent is to move away from many of those legacy systems and bring the business together.”

But RBC Life was not the only dedicated sales agency that has some disgruntled advisors. Agents at London, Ont.-based Freedom 55 Financial rate their firm lower by at least half a point in nine categories, including total compensation, support for insurance planning and back office and administrative support.

“It’s too big of a company,” says a Freedom 55 advisor in Ontario. “Everything costs money. There’s a charge for everything you want to do. Services that don’t require compliance are limited.” IE