A couple of days ago this headline appeared on my google alerts that are automatically shuffled to my inbox. I thought sure this is a mistake.
But no, it’s not…here’s a link to the story so you can read all about Quiet Company’s grand plan.
The official word from Mother Mutual is that they had a banner year for recruiting in 2012, hiring over 5,000 new agents or as they call them “financial professionals”. So, naturally they gotta raise the bar…right?
Goals are meant to be broken.
For 2013 they’ve raised the bar to 5,500 new recruits.
The point of my saying all this is not to beat up on Northwestern Mutual. Fortunately, their agents give us that opportunity quite frequently.
What’s my point?
Here it is…
Do we really need that many new life insurance agents being thrown into the field?
Northwestern Mutual says they are adding to their field force “due to the increasing consumer demand for financial security planning.”
Really?
Does anyone really believe that? We don’t.
Well, maybe we believe part of that statement.
It is true that there is an increased demand for true financial professionals who can assist people with planning. No doubt about that. The demographics of our nation support that argument wholeheartedly.
However, that doesn’t mean by default we need more people to handle the demand.
We need better people to meet the demand.
Brandon and I have been consistently underwhelmed by our competition, insurance company home office staff, brokerage directors, and so called advanced planning departments. Most don't even understand the products they offer. Those that do routinely choose to ignore the best features and offer the products in a way that maximizes the commission.
I’ve probably alienated a great many people who frequent our blog but it had to be done, I had to say it.
Our industry doesn’t need MORE agents, we need BETTER agents.
What’s more…we need for the insurance companies to reclaim some responsibility for making sure people get some sort of training.
Well, I mean some sort of training other than sales training.
Right now, that’s all a new agent really gets. They get two weeks learning how to call prospects, pitch ideas and most importantly—they learn ABC (always be closing).
httpv://youtu.be/wVQPY4LlbJ4
This has to stop.
I’ve been working for weeks trying to get accurate illustrations for one client. A brief explanation on what an illustration is may help to clarify. For those “in the know” feel free to skip this part.
An illustration is a projection of how a policy will work over time given certain assumptions. Now, each company has their own software that generates the illustrations for their particular products.
In recent years, the companies have gotten very stingy as to who they allow access to that software. Once upon a time, an agent had direct access to the life insurance company he/she was contracted with but today things are different.
Life insurance companies have decided they don’t really want to deal with agents directly. Instead, they want to have agents work through an intermediary, known as an IMO (insurance marketing organization) or FMO (field marketing organization) or a BGA (brokerage general agency). Each one of those is slightly different but it’s like the difference between an Oscar Mayer Weiner and a Nathan’s dog, you could argue why one is better than the other but the ingredients are mostly the same and nobody wants to see how they're made.
This whole arrangement is problematic.
Why?
Because FMO’s, IMO’s, and BGA’s have no incentive to actually know anything about the mechanics of life insurance. They are sales organizations, that’s it.
So, now they've (insurance company) placed a layer of people between us who have no clue what I’m talking about. As a matter of fact, I have to train them on how to do what I want. An epic waste of time.
That’s right.
I now have to train someone who doesn’t work for me but does get compensated on my sales on how to use your software to generate illustrations for YOUR company.
Gee thanks for making my life a little easier. Can you detect my sarcasm?
Example: Monday afternoon, January 7, 2013, I sent an email to a BGA that I work with to get several illustrations for a client meeting I have on, Friday, January 11, 2013. I followed their procedure for doing this, provided more than adequate details, followed up with a phone call. Normal procedure is that these are promised to be turned around in 24-48 hours. It’s now 72 hours later (I’m actually writing this on January 10th) and I have gone back and forth with one person three times, then another person got involved and now I’m on my third person at the company.
And guess what?
I get to repeat myself every time. It’s as if none of us even speaks the same language. Have you ever been on the phone with your cable provider’s tech support? Kind of like that. You get to start over with every person you talk to.
Oh yeah, I’ve yet to get an illustration that represents what I’ve asked for. I’ve been forwarded six different iterations and they’ve all been wrong. Not just slightly incorrect, completely wrong. So wrong in fact, that it’s completely evident to me that the people who are forwarding them to me aren’t even looking at them before sending them over.
What’s worse?
I can tell by the forwarded email chain that these illustrations are actually being run by staff at the insurance companies' home offices (i.e. the insurance people hired by the insurance company to present/design their products don't know how to do it).
Now let me bring this back to what I was originally ranting about.
Our industry doesn’t need more people to handle the growing demand of consumers in our market. We need agents or financial professionals that actually know what they’re doing, are honest, and are willing to put the needs of their clients ahead of short term financial gain for themselves.
We also need for the insurance companies themselves to stop abdicating responsibility for training. I don't know about you, but if I was going to let someone sell my product, I'd make damn sure they actually knew what they were talking about.
I’m not suggesting we work for free. Far from it actually.
Brandon and I like to run a profitable business and we are fortunate in that regard. But we credit our success with the fact that we always do our best to give our clients exactly what they want and precisely what they need. And if we think an alternative is better for them, we’ll let them know that as well.
Most importantly, we give away a lot. We really focus on providing value, making sure that our clients are 100% comfortable with what they’re doing. It’s not our goal to obfuscate the mechanics of their policies.
Quite the opposite. We make it all transparent to them before they make a decision.
There are so many anecdotes I could share with you regarding the blatant obfuscation of facts by agents regarding policies they’ve sold or are attempting to sell to clients. If you want to read more about that specifically, I encourage you to read, Brandon’s piece The Third Dimension of Cash Value Life Insurance.
After you read that, you’ll understand why even the agents who are currently top sales performers are doing it all wrong. They just don’t get it. And frankly we’re sick of it. Companies like Northwestern Mutual should step up to the plate, train agents on how to best use their products to help their clients, require some degree of product knowledge (and I don’t mean being able to recite the bullet points in the sales brochure without looking) before turning them loose on the public.
Until then, we’ll just keep preaching the gospel and taking business away from them.
Furthermore the companies should completely do away with IMO's, FMO's and BGA's. We don't need them. And by “we” I mean agents who actually know what they're doing.
If you feel like you bought a policy that’s not exactly living up to the promises you were sold on or if you’re considering a purchase, please reach out to us, we’re glad to help. If what you’ve got is good, we’ll be the first to tell you to stay put.
I work for a BGA and agree that agents who really know what they are talking about like Brandon and yourself don’t need us and if you do then we had better know what we’re talking about. Where I think we can do some good is to your point that most “financial advisors” don’t know what they’re talking about when it comes to life insurance. We (BGA’s and sales support who know what we’re doing) can help agents avoid mistakes they don’t know they’re making and show them concepts they don’t know they should/could be selling. About a quarter of our revenue comes from our policy review program where we help fix other agent’s mistakes and I feel that is an honest and valuable service to the agents and policyholders who were sold on dreams and not facts.
The reason they need to hire 5500 agents this year is the amount of people that they roll through their “training” every year. Bring in their 200 names, sell to family and friends and then they wash out of the business. Throw them against the wall and see what sticks.
Not an encouraging situation to say the least. I’d say the only real chance of fixing this is to turn heads by doing things right AND outselling the pants off everyone else in the process. The toughest nut to crack may be showing how this can generate MORE profit. As you and Brandon mentioned before, such practices as blending significantly lower commissions. Thus, at least those in the middle are likely to resist. I don’t know how company profits are affected but there may be some resistance there also if margins are lowered.
Notice I have not said a word about what is best for the consumer. While this is always my own first consideration, and yours I believe, we all know there are many who are loathe to let the interests of the client to stand in the way of that shiny new doodad they’ve got their eye one.
However I’m convinced that what is best for the client will always turn out to be best for everyone in the long run.
One more observation that, as the new guy on the insurance block, takes me out on a bit of a limb i.e. I may be totally wrong on this but…
My understanding is illustrations are the responsibility of the insurance company. At least, if I remember my VA exam materials correctly, as an agent, I am to present the illustration exactly as it is and not change anything. That said, would it not be in the insurance companies best interest for agents to generate illustrations that accurately reflect our design parameters?
If so, it would seem to follow that forcing FMOs, IMOs, and GMAs between agents and companies put these normally conservative organizations at risk.
Andy
Brantley-I applaud this message regarding hiring a huge group of rookies to handle helping America get “financial advice”. This is only NML’s effort to sell more whole life insurance to the unsuspecting. Better trained Agents and Advisors following the proper processes is clearly key.
I am in process of completing a book we intend to publish that shares the same underlying concerns. Once ready I will notify you guys and see what you think.
Take care.
Mike