News and resources for Canada's top financial advisors
For the MGA to keep the 39% which advisors think they get, the payout rate would have to plummet to 125%. So while advisors still feel MGAs are overpaid, they also remain unaware of exactly how much they are earning.
Despite this antipathy toward sharing compensation, most advisors who use the services of an MGA say they enjoy a good working relationship with them.
In the 2006 survey, 54% say they strongly agree with the statement that they have a good working relationship with their MGA, with another 38% saying they somewhat agree — a 92% approval rating. Only 1% said they strongly disagreed with the statement and 4% disagreed somewhat.
In a similar survey conducted last year, 91% of respondents agreed, while 7% expressed some level of disagreement.
When asked if their MGA provided good value for their share of insurance over-rides and bonuses, 83% agreed — 38% strongly, 45% somewhat so. In the 2005 survey, 34% agreed strongly, while 48% somewhat agreed. The degree to which they disagreed was marked by a shift from strong disagreement to “somewhat disagreed,” although the change was not statistically significant.
The survey found that satisfaction was highest among those advisors who earned between $100,000 and $500,000 from their insurance business, amongst whom 62% said they strongly agreed that they had a good relationship.
Among average respondents, that rate of strong agreement fell to 54%, while among top producers — those earning more than $500,000 — it fell to 52%, possibly reflecting higher expectations for services.
So what services can the MGA provide to justify a bigger slice of the pie? Considering the attitude that they are already overpaid, it might come as no surprise that the most popular response was “nothing.” That’s not to say advisors don’t want more service, but they don’t want such offerings to impact their own compensation.
The most sought after service is training, while improved communications, technical support and administration also ranked highly. Several advisors also said they would like assistance in selling their business when they were ready to retire. Surprisingly, 34% of those who expected to retire in the next five years said they still had no succession plan in place.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(06/08/06)
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Managing general agents in the insurance business still have a long way to go in managing the expectations of the advisors they deal with, according to research presented at the Changing Channel MGA Symposium in Collingwood, Ontario on Thursday.
In a survey of 333 advisors who worked with an MGA, the prevailing attitude seems to be that MGAs offer too little service and take too big a bite out of the advisor’s compensation.
“There is literally nothing that they don’t expect from their MGA,” says Tricia Benn, director of research for the Advisor Group. But at the same time, those advisors surveyed are reluctant to relinquish a greater share of their overrides.
There is a continuing perception that MGAs are already overpaid, with survey respondents overestimating the percentage of compensation the MGA takes. What’s worse for the MGA, advisors have scaled back on the amount they feel the MGA should get.
In the latest survey, advisors said they believe their MGA was keeping, on average, 39% of total compensation, but that they only deserved 27%. Last year, advisors were a little more charitable, saying the MGA deserved 31% of the compensation.
In reality, MGAs are only able to keep 26.8% of total compensation if they offer an override payout rate of 150%. Those with a payout rate of 180% are only garnering 12.2% of compensation.
For the MGA to keep the 39% which advisors think they get, the payout rate would have to plummet to 125%. So while advisors still feel MGAs are overpaid, they also remain unaware of exactly how much they are earning.
Despite this antipathy toward sharing compensation, most advisors who use the services of an MGA say they enjoy a good working relationship with them.
In the 2006 survey, 54% say they strongly agree with the statement that they have a good working relationship with their MGA, with another 38% saying they somewhat agree — a 92% approval rating. Only 1% said they strongly disagreed with the statement and 4% disagreed somewhat.
In a similar survey conducted last year, 91% of respondents agreed, while 7% expressed some level of disagreement.
When asked if their MGA provided good value for their share of insurance over-rides and bonuses, 83% agreed — 38% strongly, 45% somewhat so. In the 2005 survey, 34% agreed strongly, while 48% somewhat agreed. The degree to which they disagreed was marked by a shift from strong disagreement to “somewhat disagreed,” although the change was not statistically significant.
The survey found that satisfaction was highest among those advisors who earned between $100,000 and $500,000 from their insurance business, amongst whom 62% said they strongly agreed that they had a good relationship.
Among average respondents, that rate of strong agreement fell to 54%, while among top producers — those earning more than $500,000 — it fell to 52%, possibly reflecting higher expectations for services.
So what services can the MGA provide to justify a bigger slice of the pie? Considering the attitude that they are already overpaid, it might come as no surprise that the most popular response was “nothing.” That’s not to say advisors don’t want more service, but they don’t want such offerings to impact their own compensation.
The most sought after service is training, while improved communications, technical support and administration also ranked highly. Several advisors also said they would like assistance in selling their business when they were ready to retire. Surprisingly, 34% of those who expected to retire in the next five years said they still had no succession plan in place.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(06/08/06)
|
Managing general agents in the insurance business still have a long way to go in managing the expectations of the advisors they deal with, according to research presented at the Changing Channel MGA Symposium in Collingwood, Ontario on Thursday.
In a survey of 333 advisors who worked with an MGA, the prevailing attitude seems to be that MGAs offer too little service and take too big a bite out of the advisor’s compensation.
“There is literally nothing that they don’t expect from their MGA,” says Tricia Benn, director of research for the Advisor Group. But at the same time, those advisors surveyed are reluctant to relinquish a greater share of their overrides.
There is a continuing perception that MGAs are already overpaid, with survey respondents overestimating the percentage of compensation the MGA takes. What’s worse for the MGA, advisors have scaled back on the amount they feel the MGA should get.
In the latest survey, advisors said they believe their MGA was keeping, on average, 39% of total compensation, but that they only deserved 27%. Last year, advisors were a little more charitable, saying the MGA deserved 31% of the compensation.
In reality, MGAs are only able to keep 26.8% of total compensation if they offer an override payout rate of 150%. Those with a payout rate of 180% are only garnering 12.2% of compensation.
For the MGA to keep the 39% which advisors think they get, the payout rate would have to plummet to 125%. So while advisors still feel MGAs are overpaid, they also remain unaware of exactly how much they are earning.
Despite this antipathy toward sharing compensation, most advisors who use the services of an MGA say they enjoy a good working relationship with them.
In the 2006 survey, 54% say they strongly agree with the statement that they have a good working relationship with their MGA, with another 38% saying they somewhat agree — a 92% approval rating. Only 1% said they strongly disagreed with the statement and 4% disagreed somewhat.
In a similar survey conducted last year, 91% of respondents agreed, while 7% expressed some level of disagreement.
When asked if their MGA provided good value for their share of insurance over-rides and bonuses, 83% agreed — 38% strongly, 45% somewhat so. In the 2005 survey, 34% agreed strongly, while 48% somewhat agreed. The degree to which they disagreed was marked by a shift from strong disagreement to “somewhat disagreed,” although the change was not statistically significant.
The survey found that satisfaction was highest among those advisors who earned between $100,000 and $500,000 from their insurance business, amongst whom 62% said they strongly agreed that they had a good relationship.
Among average respondents, that rate of strong agreement fell to 54%, while among top producers — those earning more than $500,000 — it fell to 52%, possibly reflecting higher expectations for services.
So what services can the MGA provide to justify a bigger slice of the pie? Considering the attitude that they are already overpaid, it might come as no surprise that the most popular response was “nothing.” That’s not to say advisors don’t want more service, but they don’t want such offerings to impact their own compensation.
The most sought after service is training, while improved communications, technical support and administration also ranked highly. Several advisors also said they would like assistance in selling their business when they were ready to retire. Surprisingly, 34% of those who expected to retire in the next five years said they still had no succession plan in place.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(06/08/06)
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