Insurance industry fights graying trend

(March 2007) The insurance industry is in trouble. Brokers are getting older, new entrants to the industry are scarce, products are becoming more complicated, and those left to decipher them in the sunset of their careers don’t care to learn them. Demographers have a word for it: bust.

This is neither sustainable nor healthy for the industry. And it couldn’t have happened at a worse time as Canada’s aging population looks to add to their insurance portfolios. After the industry has let itself go for so many years, there are a few people who think — hope — it’s not too late to turn things around.

Peter Freedman is one of the latest people willing to do something about it. Freedman, a managing general agent and founder of Peter Freedman Life Insurance Brokers Ltd. in Richmond Hill, Ont., is launching a new company called AchieveX Financial Services Inc. this spring. The company will be unique, he says, calling it a pure play sales and marketing MGA. Possibly the one of the first of its kind in Canada.

The company will focus will be on sales development and coaching, both on a business and a sales level, although Freedman says it will do more than that. The emphasis will be on existing brokers — providing them with ongoing training and after-sales support. His approach is akin to turning back the clock.

When Freedman started in the business in South Africa the insurance companies taught brokers a systematic process. But carriers have moved away from maintaining their own sales teams and infrastructure to brokerage sales model which lacks the same infrastructure to provide training, development and recruiting of new blood.

The problem, he says, is that there is an abundance of product on the market from all carriers. He adds, he thinks the answer is to get the broker community to understand what products to sell to different clients and what companies to sell for.”

“We don’t need new products; we don’t need more complicated products. What we need to do is take people, teach them how to sell insurance, teach them to understand why they sell insurance.”

The most important part of that training is understanding people, Freedman says. “Once you know how people want to be treated, what their expectations are of you, then all you have to do is meet the clients.”

Kiran Parikh, a certified strategic business leadership coach with The Alternative Board, an international peer advisory organization of CEOs, presidents, business owners and partners who are dedicated to improving their businesses, adds that the industry’s focus on selling a product misses the mark. Instead, the emphasis should be on giving people peace of mind.

The move away from the career model to a sales model is easily explained, says Parikh, who is helping launch AchieveX. By making insurance brokers fend for themselves, the insurance companies don’t have to put any capital up front and they have no liabilities, whereas under the old model, these same companies had a payroll, management expenses and facility expenses.

The downfall, he explains, is that there is no loyalty on either side. “The companies are not loyal to the broker; the brokers are not loyal to the company.”

Overall, when it comes to insurance training, Seneca College is probably the best-known school. Amid great fanfare, the insurance industry got behind the school. It was a prominent push by the industry to attract fresh blood, but early reports suggest the program has had a difficult time filling the seats.

The program at Seneca recruits from three main target groups: those training as the chosen successor to a retiring advisor; university graduates seeking practical experience; and people unhappy with their careers and looking to change directions. RBC and Desjardins will also channel people into the program. Both financial institutions have agreed to sponsor their own recruits to take the program.

Freedman’s aim is a little different. He will first focus on the industry to sort out its current challenges before introducing any new people to it.

Others are getting on board in their own way. Worldsource Financial Management is using Frameworks, a new training development program, to provide training to its 500 financial advisors. The program will focus on four key offerings: orientation and business integration; annual training; Quest, a practice management coaching series designed to boost productivity; and succession and continuity planning.

“We know that our business environment requires advisors to have ongoing training and education in the areas of business processes and systems, the technologies employed and the compliance regulations associated with sales and supervision,” said Cindy Cowan, vice-president, training and development, of Frameworks. “However, as advisors’ practices evolve, their needs change to include practice management and ‘exit’ strategy plans. It is important to have offerings to support these needs.”

Like these other programs, Freedman is looking for a better way. “We are all looking in the wrong direction,” he says. “The direction starts with how do we take care of people first, and that means if you can train brokers proficiently, then we can take care of our customers proficiently . . . and when clients are happy and are getting the right advice, they stay with you for life.”

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(03/01/07)