Is Working In A Bank-Owned Agency On Your Sales Horizon?
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The repeal of decades-old legislation separating banks from the marketing of other financial services has seen traditional financial service corporations offering securities and, more recently, risk-management products—i.e., insurance.
Choice insurance agencies are now being swallowed whole, and top agents are being courted by banks as this industry races to gain a foothold in what they believe will be a promising new artery for profits.
Having spent almost two-and-a-half years in a bank-owned agency, I have concluded that the merging of banking and insurance offers both opportunity and risk to insurance producers contemplating careers within such institutions. The issues are quite complex.
If you are among those who are considering setting up a practice within a bank, here are some points to keep in mind.
First, come to terms with bank standards for agent productivity. This measurement is almost always significantly different in bank-owned agencies than in freestanding agencies, and is also perhaps the most distinguishing characteristic between the two types of distribution outlets.
In brief, banks operate on an unsentimental return-on-equity index. This approach makes little to no allowance for value-added or intangible services that cannot be absolutely quantified in terms of return on investment but that hold value in traditional agency settings.
Banks are no-nonsense environments. They manage by the numbers, within set time frames. Such measurement of productivity is tied to quarterly dividend reports. Dividends drive production goals. Production goals drive marketing strategy.
Therefore, a producer must produce at optimum levels, quarter to quarter, or he/she wont be there long. Indeed, good producers must become great producers in a bank-owned agency. And an average producer must become a good producer–pronto. Meanwhile, poor, marginal, or self-satisfied producers are never in a bank-owned system–at least not for long. Banks simply dont allow for it.
Second, many of the intangibles agents are accustomed to are simply displaced within a bank-owned system. By intangibles, I mean personal production goals, limited oversight by management, and flexibility in all its permutations.
These are things that attracted many agency practitioners to their profession. But, in a very practical sense, bank-owned agencies cant operate that way. When a producer works for a bank, he or she becomes an employee in every sense of the word. The agent becomes accountable to somebody who is accountable to somebody else who is accountable further to another somebody for the numbers.
