Something has to change or the life and annuity agent will become a thing of the past. At one time, the career (sometimes called "captive") agent distribution was the force driving this business. XYZ Insurance Company hired a young recruit, paid him a base salary while he learned the ropes, provided benefits for his growing family, and gave him the best training and sales support one could ask for. It was very expensive, but it seemed to be fairly effective.
Yet there had to be a way to recruit new agents without the expenses associated with a captive distribution. The field marketing organization (FMO) solved this dilemma by reducing distribution costs; they perform many of the functions that the career home office used to: recruiting, contracting, licensing, sales support, training and more. Yet, one never hears college graduates saying they want to sell annuities or life insurance today. Why would they? Today's independent agent distribution model, run through FMOs, is far different from the captive model; it doesn't provide for salaries and benefits for new recruits. Although independent agents receive greater commission payouts than the career agent did, foregoing/leaving a salaried job for a commission-only position (in which you have no training) is a scary prospect.
Then, how do we solve our distribution dilemma? Is there truly a way to provide new recruits some of the most desired features of the career agent contract without experiencing the same mountainous expenses? Can we, in essence, "captivate" our independent agents to enter this noble industry? I believe that a hybrid or somewhat "captive" marketing organization may be the solution to our dying distribution. Stay tuned…
Sheryl Moore is president and CEO of AnnuitySpecs.com and LifeSpecs.com, indexed product resources in Des Moines, Iowa. reach her at [email protected]. Responses and questions can be sent to [email protected].
