In Profile January 2013: Patrick T. Leary

Advisor Advocates

by Carolyn Ellis, Features Editor


Pat Leary is LIMRA’s assistant vice president for distribution research and team leader for the 2012 LIMRA-McKinsey Experienced Financial Advisor Study released in November. We spoke with Leary about the challenges and opportunities facing advisors and companies in financial advisory distribution.


L&HA: The 2012 LIMRA-McKinsey study of experienced financial advisors was the 4th survey of advisors’ productivity since 2002. What were your objectives?
PL: Our goal is to better understand the profiles and preferences of individuals selling retail insurance, investments and financial services. We surveyed about 2,000 experienced advisors across several channels – career and independent insurance agents, full service and independent broker dealer reps, IARs (advisors working for Registered Investment Advisors), and bank financial consultants. We use the study to help our members provide the products, services, and support that will maximize agent productivity and strengthen their advisor relationships.

L&HA: The study confirmed that sales capacity is critical to distribution and experienced agents are declining in numbers.
PL: We see a direct correlation with the number of agents out there and the number of policies sold. In 1980 there were 237 companies actively recruiting. There are 85 today, and the top ten accounts for 80 percent. It’s expensive to recruit and train new advisors if they leave after a couple of years. Organizations have made some gains to better match the career to the folks coming in, but there aren’t enough people coming into the industry to replace those retiring or leaving.

We know that only 44 percent of households have individual life insurance today, compared to 72 percent in 1960. Half of US households say they need more life insurance. Six in ten want to buy through an agent. That’s an opportunity.

L&HA: Maybe the industry needs a Virgin Atlantic or JetBlue to introduce a new twist.
: In conversations with our companies the subject of a disruptor often comes up. They mention Richard Branson or Mark Zuckerberg and wonder if there’s a disruptive technology around the corner that will really change the game. MetLife is testing an arrangement with Wal-Mart to address the low to middle market, left behind as agents and advisors have moved upscale. With this Wal-Mart offering, you buy a “gift box” for your age bracket off the shelf and the price is the premium for one year of non-renewal term. You phone in and answer a few questions, like simplified issue. If you are declined, you can use the premium you paid as a gift card.

L&HA: You found that non-traditional sellers are increasingly focused on life insurance.
PL: Non-traditional lines (including banks, broker dealers, wire houses, direct response) now have double-digit market share. Before the financial crisis, it was difficult for banks to gain traction in selling life insurance because their Financial Consultants were attracted to more transactional environments. When their investment products weren’t selling, FCs were inclined try the life insurance they had been hearing about for so many years.

L&HA: Do you see the American family being transformed? Is that an important factor in sales of life insurance
: The American family is changing but for people with children under 18, life insurance is important whatever the family structure. More important changes have occurred in the sales process. The concepts of the Omni-consumer and Omni-distribution that started in retail consumer products have moved into financial services. Today’s consumer uses website, catalogue, and call center to research and buy products from retailers like L.L. Bean. Financial service organizations need to orchestrate a consistent presence on the internet, mobile technology, social media, and call centers. LIMRA released consumer research in 2012 that shows consumers are more likely to buy life insurance if they use multiple sources of information. Agents and advisors are the primary source, but their employers and the internet are becoming more important.

L&HA: The survey looked at advisors’ best practices. Which were most significant?
: We found teaming and collaboration had the greatest impact on productivity gains for advisors. Since 2004 we have seen this concept gain traction. Today’s agent is confronted with a more complex consumer, a more complex set of products and offerings, and increased regulatory concerns. We’ve seen an evolution from solo advisor with administrative assistant to advisors bringing in specialists. Now we see the advent of a coordinated team of advisors that share expenses and revenue. Team members might specialize in the affluent market or families with children with special needs or handle marketing or communications. We found advisors operating in team-based models have higher net income and production.

We also found greater productivity from agents and advisors who specialize in market segments and those who created retirement plans for their pre-retirement clients and retirees. Those with knowledge of their clients’ life events (retirement, divorce, marriage, receiving a lump sum of money, birth of a child, health issues, or employment status) had higher production.

L&HA: Financial service organizations are offering agents and advisors more and more support. Which services work or don’t?
PL: Our survey covered areas like training and coaching; sales, marketing, and tech support; and new business processing. Companies need to focus on what advisors really want. With product training agents responded that they don’t need to be hammered with product details, they can read the brochure. Tell them how the product will help them serve their clients and open up new doors.

L&HA: Who’s there for the independent distribution channel?
: Wholesalers are going out into the affiliated and independent spaces and helping advisors grow their businesses by providing some of the support that career companies used to provide. In this study we found independent producers prefer to place their business with an intermediary. There’s another opportunity.

L&HA: Looking ahead, what do you see short and long term?
PL: In the short term low interest rates will continue to provide challenges to organizations. Longer term, social media and technology will be drivers, as companies respond to the Omni-consumer. Companies will wrestle with how you create a good message on social media and what makes you likable on facebook. Wholesaling support will take on an increasingly important role. Straight-through processing could be a tipping point, or a disruptor could come along.

To address sales capacity, companies will have to realign how they position the career with what the next generation of producers is looking for. It’s not about being your own boss or making a million dollars, it’s about helping people and being part of a team (while earning a good income). Today’s candidates want to work for an organization that has great technology, so we tell companies, “You have it, just show it to them.”