Career Agency- going bye bye?

[HomeService]

Is the "career agency model"- a thing of the past? Seems like more and more brokers out there lately, and less and less offices with full staffs and managers and overhead. Makes sense, though. It would be cheaper to have everyone work from home, no office expense, overhead, etc. Especially for "life only" agencies. I've seen some health agencies pop up here and there. Opinions?

 

[somarco]

The career shop has been dying for years and no signs of turning around. There are still a few around but you no longer see the big mutual shops in every town like you used to. Most are district branches serving detached agents.

There never were many career health shops. Mutual of Omaha had them for years but eventually converted to brokerage and then exited the major med market altogether . . . which is a real shame.

So who is left to train new agents?

Not many.

You can still find NYL, Met, Pru, Mass, NWML, Guardian and a few others but not as prevalent as in the past. Their recruiting is aimed more at people age 35 and up who are looking for a career change. Very few will hire right out of college like they used to.

There are a few independent agency's that will recruit and train but they are not on every corner.

The number of licensed agents has shrunk over the last few years and that trend will continue until it bottoms out. That just makes it a bit easier for the rest of us.

 

[xrac]

Somarco is right on with his analysis!

 

[Guest]

Somarco is right on with his analysis!

I have to agree with Somarco as well. Being with MoO and now being courted by Mass I've had an opportunity to look into the "machinery" of the career shop (even though MoO is not one by strict definition since they pay no salary or advance like Mass and NYL)

Does a carrier office (NYL, Mass, NW, etc.) have to be profitable? Does it have to be self-supporting? Does it have to bring in more in premium than it cost to run the office?

No. Of course not. The HO is the true profit center. If they can't consistantly show returns at a certain level most of the time, you're looking at a company that is going to be in trouble.

I don't have access to the books but it looks to me that a district office is a money sump. The manager has to get big piece of the action, they have to be in a class-A building with admin and technology overhead. This just has to be a big hit to the bottom line unless the company can attract competent manager-recruiters to fill the cubes with gross revenue producing agents... many of whom have to be trained in the company products and sales methods... making this not an easy task... coupled with the traditional failure-rate of agents.

Thirty years ago, life/health was easy. There was whole life and there was term and there was major medical.... not a lot of choice... or complexity... nor was there rapid change in products. With the advent of computers it all changed. Companies had the data to literally invent new products, model them with spreadsheet and other number-crunchers and determine what the risks were before they brought them out (and even then there were failures.)

With all of this technology and innovation and perhaps "risky" products, came a downside: added costs and added regulation (often going hand in hand.) My guess is that for every agent in the field there are two or three people in the HO drawing a salary doing something to please regulators... writing reports, gathering data, holding classes, etc. That all adds up to the cost of doing business.

I'm not sure on this next statement but it seems to me that the only road to success for a career shop is to have a wide product line where the agent can (and must be) the "total" financial advisor for the client. In other words he or she has to be able to sop up almost all of the client assets available for investment and not just sell cheap term like a a carrier (such as Banner or West Coast) that uses the BGA distribution system can (and even that model is showing cracks... witness those GAs that make a big part of their income in providing seminar and marketing "systems" to their flocks rather than from product overrides.)

I know I'll get heat for this, there is a segment of the market that can be marketed (conned?) into buying (term, health, and simple WL) over the internet. I don't believe that will reach overwhelming numbers in the near term, but it is another "strike" against the high-overhead career shop system.

Agents who are really good at this biz... simply don't want or need a manager or the mentoring. They stay for the training and then move on... adding yet another 'cost' the to career model.

Finally, the financial media has a bias against the career model. We hear time after time that an independent agent will always have a better and cheaper product for the client than the "captive" agent. I generally disagree with that. Having looked at the Mass product line, I find it awesome. True, I think that you can always find a "cheaper" product out there no matter whom you write with, but most media people who rag on the poor NYL or Mass agent don't understand that people don't want the cheapest insurance or cheapest doctor or cheapest car repair service... when it comes to their money they want someone whom they feel knows what they are doing and where there is a company that they have heard of that has the resources to withstand a calamity (sub-prime meltdown, Katrina, an epidemic or plague, etc.)

Those are my thoughts. From the agent point of view I don't think there is a wrong answer. However there are agents who should not be independent because they really need to be "managed" for their own good and productivity. There are others who should not be "captive" as it will hinder them. And there are others who have (or want) a practice where the logo and "legitimacy" of either a large house (Mass) or the name of a well-established local agency (Jones Insurance "Serving Podunk since 1919") is going to be a huge asset to them when going after conservative H-N-W populations.

I'm a baby in this business compared to most of you, but unlike most of you I've been self-employed for 33 years so that gives me a certain perspective that others with more direct insurance industry experience might not have.

And as always, YMMV.

The Jackass

 

[somarco]

I have to agree with Somarco

Guess I better pack a winter coat for my trip to Hell.

Or maybe not . . .

Does a carrier office (NYL, Mass, NW, etc.) have to be profitable? Does it have to be self-supporting? Does it have to bring in more in premium than it cost to run the office?

No. Of course not. The HO is the true profit center

NYL agency's are owned (unless things have changed) by the carrier. Mass, NWML are general agency's funded by the GA.

Carriers will close and consolidate career shops if they are not profitable, so don't think profits begin and end in the HO.

 

[Guest]

Mass, NWML are general agency's funded by the GA.

I'm not sure of how close the GA is to the mother-ship but I think there is some level of financial assistance from the carrier that the GA does most of it's biz and who's name is on the door.

For example, I'm talking to these people now and unless you ask or "dig down," their face to the word is "MassMutual." Their agents CAN sell other products but I don't think they'd put "MassMutual" on the door and lobby masthead (literally) if they were not getting a lot of $$$ for it.... I don't know for sure... I'll ask at my next meeting with them.

The Jackass

 

[Winter_123]

I'm not sure of how close the GA is to the mother-ship but I think there is some level of financial assistance from the carrier that the GA does most of it's biz and who's name is on the door.

For example, I'm talking to these people now and unless you ask or "dig down," their face to the word is "MassMutual." Their agents CAN sell other products but I don't think they'd put "MassMutual" on the door and lobby masthead (literally) if they were not getting a lot of $$$ for it.... I don't know for sure... I'll ask at my next meeting with them.

The Jackass

I thought you just joined Mutual of Omaha a couple months ago. How did that go?

Winter

 

[HomeService]

yes, as an ex-mutual of omaha guy myself, I would also like to know????? { basically, mutual of omaha is kind of, sort of the "career shop" I had in mind when starting this thread- well, them and agla}

 

[Guest]

I thought you just joined Mutual of Omaha a couple months ago. How did that go?

Winter

Fine... until they changed management methodology utilizing micro-management techniques as well as... well... a different (call it "old school") sales "philosophy" that I don't agree with. The DO was not making its numbers and they decided to make some changes.

I don't believe in "Glengarry Glen Ross" management by intimidation and fear. It might work for new (younger) guys but not for me. Too bad as I rather like the agency admin staff and the other agents in it... but as you all know, change is constant.

Thus, some of the men and women in this office who might be "attractive" to other career shops are looking for a different opportunity or are going back to independent status. It's not a "happy place" right now. Lots of griping and moaning and "politics," as you might imagine. As for me, I'd rather "switch than fight." (Who remembers this! Damn I'm old!)

A friend of mine (from one of the chambers I belong to) convinced me to take a meeting with MassMu last week. It was the first of several should I wish to continue the process... and so far I liked what I heard.

We'll see where it goes. It's a process. I won't stay with this MoO district office much longer after my final case is delivered and issued.

That said, I like the company and the HO staff. I like most of the products, especially their GUL which has a sweet spot for age 50 to 60. But just as "all politics is local" so are all DOs (and DSMs) for all carriers... and not all changes work for everyone. If I go independent I'll still quote/write some of their products for certain clients through a GA... most of them carry MoO.

My goal is to be the purveyor of life and health products to H-N-W "older" people in a specific area and I believe that the logo of a "named" company on my biz card will help.

I'm often wrong, but I'm never in doubt

The Jackass

 

[somarco]

GA's do receive some financial incentives and support but not to the same extent as a pure HO owned shop (like NYL). The carrier allows the GA and their agents to broker business outside of the primary carrier as long as production standards are met and the majority of the business flows to the carrier on the door.

The GA's usually monitor brokerage business (as much as they can) and generall run a tight ship. I know the local GA's for Guardian and NWML and have a good idea how those shops work.