Pains and Cures—IdeaTransfer’s practical manifesto on the life insurance industry future

by IdeaTransfer on May 22, 2011

IdeaTransfer was born in the late 70s when it began consulting with life insurance producers.  We landed in the middle of a life insurance marketing revolution.  Product manufacturing began to separate from product sales.  We became advisors to the premier producer groups and the BDs, IMOs, FMOs and other distribution structures that filled the gap.

Three decades later we were recently asked to diagnose the current pains in the distribution segment of the industry and prescribe possible cures.  Here are our top three pains and cures—not just for distribution firms but for producers and carriers as well.

Irritable Compliance  Syndrome

For many years Compliance has felt like a bloating, cramping sensation in your gut.  You keep it under control with the right elixir, but it’s chronic.  Now with the financial reform in motion the cramps and bloating are about to spread.  Is there a systemic treatment, or do you have to just wait and see where it leads?

Wait-and-see is a bad idea, obviously.  Even while the implementation of very complex changes to regulatory structure and policies are being worked out, there is much you can and must accomplish for an effective response to changes ahead.

  • Get your compliance processes powered up for more efficient adaptation to change.
  • Evaluate internal and external resources to better integrate capabilities and costs.
  • Prepare to adopt new software solutions that expand the connection of compliance to workflow and maximize internal controls of external events.

The level of compliance commitment you achieved over the past decade won’t get you through the coming one.  And there is no longer a manual option for anything compliance related.  But you don’t have to guess to be proactive.  The right steps in each of these three areas are already worked out.  Contact us if you want to locate potential resources.

Delayed Recovery Disorder

Clients can’t make long term planning decisions when favorable signs of recovery on Monday reverse by Thursday.  That’s why the art and science of consultative selling that advanced market producers perfected has appeared to lose power.

What else could you expect?  Planning thrives in proactive, linear decision environment.  A shattering financial crisis followed by a stuttering recovery created a non-linear, reactive decision environment.  Add to that the loss of credibility in virtually every segment of financial services delivery and regulation, and clients are overcome by planning paralysis.

But there is an upside.  Clients want advice on short term solutions and reactive decision-making.  Give it to them.  You be proactive because they cannot.

  • Focus your resources on financial firefighting and pragmatic planning.  Give clients confidence in the present—because your firm went the extra mile for them.
  • Increase client communications.  Make them understand the personal impact of the next change.  Let them see light at the end of the tunnel—with your firm standing under it.

And while you support them in the short term, invest in a consultative selling wellness plan.  Because, what’s on the horizon that should bring planning back with a roar?  The inevitable tax impact of current government fiscal policies!  Books and articles are already out there.  Political talk shows are on stirring the pot.  Don’t be late because you’re waiting for a definitive answer.

  • Educate your affluent clients right now on possible future tax scenarios—show them you have designed and modeled their contingency plans.
  • Invest in resources to support new long term consultative selling and marketing strategies for the new planning environment—client management, consultative training, presentation software, technical expertise, administrative support.  Communicate that investment to producers and  clients.

Distribution firms who take advantage of reactive opportunities today and prepare today for the return of proactive opportunities will attract a multitude of producers.  Producers who follow the same prescription will find client commitment stronger than it ever was.

Business Longevity Myopia

Too many producers are thinking about their exit strategy.  A few companies are talking the talk but not walking the walk.  But what if someone really finds a key that opens that exit door?  A client commitment crisis awaits the life insurance industry.

The last thing financial services or consumers need is a mass exodus of the most talented producers ever.  This is where we came into the industry—maverick agents found a key to a new distribution model.  And after three decades of success the industry is going to let their legacy get away?!

We have worked with hundreds of advanced market producer firms.  Producer retirement is never their issue.  They want to stay in the game—but on their terms.  Many have learned the hard way that taking on capital partners is not their terms.  Exit strategy is just the wrong direction.

We call the right direction Business Longevity.  Evolution is how you the distribution structure healthy forever.

  • Install an effective model for transferring knowledge, leadership, and relationships from producers to successors.
  • Create a financial mechanism to monetize that transfer at the right time and in the right manner. Fund the value of the founders’ role as Ambassadors and capitalize the successors’ future as innovative Adapters.  Maybe a turbocharged accumulation-oriented life insurance policy?
  • Meanwhile, promote business longevity as a career path to attract college graduates, MBAs, young professionals and frustrated entrepreneurs caught in the wrong jobs.  Right now none of them have a clue they could own their own firms in a few years.

IdeaTransfer has worked out the first step.  And we know enough bright people to accomplish the next two steps.  Distribution firms that commit to this solution today will find the best producers and the best successors at their doorstep tomorrow.

It’s time to be bold.  Not an industry hallmark, but don’t let its leaders be remembered by analogy for trading Babe Ruth to the Yankees.

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