THE CHANGING FACE OF THE INDEPENDENT AGENT

YOUNG AGENT THRIVES ON NETWORKING

New technology doesn't diminish importance of person-to-person selling

By Edward O'Hare

At 7 a.m. every Wednesday, M. Stuart Nelson enters Andiamos Restaurant in Sacramento, California, for the weekly breakfast meeting of Le Tip of Point West--a diverse networking association of businesses and professionals. The aggressive but engaging young independent agent quickly works the room, touching base with business people from high-technology firms and neighborhood retail stores, doctors and lawyers, small contractors, and funeral homes, florists and cellular phone companies. Many of them constitute the core of Nelson's commercial insurance book of business. But equally important, they form a conduit for new business--through referrals. By his second cup of coffee, Nelson usually has picked up one or two newly referred clients.

"It's like having your own sales force out there drumming up business for you," says Nelson, vice president of Insurance Associates of Sacramento, Inc., who has built his insurance portfolio largely through referrals. What's more, he adds, the referral business tends to be more loyal--no small plus in today's highly competitive market where clients continually shop for the best price.

Credit that loyalty in part to the competitive price and the quality service that Nelson provides to his clients. But there is a third component called friendship that Nelson has made a cornerstone in his relations with clients--pulling them in to a sort of extended family. And what are friends if not loyal?

"One of the things I like most about being an agent is the interesting and exciting people I meet and do business with," says Nelson. "Many of us have common interests in various recreational activities so it seems only natural to continue our relationship beyond business." That can mean camping, water skiing, and mountain biking in the beauty and grandeur of the Sierras, a round of golf or a get-together for a swim and a barbecue.

Along with creating an ever-widening circle of friends, Nelson has used this blend of business and pleasure to carve out a lucrative and rewarding career in just 10 years as an agent. This has been capped off with a full partnership at Insurance Associates, a leading property/casualty agency with a staff of 18 and $8 million in premium volume. Nelson also has become an articulate advocate for young agents as president of IBA Sacramento and chairman of IBA West Young Agents. All this from someone who started out wanting to design and build structures rather than insure them.

"When I started college (California State University Sacramento) I planned to become an architect," says Nelson. "But during summer vacations, I worked at Insurance Associates, where my father (Maynard) was a partner, and developed a liking for the business." And in a clear case of the apple not falling far from the tree, he switched to a business program with a concentration in insurance and marketing--graduating with a Bachelor of Science degree in 1990. He later rounded out his training in an intensive program in commercial and personal lines at the USF&G School of Insurance in Baltimore, Maryland.

Nelson's father, Maynard, is one of the most highly respected insurance executives in the state, a power in the Republican party who ran for the Assembly, and a former president of the Chamber of Commerce. From his father, Nelson developed the values that have defined him as an agent and a person. "My father exemplified the perfect businessman," says Nelson. "He taught me to treat everyone equally and with respect and to follow through on your word. Your reputation is the most valuable form of advertising. If you develop a poor ad for the paper, you can write a new one and fix it the next day. Reputations can take years to mend. Integrity is everything."

As he settled into his career in insurance, Nelson early on laid out his priorities for the firm and the family. "I believe that you work to live, not live to work," says Nelson. And that belief has become his mantra, not only for himself but for his employees as well by encouraging them to leave their work in the agency and devote weekends and vacations to leisure activities with their families. For Nelson, his main priority is his wife, Maureen, an elementary school teacher recently turned housewife, and two children, Lauren, 3, and Tyler, 9 months. "I met my wife at Cal State at a Halloween party," recalls Nelson. "She was all decked out in an Oakland Raiders uniform and I asked myself: 'Who is this woman and why is she wearing a Raiders uniform with all of us 49ers fans around?' We struck up a conversation and it was the start of a beautiful friendship."

They live in a suburb of Sacramento that is two hours from Lake Tahoe and 90 minutes from the Pacific Ocean--spectacular sites for their favorite outdoor leisure activities. And their house has gotten Nelson's architectural fires burning once again. He has gutted, redesigned and rebuilt most of the rooms and is now working on the backyard, turning it into a veritable outdoor kitchen to accommodate their yen for year-round barbecuing.

Nelson sees his life as an agent as a continuous learning process, developing expertise that enables him quickly to zero in on both the obvious and the hidden risks of such clients as electronics and computer software companies, school drill teams and skate board parks, as well as church organizations--the latter a specialty coverage of the agency. "Each of my clients has special coverage needs, and there is great satisfaction in knowing that you have provided them with protection against any eventuality," says Nelson. "And there is even greater satisfaction when you hand them a check to cover a loss."

Like more and more young agents, Nelson is bringing fresh ideas in marketing and systems to his agency to keep pace with the technological revolution underway. "We've converted our personal lines department to transitional filing; it's a paperless operation, able to download and upload with five of our eight personal lines companies," says Nelson. "We're also doing business on the Internet, working on a Web site and sending out a newsletter to all of our clients."

With the passage of new financial services legislation, Nelson sees the independent agency system at a crossroads. Gone are the walls that for decades allowed banks, insurers and securities firms to conduct their businesses without competition from each other. Now everything is up for grabs and up in cyberspace as well. How does the agent compete? While Nelson has easily embraced the new technology in marketing, he isn't about to rush out and get his Series 6 and Series 7 brokers licenses to sell securities.

"I can't be an expert both in property/casualty insurance and other financial services," says Nelson. "Even if it means leaving money on the table, I owe it to my clients to concentrate on insurance." What he can and will do is tap into the well of talent in the securities business for alliances that will enable him to refer business and get referrals in return.

As far as banks are concerned, he sees no imminent alliances but would welcome the chance to put a staff member in a bank. "It would be like opening up a new branch office." Acknowledging the increased competition agents face from banks, Nelson wishes that insurance companies, including his own, would level the playing field where agents and banks would compete equally. "I don't feel I should have to compete with my own companies which are selling insurance directly through banks and giving them preferential pricing, as much as 10 to 15% below the price I have to offer."

And the stunning announcement that Allstate Insurance Company would begin selling auto and home insurance over the telephone and the Internet obviously raises the competitive bar even higher for the agent, perhaps foreshadowing what's yet to come from other big insurers.

Still, Nelson remains upbeat about the prospects for young agents as well as the independent agency system in the changing financial services landscape. He firmly believes that customers prefer to deal locally--that any agents worth their commissions ought to be able to compete with a distant, hard-to-reach voice on an 800 number with the frustrating directions: "If you're calling about this, press ... If you're calling about that, press ... I'm away from my desk right now, if you need immediate assistance, call 911."

As president of IBA Sacramento, Nelson is involved in efforts to recruit young people into the business. He finds them bright and enthusiastic, committed to the agency system with its personal, face-to-face dealings with clients. But he says young agents are also comfortable with new marketing and distribution methods. "Young agents are computer savvy, at home online," he says, adding: "They can dot com with the best of them."

This year Nelson is serving as chairman of the IBA West 2000 Young Brokers and Agents Committee, which is planning the group's 25th annual conference, scheduled for June 1,2,3 in Santa Barbara. The conference brings together the best and the brightest in the independent agency system, providing a forum for an exchange of new and creative ways to prosper in the new financial services market place. And it gives young agents renewed faith in the independent agency system.

If the past is prologue, Nelson believes that the crucial role independent agents have played throughout history in protecting the lives, homes and businesses of Americans will be a strong starting block upon which to build success in the Year 2000 and beyond. That means giving clients the best price and the best service and, as far as he's concerned, a lot of friendship thrown in. *