Gear up for financial services with tools and training from NAIFA
By Elisabeth Boone, CPCU
Len Brevik is NAIFA's chief marketing officer and vice president of business development.
"You can get anything you want at Alice's Restaurant." That line from an old Arlo Guthrie song rings truer than ever for independent agents today as they face growing pressure from both carriers and clients to expand their product portfolio. For agencies of the new millennium, the choice is clear: Offer the spectrum of insurance and financial services, grow, and prosper; or stick to a tiny menu of traditional property/casualty products and watch your clients cross the street.
For agents who haven't yet made the leap into the brave new world of life, health, and financial services--and for those who want to sharpen their skills and knowledge--a great place to start is the National Association of Insurance and Financial Advisors. NAIFA is the successor to the National Association of Life Underwriters, which was established in 1890. Affiliated organizations are:
* General Agents and Managers Association (GAMA)--Works to enhance the quality and capability of the insurance industry's field management
* Association for Advanced Life Underwriting (AALU)--Supports advanced life underwriters and agents in complex areas of life insurance such as business continuation planning, estate planning, retirement planning, employee benefits planning, and deferred compensation
* Association of Health Insurance Agents (AHIA)--Works to sustain and enhance the business environment for health insurance agents and to improve the financing and delivery of health care in the United States
* Million Dollar Round Table (MDRT)-- Provides its members resources to improve their technical knowledge, sales, and client service while maintaining a culture of high ethical standards.
Get off the fence
For some property/casualty agents, the idea of moving into life, health, and financial services has about as much appeal as diving headfirst into a pool of killer sharks. Objections tend to be fear based: How can I learn all these complex concepts? How can I keep up with the changes in regulations and tax laws? And, perhaps most worrisome: What if I do something wrong and lose a good client?
Len Brevik, NAIFA's chief marketing officer and vice president of business development, readily understands these concerns; he came to NAIFA from the a senior staff leadership position at the Independent Insurance Agents of America and is familiar with P-C agents' reluctance to make the leap. What would he say to an agent who's on the fence about offering life, health, and financial services?
"It's an extremely lucrative market, so from the standpoint of profit, I'd say 'go for it,'" he responds. "But it is complex and it does require expertise. It's a value-added service, and the agent has to be trained and prepared to handle this kind of business. Actually," he continues, "the companies are somewhat ahead of the agencies in moving to full financial services. They're saying to property/casualty agents: 'You need to broaden your offerings and provide the full spectrum of services so customers don't walk out the door because you can't meet their needs for financial planning.'" An agent in this situation, Brevik adds, also might risk losing the client's property/
casualty business to a competitor that offers financial services.
Adds Bill Jenkins, a marketing consultant to NAIFA: "When companies like Hartford and Travelers and SAFECO, which all have life and health divisions and in some cases financial services, look at the results they're producing in the different segments of their business, they're finding that the life segment is very attractive in terms of its contribution to corporate earnings. Many companies want their property/casualty agents to get more involved in this arena because it's good, solid business. Also, the legislative and regulatory changes of the last decade have allowed for the convergence of insurance and financial services, and that has created a tremendous opportunity for agents."
Cross-selling is key
What are the most important factors for a property/casualty agency to consider before embarking on the sale of life, health, and financial services?
"One of the keys is having a plan to cross-sell," Brevik says. "How will you establish an effective cross-selling effort in your agency? Will you create a separate life and financial services division? How integrated will these products and services be with your property/casualty operation? I think it's essential to have an actual plan for cross-selling and to mine your data so you can figure out how to leverage your clients for maximum advantage."
"Achieving Success" is part of NAIFA's new training initiative, called Programs in a Box. Each Program includes a video, transcript, handouts and a PowerPoint presentation on CD-ROM.
Historically, Brevik notes, there's always been a cultural divide between property/casualty and life sales. A key challenge is figuring out how to bridge that gap and create a full-service culture in the agency. "Agencies come in all shapes and sizes, and what works for one may not necessarily work for another," he says. "But I think you have to instill that cultural understanding, and you have to take a team approach. If you go with that, you'll be rewarded financially."
Some property/casualty agencies, Jenkins observes, are combining perpetuation with entry into life, health, and financial services. "While many owners still take the traditional approach of bringing in a son or daughter as a commercial lines producer with some big accounts, we're now seeing a number of property/casualty agents bring children into the agency as life and financial services specialists. As these agency owners look toward the future, they see the growing convergence of insurance and financial services, and they want to instill an understanding of that culture in the young people who will be taking over the agency."
How can NAIFA help?
If you think the National Association of Insurance and Financial Advisors is strictly for life producers, think again. Of NAIFA's 80,000 members nationwide, about 37% identify themselves as selling some form of property/casualty coverage. "That's a pretty sizable chunk, and we see more and more of our members becoming affiliated with property/casualty agencies," Brevik says. "Our national president, Bob Nelson, is affiliated with a major P-C agency in Nebraska. That's a growing trend and a market segment we are actively trying to serve."
NAIFA's members are individual producers rather than agencies as in the Big I, Brevik explains. "One of our greatest strengths is our 900-plus local associations," he says. "They generally meet on a monthly basis, and they offer excellent training and continuing education and networking opportunities."
NAIFA is the largest trainer of life agents in the country through the Life Underwriter Training Council program, which is offered by local associations through a partnership with The American College. "Each year, we train about 18,000 agents in insurance sales skills," Brevik says. "When you listen to people who have earned the LUTCF (Life Underwriter Training Council Fellow) designation, you can tell that to them it's almost like a religion. They say that the reason they're in business today is the sales skills that helped them get over the hump when they were starting out. Life, health, and financial services is a very competitive business, and the LUTC program is geared toward developing the practical skills agents need to survive, grow, and thrive."
Whereas property/casualty education programs tend to emphasize the nuts and bolts of coverages, Jenkins comments, "What LUTC adds is a plan for how to go out and sell. How do you approach customers, what do you say, how do you move the sale forward, how do you close, how do you develop the relationship? LUTC is targeted to those issues."
NAIFA staff includes (left to right): Afsoon Namini, vice president/business relations; John Morgan, director/education marketing; Len Brevik; and Stacey Scarnato, associate director/marketing.
Adds Brevik: "Whether you're a property/casualty agent or a life agent, it's still a relationship business; it's just that to sell life insurance, you need a different set of skills."
More member services
In Advisor Today, NAIFA's monthly magazine, members find sales strategies and practical management tips, as well as articles on market trends, analyses, and legislative updates. NAIFA lobbies the governments of all 50 states and the federal government on behalf of its membership.
NAIFA's Industry Awards Program honors life, multiline, and home service agents who seek to maintain high standards in the insurance and financial services industry. Members can qualify for:
* Home Service Quality Sales Award (HSQA)
* National Multiline Sales Award (NMSA)
* National Quality Award (NQA)
* National Sales and Achievement Award (NSAA)
NAIFA is a founding partner of the Life and Health Insurance Foundation for Education (LIFE), a nonprofit entity that educates consumers about the importance of life, health, and financial services and the value-added role of insurance and financial services professionals.
Worksite marketing: a natural
A buzzword for full-service agencies today is worksite marketing: providing life, health, and financial planning products and services--known as voluntary benefits--to a client's employees through payroll deduction. "Worksite marketing is one of our key initiatives this year," Brevik says. "Traditionally it's been in the no man's land between property/casualty and life, but the success of AFLAC's worksite marketing effort has led many of the property/casualty carriers we talk with to develop a very strong interest. They want to know how it works, how to get their agents involved and trained, and how to get into the marketplace with products and services. We've launched an initiative to bring the companies up to speed on worksite marketing and then to help our agents tap into this marketplace."
Worksite marketing is a natural for property/casualty agents, Brevik notes. "If you ask who already has the insurance relationship in almost any company in the country, it's the property/casualty agent. Done correctly, worksite marketing strengthens the agent-client bond by allowing the employer to offer workers a benefit. And in terms of revenue potential, an agency's income from voluntary benefits can easily approach and sometimes exceed the revenue from the commercial lines account itself."
What's more, Jenkins comments, "The retention rate goes way up. Also, when you're writing the individual employees, you have an advantage as an independent agent. You're placing each person's business with the right company for him or her, so it's harder for the employer to terminate the program. Dealing with all the different insurers and X-dates is just too much trouble. We're promoting worksite marketing because it's an excellent crossover between property/casualty and life, health, and financial services, including 401ks. If we've learned anything from the whole Enron debacle, it's the value of having independent investment advice. That's what NAIFA members provide."
Division of Financial Advisors
For members who want to pursue the market for sophisticated, high-end financial planning, NAIFA has created the Division of Financial Advisors. Each year DFA presents a two-day forum where members can learn strategies and techniques from experts. DFA has been instrumental in developing a preferred relationship with Delaware Trust for NAIFA members. This will enable members to receive continuing income from client trusts through the subsequent sale of insurance, annuities, investments, or fee-based investment services.
Another key DFA offering is a Web-based program designed jointly by NAIFA and Standard & Poor's. Called NAIFA Advisor, the program provides investment analysis, news, and tools to help advisors serve their clients. Among the tools are a market summary that's updated several times each day; snapshot profiles of more than 6,000 companies featuring S&P's Investability Quotient, a proprietary system that evaluates a stock's investment characteristics; insurance ratings; and S&P Calculators for inflation, college planning, and retirement costs.
Programs in a Box
To help local associations present a wider variety of financial service program content, NAIFA has launched a new initiative called Programs in a Box. "We believe a rising tide lifts all boats, and if we can give our local associations information to help them professionalize their training, then it's a win for everyone," Brevik explains. "We'll roll out six programs this year, and our objective is to create a program for each month. What we do is videotape a high-profile expert in a particular field, and we package that with a transcript, handouts, and a PowerPoint presentation on CD-ROM. It's a train-the-trainer format. With Programs in a Box, we know that our 900-plus local associations have the material for a high-end, quality educational event that they can use to recruit new members and to provide consistent value for existing members on a monthly basis."
Recent Program in a Box topics include:
* Retirement Planning After the New Tax Law
* Recruiting and Retaining the Ideal Sales Assistant
* Educational Funding After the 2001 Tax Act
* Long Term Care Insurance in the Executive Marketplace
* The Role of Life Insurance in Stretch-Out Retirement Planning
"We try to create these programs on a timely basis," Jenkins says. "You can take a generic course in retirement planning or college funding. We present a topic in terms of how the producer can use this new information: how to explain it to a customer, how to sell it, how to use it as an opportunity to reestablish a relationship or build a new relationship. With all the changes taking place in tax laws and all the new products being developed, there's a lot of interest and a lot of questions. Our members need to be able to establish their value in areas like college and retirement planning, and that's what Programs in a Box are geared toward. What do you as a financial advisor need to know, and how do you use this as a relationship builder with your clients?"
Adds Brevik: "These are tangible things that go 'ka-ching' for our members. These programs will help them in their existing practice or give them additional tools to move into some new markets."
Although it was established way back in 1890, NAIFA is using every tool at its disposal to help its members move boldly into the marketplace of the new millennium. Full service is the name of the game, and NAIFA members are well equipped to play it. *
For more information:
National Association of Insurance And Financial Analysts
Phone: (877)-866-2432
Web site: http://www.naifa.org