Insurance advisors surveyed for this year's Insurance Advisors' Report Card placed great importance on having the "freedom to make objective product choices for clients." And much to advisors' delight, their firms are delivering strongly in providing that freedom.
Advisors gave the freedom category an overall average importance rating of 9.6, tied (with "firm's/MGA's ethics") for the highest such rating in the Report Card. They also gave their firms an overall average performance rating of 9.3 in the freedom category, also tied (again, with ethics) for the highest such rating in the Report Card. These ratings point to advisors' independence and vast product shelves as reasons for the widespread satisfaction.
Many advisors said there's a philosophy of advisor autonomy at their firms, which allows advisors to make product choices for clients without interference from management or supervisors.
"I get all the freedom to give the advice to the client. There's not any question [about it]; I'm free to make the best recommendation possible," says an advisor in Ontario with Mississauga, Ont.-based RBC Life Insurance Co. "Nobody's telling me how I should go about it. [The choices I provide] are just based on my training and how to give proper guidance."
"I have total autonomy, no pressure at all from my MGA [that is, the managing general agency]," adds an advisor on the Prairies with Kitchener, Ont.-based Financial Horizons Inc. "[That's] one of the reasons I chose [to work with Financial Horizons]."
Part of the process in ensuring advisors have the freedom to sell whatever they deem a best fit for their clients is that firms have an abundance of products available from many carriers from which advisors may choose.
"We deal with 24 carriers and we offer advisors 100% freedom of choice," says Patricia Ziegler, chief marketing and corporate strategy officer, with Financial Horizons. "We don't show a bias or favouritism toward any company."
Insurance agencies across the board share that approach. And advisors were quick to offer praise for the firms that provide a variety of products from which to choose.
"We're fortunate that PPI Advisory has a wide array of products available from a wide range of carriers," says an advisor on the Prairies with that Toronto-based firm.
Adds an advisor in British Columbia with Winnipeg-based Great-West Life Assurance Co.'s (GWL) Gold Key distribution network: "I have access to a lot of different products - even if they're not from [GWL]."
Advisors given choices
"The [MGA] takes turns in being fair [in promoting] all their providers, and they rotate months [in doing this]," says an advisor in Atlantic Canada with Mississauga-based IDC Worldsource Insurance Network Inc. (IDC WIN). "One month might be Equitable Life [Insurance Co. of Canada]; the next might be Manulife [Financial Corp.]; [IDC WIN] tries to promote each company fairly. But from a product point of view, they let you do what you think you should do for the client."
"Advisors have a lot of choice," says Ron Madzia, president of IDC WIN. "From a legal standpoint, there's no way we can dictate to them: 'You should sell this or can't sell that.' We've never had an issue with an advisor or client who has said they've been sold the wrong product."
Still, some advisors with the dedicated sales agencies mentioned concerns. Even though some of these advisors praised their firms for granting autonomy to choose what fits best for their clients, they felt that their objectivity is diminished somewhat because they have access to only their company's products - or must offer their agency's products to clients first.
Says an advisor in Ontario with Waterloo, Ont.-based Sun Life Financial (Canada) Inc.: "Being career agents, we have a licence to sell only Sun Life products. I can't really be objective. I have only one type of insurance to really offer clients."
This feeling was particularly prevalent at London-based Freedom 55 Financial. Those advisors were very critical of their firm in the freedom category and gave a rating of 7.7 - significantly lower than for any other firm in the Report Card.
Limited product shelf
"We are allowed to recommend only what we have on our shelf. In many cases, we don't offer several products, such as long-term care," says an advisor at Freedom 55 in Ontario. "It's very difficult for us to be holistic advisors and have clients' best interests at heart."
If Freedom 55 advisors want to offer products the firm doesn't provide, they have to seek permission -which, they said, can be an arduous process.
"Our contract says we can sell only products that are approved," says a Freedom 55 advisor in Ontario. "In other words, if I have someone who needs long-term care, travel insurance or different products, I have to get permission. [The firm] just makes it difficult.
In response to advisors' grievances, Abbie MacMillan, vice president with Freedom 55, defended the firm's product shelf, saying advisors still can be objective and that the firm's intention is to be able to meet all of clients' insurance needs.
"The most important thing that we're trying to do is put the client at the centre of everything that we do," she says. "And we want to make sure our advisors are in a position to meet the needs of their clients [with] a broad range of products."
© 2017 Investment Executive. All rights reserved.