Although older, more experienced insurance advisors tend to have greater production levels, they offer less “lifetime agent value” to a firm than advisors who are recruited at a young age, according to Marianne Purushothan, corporate vice president of research shared services at LIMRA, who spoke at the 2018 LIMRA and LOMA Canada Annual Conference in Toronto on Thursday.
Speaking about LIMRA’s new Centre of Excellence for Predictive Modelling and Data Analytics, Purushothan explained the association was completing a study on agent recruiting and retention within the U.S. market and plans to undertake a similar study in the Canadian market within the next 12 to 18 months.
The U.S. study looked at production and retention separately from an analytics perspective, and then created a “lifetime agent value” as a metric that combines production and retention from the perspective of a company. One of the key findings was that advisors who are recruited at a younger age tend to create better value.
Purushothan said that older, more experienced advisors tend to move around more from company to company. “They don’t tend to necessarily stay with one company for very long if they get a better opportunity somewhere else. They tend to be poached,” she said.
“So those agents might have great production levels, but they have such low retention that when you look at it from a lifetime value basis they may not be as valuable as newer recruits.”
Firms should consider recruiting and training younger advisors the way they prefer to be trained, Purushothan added.
The study also revealed that compensation and both the type and number of licenses led to higher productivity among advisors. “Our assumption is that this has something to do with education,” she said. “In order to get those licenses, the agents have to go through a certain level of training and maybe the more licenses they have, the more comfortable they are with the products they sell and therefore the better job they do.”
Lastly, the study shows that an important way for firms to improve retention is to provide management responsibilities. To prevent great employees from being recruited elsewhere, firms need to give them more than just good compensation; they have to provide a real career path and a real satisfaction with what they are doing in their day-to-day jobs.
“We might be missing out on an opportunity in terms of career development,” Purushothan said. “It doesn’t cost any extra money in terms of compensation structure.”