Need for insurance support growing

As more financial advisors embrace holistic planning, the role of insurance grows increasingly important.

In this year’s Dealers’ Report Card, both the sale of insurance products and overall insurance revenues grew significantly. While the proportion of advisors with insurance licenses dipped slightly, to 89.3% from 90.9% year-over-year, the average annual insurance revenue for advisors was $83,474 – a considerable leap from last year’s $55,999.

Further, the average breakdown of product distribution in relation to total gross revenue included 16.7% of insurance products, up from 15.5% in 2018 and closer to the five-year high of 17.2% in 2017.

The rise in insurance sales over the past 12 months coincided with an overall increase in advisors’ assets under management, alongside equities market strength. This year, the average advisor’s book value was $48.6 million, $10 million higher than 2018’s reported $38.4 million. (See Rising tide lifts advisors.)

“As the securities and mutual funds [industry] grows, advisors within [dealers and brokerages] are recognizing that insurance has a role to play in the offerings they provide their clients,” says Ron Sanderson, director of policyholder taxation and pensions at the Canadian Life and Health Insurance Association. “There’s more awareness and more interest. I think that’s going to be a growth area for a number of years to come.”

When it comes to insurance sales, the Report Card results show term life insurance was highest (35.1%), followed by permanent life (26.4%), segregated funds (24.1%), living benefits (9.1%), fixed annuities (0.9%) and other insurance products such as group insurance (4.5%).

That makes sense to Sanderson, who says consumers are less likely to buy permanent insurance than term because it’s more expensive. “It’s really a question of bang for the buck,” he says, adding consumers can buy more insurance for a smaller premium with term life, so it’s a good way for advisors to get clients into the market.

Given the growing interest in insurance products, the advisors surveyed have been looking to their firms or to third-party managing general agencies (MGAs) for guidance. Advisors rated the overall average importance for “support for insurance planning” at 8.5, a slight increase over a year ago. Overall average performance for the firms that offer support was 8.1, also up slightly. The difference between the two ratings indicates that firms are not yet fully meeting advisor expectations: year-over-year, this difference has ticked up 0.1.

Toronto-based Assante Wealth Management (Canada) Ltd. and Mississauga, Ont.-based Investment Planning Counsel Inc. (IPC) tied for the highest “support for insurance planning” rating, at 8.5, while Mississauga, Ont.-based Carte Wealth Management Inc. came in second with 8.3. Advisors commended these firms for their educational resources and support specialists. (Assante and Carte Wealth perform these services in-house, while IPC offers insurance support via a partnership with Calgary-based PPI Solutions Inc.)

For example, an advisor at Carte Wealth says, “They have a lot of different speakers come in and talk about different aspects of insurance. It’s not a product-driven process.”

Assante was praised for the knowledge and approachability of its insurance specialists. “They put really great people in place for us to work with and they bring value to client meetings,” says an advisor in Atlantic Canada.

Adds an Assante advisor in the Prairies: “Our regional sales developer is well-versed in insurance planning and fits each plan specifically to our clients’ needs.”

On the opposite end, Winnipeg-based Investors Group Inc. received the lowest insurance support rating among the dealers that offered it: a 7.4. Advisors were dissatisfied with the firm’s recent restructuring, which they said had reduced their access to insurance support. Respondents reported that their local insurance specialists had been removed, to the detriment of their business.

“They completely changed the model. We’re really on our own,” says an Investors Group advisor in Ontario. “We’re relying on regional and divisional directors, and they’re not equipped to do it.”

Adds an Atlantic Canada advisor: “We have an awesome manager, but the latest model makes him hard to access. He’s spread too thin.”

Brent Allen, senior vice president of distribution operations at Investors Group, confirmed the firm’s use of divisional directors in a statement emailed to Investment Executive, also noting that the firm has encouraged its insurance specialists to focus “on more complex client needs.”

“Our divisional directors continue to be a go-to resource for consultants on insurance-related questions,” he says. There are also “four full-time insurance trainers who produce extensive content and resources” through the firm’s IG University training tool and through events, including an online insurance summit introduced last year.

One alternative to providing in-house support is to lean on dedicated agencies or MGAs. Looking at IPC, executive vice president Reggie Alvares says, “We have a strategic partnership with PPI. That’s why we have so many of our advisors using it. When we have events and global training, we do it in partnership with them, though it’s PPI’s expertise and content.”

One Atlantic Canada advisor says the arrangement with PPI is “great,” noting there’s “high-value service, lots of product [and] great support.” Another in Ontario commends the firm’s decision to “sub out their insurance arm.”

And yet there’s room for growth. One IPC advisor in B.C. says, “Our MGA just needs to improve some of the products. Some of the things they have are good, but some are lacking, and there’s a poor grid payout.”