The insurance industry is taking steps to recruit and train the next generation of independent advisors to shore up a thinning workforce. Still, many in the field agree that there is a lot more to be done.

“We need to find a way to augment the number of people that are coming into the business and being trained, other than through [the career agency channel],” says David Gray, vice president, wholesale distribution, for Sun Life Financial Inc. of Toronto. “I would say that it’s a common concern of all the companies in the industry. We’ve had open conversations about this at recent meetings.”

Sun Life is financially backing one of the few important programs trying to remedy the problem. But the main challenge remains: money. Managing general agencies don’t have the capital to fund training programs, either internally or by outsourcing them to other firms — and the insurers are stretched thin financially.

The root of the problem is that the existing workforce in the insurance business is aging, and there’s just not enough new blood coming in to replace the growing number of retirees. Virtually every agent in the industry starts with a career agency, such as Sun Life. Others that have typically trained new recruits include London, Ont.-based London Life Insurance Co., Investors Group Inc. of Winnipeg and Toronto-based RBC Insurance Inc. of Toronto.

Yet, a recent report from LIMRA International Inc., a subsidiary of Windsor, Conn.-based LL Global Inc., a consultant to the global life insurance sector, shows that although the retention of insurance advisors through the career agency side is on the upswing over the long term, the industry overall is still losing more advisors every year than it is gaining.

“This is something that seriously needs to be addressed within two to five years,” says Rene Pereux, co-founder and co-CEO of Daystar Financial Group Inc., an MGA based in Winnipeg that’s looking to get involved with Sun Life’s training plan.

That plan involves a partnership between Sun Life and the Covenant Group, a Toronto-based training firm, to bring fundamental practice-management training to the insurance industry. Under the program, insurance advisors working through MGAs can learn to build their businesses using proven sales processes, marketing and referral systems, and client-servicing plans — the sorts of ideas that securities and mutual fund dealers have been using for some time.

The training that Sun Life offers through Covenant is available only to advisors who sell Sun Life policies through MGAs that have a contract with the insurer, but this restriction is not a question of Sun Life pushing its own products. The goal of the program is to create businesses run by independent insurance advisors, or teams of advisors, that will eventually become financially stable, allowing them to be bought and sold when the founding advisors wish to leave the business.

“The Covenant Group is good at this,” says Gray. “It’s all about succession planning. In the end, you’re bringing advisors into a situation in which there’s a succession plan in place that, I think, creates the chance of better retention [of advisors].”

The course is in its freshman year. The first batch of advisors started the four-year program in 2010, and a fresh group of trainees will start in January 2011. “By next year,” Gray adds, “we should have [a total of] 30 to 50 advisors enrolled in this program.”

Pereux knows the training well because he had retained Covenant on his own for advice on his financial planning practice, Pereux Financial Services Inc. , which is also based in Winnipeg.@page_break@WORKSHOP LOCATIONS

Within three months, Pereux says, the advice from Covenant developed for the Sun Life program has added greater focus to his practice. He has been impressed enough that he has been in touch with Sun Life recently to bring the rest of Daystar’s top advisors into the program.

Nationally, about 10 MGAs are promoting the Sun Life/Covenant program to their advisors. The MGAs also provide locations for the workshops and support the program — including, for example, directing advisors to online training platforms hosted by Covenant.

Says Norm Trainor, president and CEO of Covenant: “I don’t know if there’s anything else going on where we’ve created an interdependent relationship between a large financial services institution such as Sun Life, MGAs and the independent agent. The idea is that the resources of all three will be leveraged to make the advisor more productive.”

Sun Life is not the only insurer that is training independent advisors, but its program is more advanced than those of other insurance companies.

For example, Toronto-based Transamerica Life Canada, ultimately owned by AEGON NV of the Netherlands, is in the midst of developing a training system, but is not yet ready to announce the details.

Douglas Paul, vice president of national sales at Transamerica, will only confirm that a training program is in the works and that it was a priority for the firm to help advisors serve middle-market Canadians. Co-operation with MGAs is almost certainly part of the training package, but Paul would not commit to a timeline for the initiative or other details.

When it comes to MGAs that are looking for financial help to train new insurance advisors, it’s important to mention Empire Life Insurance Co. For the past several years, the Kingston, Ont.-based insurer has boosted commissions for MGAs that are recruiting new advisors; however, that program doesn’t fund the actual costs of educating recruits.

The costs of recruiting and educating independent recruits is also falling to the potential recruits themselves. Until last year, anyone interested in working as an insurance advisor or agent but who did not want to join Sun Life, or any other insurance company that trains its own staff, had to shell out almost $8,000 to take the financial services practitioner course at Seneca College in Ontario. (No other program exists.)

The cost for the course is now about $4,000, according to Sam Albanese, insurance industry director at the Centre for Financial Services at Seneca. That’s because the program is now partially paid by the provincial government after it was approved by Ontario’s Ministry of Education last year. Seneca’s course is now running at full capacity, starting each semester with 30 students.

To the credit of the life insurance companies, they had provided Seneca with the seed capital to get the program up and running about four years ago. The goal of both the industry and the college is to expand the program to colleges in other provinces — first in Alberta and British Columbia, then elsewhere.

“If the 10 insurance companies in question [each] come up with $75,000, we will have this up and running across the country,” says Albanese. “We need the industry to invest in the program so that we can work with MGAs coast to coast.” IE