5 key factors that help retain new financial professionals

With the retention of financial professionals a long-standing problem in the industry, new research from LIMRA and the Finseca Foundation has identified some solutions to help address this challenge.

High turnover rates among those new to sales positions in the industry are an ongoing challenge. LIMRA research shows that in 2020, only 15% of financial professionals in agency systems that recruit mainly inexperienced individuals remained with their hiring companies after four years. In fact, the majority of those left within their first two years in the business.

Combatting the issue

When asked how to address this issue, field and home office leaders identified five factors that have the greatest influence:

1. Early sales activity (a fast start)
2. A strong selection process prior to hiring financial professionals
3. Joint fieldwork
4. Quality of sales training
5. Mentoring

“Finding ways to make financial professionals successful in their careers will help companies keep new recruits and ensure the industry has experienced professionals who can help Americans get the products they need to protect themselves and the ones they love,” said Bryan Hodgens, head of LIMRA Distribution and Retirement Income Research.

The top two factors – early sales activity and a strong selection process prior to hire – are closely related, LIMRA and Finseca said. A good selection process not only communicates the performance expectations of the job, it also provides the hiring manager with evidence that the candidate will be able to perform effectively. If the selection process does neither, financial professionals are much less likely to succeed.

New financial professionals also need a multifaceted plan on how to build their books of business. Mentoring and joint work are time-tested ways of helping them get started quickly.

The COVID-19 environment, however, made it difficult for joint fieldwork and mentoring. This worries some field leaders, especially as it pertains to new recruits entering the business.

Some companies have provided incentives for top financial professionals who take on and mentor a junior sales representative. Others rely on formal teams to provide the structure and support new agents need.

The importance of skills-based training

Improving the quality of skills-based training can also make up for some of the lack of mentoring and joint work, Finseca and LIMRA said. To be successful, however, this type of training needs to be practical, situational and real-world based.

Most financial professionals want to apply what they have learned, but if what they learn doesn’t appear to be immediately applicable, they may disengage.

Training is not just about transferring knowledge; it is also about helping agents understand what companies are asking them to do and, just as importantly, why and how everyone (they, the company, and the customer) will benefit, Finseca and LIMRA said.

"Finseca’s chief mission is to advance financial security for all,” noted Bonnie Godsman, president of Finseca. “We know a strong and unified profession can truly change the world. It starts with recruiting, developing and training the next generation of financial security professionals.”

Retaining African American agents

African American insurance agents are also leaving the industry at a rapid clip, prompting calls by industry leaders to take steps to address this issue and enhance diversity, equity and inclusion among professionals serving the industry.

The Next Steps on the Journey, a survey report recently released by Marsh and the National African American Insurance Association, offers a few suggestions on how to hold on to African American agents.

When the survey asked participants to list and rank the barriers to retaining African American agents in the insurance and risk industry, most of them said that lack of promotions or advancement is the most significant barrier to retention (75% ). This was followed by lack of growth opportunities (70%), and lack of mentorship (68%).

When put together, the survey said, these three categories emphasize that without direct connections to a more experienced or senior leader for guidance, or access to opportunities that allow an agent to demonstrate his or her expertise or experience, the same talent that overcame barriers to entry in the first place would remain underutilized and undervalued.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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