The life insurance industry has experienced a high turnover rate among financial professionals for many years. According to LIMRA research, in 2020, only 15% of full-time financial professionals remained with their hiring company after four years. The greatest portion of those terminations occur in years one and two.
To better understand the reasons behind low financial professional retention rates, LIMRA and Finseca surveyed field and home office leaders to gain insights into the reasons why some professionals terminate and why others remain and are successful.
Key Factors Affecting Retention
Our research finds a remarkable amount of agreement between home office and field leaders. Both groups identified five factors (out of a list of 12) they believe have the greatest positive effect on two-year retention: early activity (fast start), strong selection process prior to hire, joint field work, quality of sales skills training, and mentoring. This sends a strong signal that focusing on or investing more resources in these five areas could result in better outcomes for the industry.
It is no surprise that financial professionals who get off to a fast start are more likely to succeed. As a practical matter, less activity means fewer sales and lower income — a particularly high hurdle for new agents who lack a solid financial foundation coming into their careers. In fact, having a competitive financing plan, although rated below the “top five,” also is viewed as an important factor in overall success.
Field leaders frequently mentioned a set of personal characteristics they believe are key to an agent’s success or failure. They described these characteristics as drive, motivation, grit, self-discipline, work ethic and willingness to be coached.
However, personal characteristics can be hard to assess. The home office may be able to help field leaders objectively assess those attributes. If they are identifiable, it follows to invest more in recruits who demonstrate that they are coachable and have the drive to succeed by tracking and rewarding activities and the achievement of developmental milestones.
Field leaders also believe that a lack of understanding about what the job entails can be a factor that contributes to termination. Considering most companies have a lengthy selection process (70% are longer than two months), it is particularly striking that field leaders cited this “career mismatch” as a significant reason for failure.
Perhaps precontract programs, which allow recruits to “try on” the career, are underused. Such a program could flag those who are clearly struggling with foundational aspects of the career such as prospecting and sales skills.
Another possibility is that recruiters’ narratives do not align with what the new candidate actually will be doing. In addition, younger generations may come in with a negative bias toward some of the industry’s terminology (for example, “insurance agent” or “commissions”).
Using terms such as “financial professional” instead of “agent” or substituting “paid based on your performance” instead of “commission” may help with this. Spotlighting the “greater good” aspects of the career and moving away from a “sales job” mentality also could be beneficial.
While there is no one-size-fits-all solution to low financial professional retention rates, a combination of improved selection, early activity, quality sales training, and real-world experience through joint work and mentoring is likely to provide a pathway to success for new recruits.