Bankers Life will remain focused on developing agents who have some experience but who harbor ambitions of broadening their horizons by becoming financial advisors, a company executive said.
The insight could serve as a guide to other agents looking to remain and eventually thrive in a profession known for high turnover in the early years.
Agents who survive past the three-year mark deliver significantly higher sales compared with agents who have less than three years’ experience. That was the word from Gary Bhojwani, president of CNO Financial Group, during a conference call.
“My main focus is bringing in a reasonable pipeline, getting a reasonable retention number and then getting them to the point where they are productive, because we really do see a significant difference after three years,” he continued.
Other company recruitment programs targeting professionals are underway. But, Bhojwani said, the highest sales come from “folks who are referred in, who have some experience as insurance agents, and have an interest in expanding their expertise into the securities area."
Over the past year, Bankers Life has talked about expanding recruiting efforts toward college graduates, said securities analyst Humphrey Lee with Dowling & Partners. However, he added, that doesn’t seem to be an area of recruitment focus right now.
Last year, CNO executives talked about broadening the number of recruitment channels through which to attract agents. In the past, company executives have talked about boosting agent productivity.
Compared with 20 years ago, fewer insurance agents anywhere find they can make a decent living selling only insurance.
One way for them to thrive in the future is to look beyond insurance and expand into securities, financial advice and retirement planning.
A tighter labor market also means that insurance companies are competing more aggressively with banks, broker/dealers and investment advisors for skilled financial services professionals. Wall Street analysts want to know Bankers Life intends to compete.
Bankers Life, a subsidiary of CNO Financial Group, distributes life, annuities, health and long-term care insurance products to the middle-income senior market through a network of about 5,000 captive agents.
Agents visit clients in their homes, which the company says promotes strong personal relationships with customers.
Agent Counts Decline in 4Q
Bankers Life agent recruiting and average producing agent count, often considered a predictor of future sales, were both negative in the fourth quarter compared with the year-ago quarter. That's according to UBS Securities analyst Dan Bergman.
The average number of producing agents at Bankers Life in the fourth quarter was 4,323. This was a drop of 5 percent from 4,565 producing agents in the year-ago period, CNO Financial reported.
New agent recruiting also dropped in the fourth quarter, by 12 percent compared with the year-ago period.
There were an average of 1,859 first-year agents at Bankers Life in the fourth quarter. This was down from 2,051 first-year agents in the year-ago period.
Analysts dig through agent counts for clues to an insurance company’s sales productivity. But there are times when services provided by agents do not necessarily translate directly into premium volume and the company’s bottom line.
A lot of agent activity around serving consumer needs doesn’t show up in new annualized premium or even as collected premium on the balance sheet, said CEO Ed Bonach. “That’s another thing to factor into how you look at productivity.”
Fourth quarter new annualized premium was $65 million, a drop of 6 percent compared with the year-ago period. That was due to lower life, Medicare supplement and long-term care sales, the company said.
Stable Agent Force
Recent softness in the average number of first-year agents may portend a smaller pipeline down the road. But it doesn’t necessarily mean lower future sales since the agents with three years' experience or more are the ones who deliver the greatest sales.
Over a 10-year period, the number of Bankers Life agents has remained stable. The agent count has fluctuated between a quarterly average high of 5,046 at the end of 2013 and a quarterly average low of 4,034 at the end of 2007.
The company has “three levers” at its disposal to boost agent growth: refine the company’s recruiting and selection process, tweak compensation levels, and adjust products and features.
“We are constantly working with those three levers,” Bhojwani said. “I was not happy with what we saw in the fourth quarter, but I also didn’t get too worked up about it because of seasonality.”
Dips in recruiting in 2015 and 2014 are less important than rethinking the way the company attracts agents and advisors in an era of tightening labor supply and much tougher regulation of advice dispensed into retirement accounts.
"There are a lot of different forces that are pushing on how we recruit agents,” Bhojwani said. Those forces include changes in the marketplace, job candidates' use of websites such as monster.com and the impact of the improving job market.