COVID-19 Forced Advisors To Adapt In The Midst Of Disruption

By Peter Dewitt

The COVID-19 pandemic has caused dramatic changes to the practices of advisors and agents. As with all change, however, there is an opportunity to adopt and implement new processes to help drive business. LIMRA research shows the many ways advisors and agents have adapted throughout the pandemic.

On average, our research shows the pandemic caused a high level of disruption of 5.8 (out of 10) on the practices of advisors and agents. With a rebound in equity markets, broker-dealers’ and registered investment advisors’ sales, on average, fell below the overall average, and insurance agents found the pandemic to be more disruptive. Based on a subgroup of advisors who responded in March and October 2020, the average level of disruption has decreased by 14%, primarily driven by a 30% decrease for RIAs.

One in four advisors and agents reported their sales through the third quarter of 2020 increased compared with the prior year. However, half of agents and advisors said their sales dropped. Not surprisingly, those advisors and agents who reported being the least disrupted have increased sales since the start of the pandemic (compared with the prior year), and their product mix remained fairly unchanged.

The opposite is true for advisors and agents who have been most disrupted; they have experienced a decrease in year-over-year sales and have seen a substantial change in product mix. Big changes to a product mix may not be fruitful. Advisors and agents would be better off focusing on products they know and understand and that align with their clients’ long-term goals.

One bright spot could be that clients and prospects gained a heightened awareness of the value of life insurance, thanks to the pandemic. Roughly 40% of advisors and agents said they have seen an uptick in interest about life insurance from prospects and clients. Advisors can use the pandemic as a way to reevaluate or add an insurance element to a client’s current financial plan.

Advisors and agents said that for carriers to earn this business, they must remain competitive with their pricing, customer service and support.

Although our research shows most advisors and agents have met with virtual wholesalers in some capacity since the beginning of the pandemic, the results of doing so have been mixed.

About half of those advisors conducting these meetings found them more effective and 35% said they were less effective. Based on advisors’ and agents’ experiences meeting with wholesalers virtually, there is significant interest in continuing this trend through at least the first half of 2021.

A large number of advisors said they hope to interact with wholesalers in person during the first half of 2021, but it is worth noting that a similarly sized group wants to continue to meet in a predominantly virtual environment. Another way for wholesalers to connect with advisors this year is through virtual seminars and marketing materials.

For advisors and agents looking to grow their businesses, there has been a correlation between the success of engagement methods with prospecting since the beginning of the pandemic and the likelihood of doing so through the middle of 2021. When bringing on new clients during the pandemic, in-person has been the most effective engagement method, closely followed by phone calls and virtual meetings.

As advisors and agents continue through 2021, we expect to see phone calls becoming the most commonly used method for insurance agents to find new clients. We expect broker-dealers to most likely meet in person and RIAs to meet virtually with prospects. Social media, seminars and marketing materials have not proven to be effective for most advisors and agents.

As advisors and agents have changed and adapted throughout the pandemic, they have gained a better idea of what has and hasn’t worked well for others so they can be better prepared to set themselves up for a successful 2021.