The best of both worlds: Career and independent agents — With MassMutual’s Paul LaPiana

In a world in which everyone is chasing the next shiny object, MassMutual continues to focus its efforts on whole life insurance, disability insurance and annuities while emphasizing holistic financial planning. 

Paul LaPiana, head of brand, product and affiliated distribution with MassMutual, started in the industry by joining forces with his college roommate to cold-call on prospects. That was the beginning of a career that has spanned more than 30 years.

In this interview with publisher Paul Feldman, LaPiana describes how the career agency system and the independent channel can coexist and bring protection and planning to more consumers. 

PAUL FELDMAN: How did you get into the industry?

PAUL LAPIANA: I was the first person in our family to graduate from college. I come from a blue-collar family — pipefitters and electricians. When I graduated from college in 1992, there wasn’t a robust job market. My college roommate’s father was a general agent or managing partner with Equitable, so my roommate Dave, who is still with Equitable 34 years later, was going to be a financial advisor.

I did not know anything about what being a financial advisor was, so I went in for an interview, and before I knew it, I was hired as a financial advisor with Equitable. 

The reaction from my parents was very underwhelming. They were not excited about it. My dad’s first comment was “You’re not going to sell me anything.” His second comment was “Anytime you want to get in the union, I can get you $6.95 an hour and full benefits.”

Dave and I ended up cold-calling our way into the business. At night, we cold-called on people who had new babies, people who had just bought or refinanced homes. During the day, we knocked on doors of small to medium-sized businesses for any kind of 401(k), SEP plan or health insurance that owners tried to put into their companies, because all the top advisors at Equitable were focused on the corporate market.

I was an advisor for eight years before someone asked Dave and me to leave our practice and go to the corporate side, but that’s the journey. 

FELDMAN: How long have you been with MassMutual?

LAPIANA: I’ve been with MassMutual for nine years. But if you looked at my years of service, it would actually be 23 — I was at Equitable as an advisor for eight years. Our mentor, who is our managing partner, tapped us to start third-party distribution for Equitable AXA in 1999, so we gave up our practice to do that. 

I followed some of those folks a couple years later to start a third-party business at MetLife. I was at MetLife for 15 years, about 10 of that on wholesaling and distribution and third parties. Then I was asked to lead the career agency system at MetLife in 2012, and I did that for about 4-1/2 years. 

As you know, when MetLife made a decision to spin off the retail business, which is now Brighthouse, the first shoe that dropped was they sold the career agency system to MassMutual in 2016. I joined the company in 2016, so I carried my years of service, but I’ve actually been at MassMutual for nine years, and it has been great.

FELDMAN: One of MassMutual’s strengths is its brand. Tell me about the brand, what you are doing with it and how you make it better.

LAPIANA: There are two elements of our brand. One is consumer awareness and consideration for the actual company itself. The other is down the funnel a bit, which is advisor and distributor awareness and consideration, because they have choices. They can use our products as the solution, or they can go to one of our competitors, who also have great products on the shelf. 

We did a brand relaunch in 2017. The foundation was mutuality, trust, protection, financial strength, premier products and solutions. But we’ve seen a transition since then, going down the funnel and talking more about protection, accumulation, retirement income solutions, and the need for advice and guidance. Clients can’t go it alone. They need an advisor or a team or advisors to help them navigate the complexity. 

Now as we get into a new era of our brand, it’s still about protection, accumulation and retirement income. But the narrative around advice and guidance is shifting a little bit to more about holistic financial planning and wealth management as part of the journey. This is really to help our advisors because they are holistic in nature and it helps them tell their story. 

A lot of people don’t know us for wealth management, so this helps us recruit new people to MassMutual’s career system. Finally, I would say this supports the journey for all of our independent advisors who also do holistic planning. It nests nicely into their value proposition that MassMutual is a manufacturer that helps them get there and helps get their clients to the finish line.

It is a complicated dance, though, because it’s not just about consumers, it’s also about the distributor. And guess what? We’re not only in career and third party. We’re multiple products in those channels, and then we also have worksite, and then we’re also institutional. So we’re speaking to different audiences, and that increases the complexity.

FELDMAN: Tell me a little bit about your perspective on career agents and independent agents.

LAPIANA: I spent a lot of time in both worlds. We have this philosophy that you can only get to so many consumers through your career agency system. If you have 6,000-ish advisors, you’re serving a lot of clients. But there are a lot more people in this country in need of protection, accumulation and retirement income. Third-party channels and the right third-party partners are a valuable way to reach those consumers who are doing business with those advisors.

I think both channels are needed. When I think about career advisors, ours are entrepreneurial, and we support their independence, but they represent the company’s brand. They are the individuals who drive the advance and guidance and then use the product to deliver solutions and recommendations.

What I love about career agents is there’s a loyalty; there’s an active feedback loop. They’re the ones who are delivering the advice — because it is about advice; it’s not about product.

The third-party side allows you to grow because you reach more people. The positives of that, if you work with the right partners, is that there is a value on the relationship, the brand, the financials, the value proposition you bring with your wholesaling team, your product portfolio, your underwriting. It provides you with growth and allows you, again, to reach more consumers.

What I like about having both channels is that it provides not only growth and an additional feedback loop, but it also allows you to keep your ear to the ground. If you can provide growth and you can still manage profitability and risk, it makes everything better. 

FELDMAN: How do we get more people into this industry?  

LAPIANA: One thing I am concerned about is that right now, the industry’s trading on experienced advisors, because not a lot of career agencies exist, and that has been fuel for new recruits into the industry. The industry has not been as focused on inexperienced recruiting. It is a very expensive investment, but it is an investment. 

When you couple that with the need for advice and guidance going up and the number of people retiring from this industry — you’ve seen some of the research that says about one-third of current active advisors will be out in 10 years — there’s a mismatch between demand and supply.

We are fortunate to still be in the affiliated distribution game. We appreciate our partners at Northwestern Mutual, New York Life, Equitable, Guardian, because we’re doing both — we’re recruiting new people to the industry and we’re also recruiting experienced advisors to the business.

One thing we’ve changed in our model over the last couple of years is that we are focusing on fully licensed advisors. What we found is when we bring fully licensed folks in, you have a more committed new advisor. When you provide them with the proper training, you see productivity rates go up, you see retention rates go up. Retention in this industry is around 9% after four years. If they’re fully licensed, we see a retention rate of 30% to 35%. The benefit of that is they’re also able to serve clients in a more proper way as opposed to only selling insurance and annuity products. They’re thinking about things more holistically.

The other thing we’re doing with inexperienced hires is strategically hiring new advisors to existing teams. When you think about our aging advisor population, the need for succession planning and the need to expand the scale of their practices, bringing in junior advisors is important. But it also works well for the junior advisor because they get coaching, they get mentorship, they get immediate access to clients in the book of business. It also helps the senior partners deliver on all the promises they made to those families and individuals along the way. 

Now they have people serving them and providing the right solutions. With team-based advisors, we’ve seen productivity up and retention up, which is awesome.

We’re also working on lead generation. The most difficult thing about this business is getting in front of people on a favorable basis. We have a lot of leads coming through from our branding and marketing efforts as well as our in-force books of business. We’re layering on some technology and data analytics and getting those people in the hands of the right advisors so they can serve them.

The last thing we are doing is looking at different models of how we compensate new people coming into the industry. The old-school way is full commission. When you have a career-changer with kids and a mortgage, that way doesn’t work. So how do we take that investment and provide more salary-based options to help people transition into a new career?

I don’t think we have all the answers, but we’re looking to bring between 1,200 and 1,500 new advisors into the industry every year.

FELDMAN: Let’s talk about your distribution. You have the independent side, and you have the career channel. What’s the mix for your organization?

LAPIANA: Our career channel has roughly 6,000 advisors and 55 firms across the country. They are independent contractors. Our goal for that channel is to put the right national and localized resources around them so that they can do what’s the most important part of their profession — serve clients and acquire new clients to grow their business.

Looking at their product mix, we do about $650 million to $700 million of life insurance through the doors of our career agency. That’s about 90% of our life insurance, and it’s huge. That organization does roughly $12 million a year in annuities. But we as a manufacturer get only about 40% to 45% of that, depending on the year. That organization does about 95% of our fully underwritten disability insurance. Wealth management does about $40 billion in new sales a year, and we have around $300 billion under management.

When you move to the independent channel, it’s a bit of the reverse. Our MassMutual Strategic Distributors channel is doing about 10% of our life insurance business and 5% of DI, and we want that to grow. On the annuity side, they’ve got scale. They’re doing 80% to 85% of our annuities through specialty distributors, independent marketing organizations and broker/dealers, and then mostly through MassMutual Ascend.

FELDMAN: I think disability insurance is the most undersold product. MassMutual sells individual DI. Why aren’t more companies selling it?

LAPIANA: The disability industry has been a very slow growth industry. It has been kind of the same for years — around a $500 million to $600 million business.

Many manufacturers aren’t comfortable in that market. A small subset of carriers have dominated the market for years and we’ve been a No. 3 or No. 4 player in disability with a 10% to 12% market share.

We have individually underwritten disability; we also have a multilife. Think of guaranteed standard issue for the executive space. We also have things like business overhead expense as well as buy/sell — we have a full suite. 

What you’ve seen over the years is that DI has been concentrated in special distributors that have focused a lot of their time in the medical and dental areas. We haven’t seen a broader base of sellers, meaning financial advisors selling it beyond the medical and dental space to white collar and even gray collar and blue collar. One of the issues we face is there’s a fear factor for advisors in selling disability because it crosses the threshold into a lot of health issues. A lot of times advisors know it’s one of the most important things you can do in a holistic plan, but they don’t want to mess up if something goes wrong because the client has a back issue or a shoulder issue. Then there’s an exclusion and the client is disgruntled. The advisor doesn’t want to lose the assets under management and they don’t want to lose the life insurance, so they put off addressing disability.

It’s not only about the product. It’s also about getting people to understand the reason why you must put this in as a foundational part of financial planning. If you say you’re doing financial planning and you have credentials after your name, you must do disability planning for your clients. If you don’t like the conversation, have someone on your team who does or partner with someone who knows how to do it.

FELDMAN: What products are hot, and what products do you see as the future for MassMutual?

LAPIANA: Being a mutual company, we are committed to and we love the value proposition of whole life. We want to continue to make sure that our advisors in our career system, affiliate advisors and folks that sell us as a third-party appreciate and understand the value that product brings to the end consumer or the business owner or the trust for the next generation. That is a product we are always keeping competitive and investing in because we believe in it.

Our affiliated advisors sell a fair amount of variable universal life; they sell a fair amount of universal life. So we are looking in the life insurance sleeve — to continue to appropriately support and grow whole life but also to bring out some adjacent products to give us a shot to earn some more business with our affiliated channel.

We’re bullish on the annuity market because we have an aging population and people undersaved for retirement. A lot of people will have to go it alone for retirement because of the shift from defined benefit plans to defined contribution plans and questions about the future of government programs. 

We’ve done things to enhance our fixed annuity portfolio. We’ve made some enhancements to our income annuities so that we can compete more favorably. We added a variable annuity and we’re looking at things with our registered index linked annuity product that Ascend has today to make that product more competitive. 

FELDMAN: Where do you see the biggest growth?

LAPIANA: We think there is opportunity in both VAs and RILAs, and we think we’ll be able to get really good, comfortable run rates in VAs as well as RILAs. 

I am a fan of the traditional VA with living benefits. Those products play a good role and provide a lot of value to consumers looking to provide guaranteed retirement income to themselves and their families. 

FELDMAN: MassMutual started a digital life insurance subsidiary, Haven Life, which has since discontinued its direct-to-consumer operation. What are your thoughts about insurance carriers going direct to consumers?

LAPIANA: We as an industry need to reach more people because people are underinsured. You and I also discussed that the advisor population is shrinking right now. That also means more advisors will go up market, not down market, and that means fewer people will be able to have the advice and guidance they need. 

So how do you get to the middle-market, lower mass affluent consumer? There are a couple of ways. You can get to them through the group market, through their worksite, and we actively participate in that market. And you get to them through a direct-to-consumer model.

We learned a lot of things by launching Haven — both good and bad. We do think it’s a viable channel for carriers, now and in the future. And it is a very small piece of insurance in today’s market — somewhere between 3% and 5%. At this point, we’re looking at the worksite as the opportunity to get to more consumers who may not be served by advisors.

It’s still somewhat true that these products are sold, not bought, so you need someone to get the consumer to sort through the confusion and take action. Even though you see more people going online to look for life insurance, the bad news is they’re not transacting. 

We need to get people to take action, and that’s the key. The landscape is confusing and there’s more activity to search and learn, but there’s not more activity to buy. 

FELDMAN: Do you have any closing thoughts?

LAPIANA: I would say the need for advice and guidance in this country is maybe at an all-time high. But the industry, in my mind, isn’t at scale, delivering on holistic advice. They’re using financial planning tools to gather assets, put people in a 60/40 portfolio and think they stuck the landing. 

There has been some research done that basically says that advisors and teams who use permanent life insurance adjacent to annuities, adjacent to the 60/40 portfolio, deliver the best outcomes for clients in the form of the highest income, longest duration of income, most optimal and efficient wealth transfer and efficiency of accumulation. That is not happening in the industry. 

What we think is a differentiator for our advisors is the understanding of wealth but staying true to our protection DNA and understanding how life insurance, disability insurance and annuities bring value to people’s portfolio and help them get to the finish line that’s right for them and their family or their business. 

Paul Feldman started the website InsuranceNewsNet in 1999, followed by InsuranceNewsNet Magazine in 2008. Paul was a third-generation insurance agent before venturing into the media business. Paul won the 2012 Integrated Marketing Award (IMA) for Lead Gen Initiative for his Truth about Agent Recruiting video and was the runner-up for IMA's Marketer of the Year, a competition that includes consumer and B2B publishing companies. Find out more about Paul at www.paulfeldman.com.