Tilting the Agent Count as Bankers Life Reshapes into Advisory

At Bankers Life, the career agency is tilting away from a pure insurance agency shop and toward an advisory shop.

In the process, Chicago-based Bankers Life offers a case study in how to recast a narrowly-focused captive insurance distribution approach into a holistic advisory one that extends to insurance agents an opportunity to further their careers.

Scott L. Goldberg, president of Bankers Life, calls it reshaping the agency, but analysts still aren’t all convinced as agent count is lagging.

Bankers Life, a subsidiary of CNO Financial Group in Carmel, Ind., distributes life, annuities, health and long-term care insurance products through a network of about 5,000 captive agents to the middle-income senior market.

Other subsidiaries include Colonial Penn Life Insurance and Washington National Insurance.

So what has Bankers Life done to retain agents in a world where fewer insurance-only agents can make a decent living, dropping unemployment rates means heated competition for advisors from competitors, and regulation sets limits on how advisors must act?

Going to Market as Advisors

A year ago, the company launched a broker-dealer called Bankers Life Securities as well as a registered investment advisor called Bankers Life Advisor Services.

Agents who were securities licensed but who previously had to sell securities through a third-party broker-dealer are now registered with Bankers Life Securities. They approach the market as financial advisors, company executives told analysts earlier this month.

By going to market as advisors, clients have access to a broader suite of protection and investment or income retirement solutions. Financial advisors tend to be more profitable than insurance agents, according to industry consultants.

Average account size at the broker-dealer is more than $50,000, while average account size at the RIA is north of $125,000.

Agents with three or four years or more of experience are twice as productive as first-year agents and agent retention has gone up, Goldberg said.

Only one out of 12 Bankers Life agents are registered to sell securities, but the company goal is to get to one in five, company executives said.

Analysts: Headcount Stagnant

In February, A.M. Best affirmed the financial strength (A-) and issuer credit ratings (a-) of CNO’s life and health insurer subsidiaries, but blamed lower new business premium trends in long-term care and Medicare supplement core lines of business.

Lower LTC premium is a function of Bankers Life’s shift to short-term care products and fewer benefits, but premium decreases are partly attributable to agent growth in the low single-digit range, analysts said.

“While agent productivity has improved, agent headcount has remained relatively stagnant for several years,” A.M. Best analysts Joseph Zazzera and Ken Johnson wrote in February.

Growth in annuity premium, driven primary by indexed annuities, has been able to offset the decrease in health premiums at Bankers Life more recently, the analysts said.

Industry standard practices of boosting productivity and improving agent retention include “targeted profiles,” preferred candidate sources, personal referral programs, commission support and higher field training allowance, Bankers Life said.

Company: Tilting the Headcount

Bankers Life senior managers don’t disagree with growing the agent base, but note that it’s even more important to tilt the base in favor of more experienced agents and advisors instead of churning through new recruits and seeing how many survive.

The company has deliberately dialed back on new recruits, which explains the 5 percent decline in a compound annual growth for younger agents since 2009.

Agents with more than three years of experience have seen a compound annual growth of 4 percent since 2009, company data shows.

The gap between rookie and experienced agents has narrowed significantly over the past eight years, and is now nearly at parity.

In 2009, Bankers Life had fewer than 1,500 producing agents, on average, with three or more years of experience, but nearly 3,500 agents with less than two years of experience.

This year, there are almost 2,000 producing agents with, on average, three or more years of experience at the company, but fewer than 2,500 agents with less than two years of experience, Bankers Life reported.

Retaining some younger advisors is still important to supply the pipeline, but by the time the company finishes reshaping its agency system, it will have evolved into a “higher caliber,” agent force capable of doing middle-market retirement and financial planning, Goldberg said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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