Financial Services -Distribution Channels-Growing Sales & the Value Proposition.

Last Week, Christopher Paulino, President of Sales - Helping Companies Sell More By Increasing Leads, Marketing, & Training Sales Teams asked a very interesting question...

"What comes first sales or marketing?"

As it pertains to the financial services sector, this is a paradox when you consider how carriers and marketing organization recruit and then support their career and independent insurance and financial services representatives.

Sales and Marketing: What are the differences between Career Distribution and Independent Distribution?

Career Distribution Groups generally grow sales by bringing new inexperienced agents/reps into their channels through an age-old technique of identifying 100-200+ potential prospects that can be approached for selling insurance and/or investment-based products. Within the industry, this is known as the Project or Market 100 or 200. Over the years, this technique has proven to be very successful, especially if those potential prospects are geographically accessible and approachable.

Independent Distribution Groups grow sales entirely differently. Yes, for roughly 10+ years, independent distribution has surpassed career distribution in sales of insurance products. This makes sense. As career agents wash-out or leave their Career Distribution Groups, they become 'independent' and by default, the sales of insurance and investment products, in the IDG, grows. After all, it's a numbers game.

It should be noted, IDG is seeing a slight reversal in this trend as a result of direct response carriers and reemergence of some affiliated or career agent system. There's also the issue of an aging and/or retiring sales force. Insurance Information Institute.

Sales and Marketing

Impact on Distribution- Career & Independent.

According to the Insurance Information Institute, 2018, net income of life and annuity products fell by over 10%. This is not surprising. For over 20 years, as either a Regional VP of Sales in the Independent Distribution Channel or a Sales Manager for the Career Distribution Channels, the challenge has remains is the same..."How do you grow sales overall?"

In the Career Distribution Channel, the objective has been to provide the adviser/agent with minimal financial subsidy, that will, in turn buy enough time for the new agent to solicit and sell products to the Project 100/200 prospects. The margins are generally enough to allow the carrier to recover the cost of bringing the new adviser into the channel. If the agent/advisers is skilled enough and develop natural markets, the agents ultimately become successful. There's a Catch 22 in this relationship as well. If the agent becomes too successful, the carriers or institution may lose the adviser/agent to a competitor that offers more diverse products, higher compensation packages or more innovate marketing platforms. If the adviser/agent is moderately successful and doesn't have marketing insights to expand and grow, he/she may wash-out or become complacent.

The so called "marketing" tools provided to career channels advisers/agents include: Telephone Scripts used at the weekly Dialing for Dollar Campaigns. Power Point presentations created by home office sales prevention units. The irony of these prepackaged canned presentations is that they are supposedly designed to facilitate seminars attendees buying decisions. The reality is most attend these seminar simply to get free meals and lick plates. Then there is these high gloss, product-based propaganda flyers and brochures home office marketing staff create that are intended for use as handout materials at Booth Bunny conventions, Civic Centers and Chamber of Commerce networking events. Most of these materials, once browsed by realtors, roofers and other insurance agents, find their way into recycled bins or burn piles.

Marketing in the Independent Channel, sales are driven solely by Product, Price, Underwriting and Compensation. Nothing more, nothing less. This is evident by the fact that most Independent Marketing Organization have access to the same carriers, products, pricing, underwriting and compensation schedules. For most, their definition of recruiting is to proselytize distribution from their competitors. Marketing is defined by "here's a brochure', here the rates and and here's your compensation schedules."

Don't get me wrong. There are a few marketing organizations that actually do step up and provide their agents with the resources to be financially successful. This is done mostly through some for a a "lead generation" system. This too is expensive and becoming harder and harder to support; mostly because of inaccessibility or the ghosting of the 'lead' or individual that 'responded' to a marketing campaign.

We've heard the news and read the reports... societal buying habits are evolving.

Today, 95% of 83 million GenX'ers use social media and spend roughly 7 hrs a week, and growing, on Facebook. They are connected and well-rounded how they obtain news and researching information from a variety of internet, multi-media and print sources. Yes, they prefer person-to-person engagements, especially when making financial transactions but they too are challenging in their accessibility. IF they are accessible and willing to engage, their financial priorities are to pay down debt and to save for retirement. Many are still raising children, and more and more are providing for the care of aging parents (Boomers 76 million age 55-75). What's left of their wealth, if not spent through life expectancy, is likely to be transferred to the Millennial generation over the next 20 years. They are ideal 'prospects' for insurance and financial services products. But only if accessible and willing to engage.

Kasasa? ,a financial and technology services company, states that for Millennial's, they too carrier massive amounts of debt, mostly student loans. They tend to marry, procreate, have fewer children, and buy homes, later in life. Brand loyalty is not a driver in their buying decision nor is there a necessity to establish any one-on-one relationship with financial institutions. There preferred method of communications is texting followed by social media.

An interesting publication from Deloitte, regarding Millennial's indicates- "72% are self-directed...risk adverse, lack financial knowledge, yet seek technology and information platforms for financial advice... they are skeptical of advisers but are receptive to financial advice from others..."

There's a perplexing consideration here...if you consider the average age of today's financial adviser is 51 (GenX) and 43% are over age 55 (Boomers) (Marketwatch 2018), and then take into consideration 'how' Millennial's see 'investing, finances and communicate or engage with others, the next question to ask is..."will the Project 100/200 on-boarding technique, become obsolete to the growth and recruiting efforts of the career system?

Value Proposition-

For over 25 years I've heard the same thing from every carrier and distribution group in the industry...

Carriers say their "Value Proposition" to the adviser/agent is Brand, Stability, Commitment.

Distribution Groups says their "Value Proposition" is access to Carriers, Back-office Support, Top Commissions...

From the adviser/agent, I hear...

"I could sell more of this stuff if only I had more prospects or people to talk to..."

Well, not kidding... Like I said, it's a numbers game.

The industry's problem isn't the lack of consumers (76 million Boomers, 83 million GenX and 95 million Millennial's) nor is it the lack of "need" for the insurance and investment product offered by the industry.

The problem is the Inaccessibility of these cohorts.

More than ever, the game is now stacked against the adviser/agent.

Consider this; Advisers/Agents can no longer tela-market. Direct mail is costly, ineffective and who wants to lick stamps? Third-party, lead/response purchasing is ethically challenging, financially risky and conversion is marginal at best. The latest trend on the Internet and Social Media is "click bait". This requires prospective buyers input personal contact information prior to receiving the requested or searched content. This does nothing more than annoy prospective buyers. Plus, consumers have gotten savvy to this practice and with the emergence of Google Voice and fictitious E-Mail set up have found effective methods to circumvent deceptive "click baiting" internet marketers.

In order for the industry to survive and to evolve, both Career and Independent distribution groups must define a true value proposition for both the adviser/agent and the prospective buyers of insurance and investment products.

For the adviser/Agent, the value proposition must help them to Identify, Target, Engage, Cultivate and Convert prospects into clients. For the consumer, the value proposition must allow them to obtain the Information They Need and Want; On Their Terms. The information must be thorough yet concise. Ideally and for convenience, information should be easily accessible without click-bait and retrievable without having to search multiple sites and resources.

This is not a quick fix but through effective, informative, consistent and transparent marketing, over time, it will develop trust and grow sales in the insurance and financial services industry. What's the alternative? - Direct Response Selling by Companies.