Traditional Financial Services vs. Agency Building/Distribution Model

When you're stuck in the ways of the past in any industry, don't you believe you shoot yourself in the foot in business? Perhaps you lose competitive leverage which will affect your business long term? So if we already know that most of the traditional business practices simply don't allow us to achieve the same results as "back in the day", why not adjust to the changes in the industry? Better yet, why not be the revolutionizing factor in the industry? 

Just like technology has evolved and has modernized the way we do things today, the world of financial services has evolved. Allow me to be transparent. For those reading this publication and are in the industry, you should already know that MetLife sold off their network of 4,000 captive/career agents to MassMutual earlier in 2016 and now Nationwide has made the decision to switch to the independent agency distribution model. 

This brings me to my first point. In the traditional model, an agent is considered captive. Here are some of the characteristics:

• Salary draw for two years with a declining salary to full commission pay structure;
• The "broker" runs through the new agent's market of 250+ people;
• No team work - an agent is on their own, no leverage, no support;
• Assets Under Management (AUM) yet the assets they bring in are not theirs. The primary focus is to help the "big fish" not the little guy, the very people who live in the community they themselves grew up in and the people they sit across from at the dining room table over Thanksgiving dinner;
• Quotas - if quotas are not met, they WILL get fired and there goes their book of business;
• Some products and services can be "brokered" out to an approved competitor but the first choice is their parent company most times having the higher paid contract;
• Restricted to marketing methods approved by the company; and
• Must be full-time

Agents realizing throughout their career that the book of business they're working hard to build is not really theirs, make the decision to become independent. That's my second point. An independent financial professional establishes contracts with several carriers in the industry.  Although, they build their own book of business and can bring on board several general agents to establish scalability, they are constantly in the grind to acquire their next client. Not to mention the tens of thousands of dollars spent on marketing in hopes of landing their next big client. Furthermore, the agents they train and mentor can easily walk away to pursue their own independent career soon after they realize they can't have the same contract level as the person who trained and mentored them. Before they know it, they're on their own.......again.

Hold on to your seats y'all as some of you reading this may not like what comes next. Thousands of independent financial professionals have realized that without a system in place, scalability, leverage, and support are nonexistent. Some will quit the industry altogether and some will go on to follow a proven system. And so here's my third and last point. An agency building model in financial services allows for an agent to come in to this $63 trillion industry, build from day one, own their book of business, have no quotas, and they can start part-time. The agency building model may not sponsor licenses for their up and coming independent financial professionals but if you really think about it, each agent has the opportunity to build an independent agency within this platform, so why wouldn't they invest the few hundred dollars to get their license and have an opportunity to make unlimited income? Doesn't a real estate agent pay for their own license?

Remember when I mentioned MetLife and Nationwide earlier in this publication? How they sold their network of agents to MassMutual and Nationwide is now switching to the independent agency distribution model? Guess who they're partnered with? Guess how many other carriers have opted for this same distribution model? A now 8-year-old FMO in the agency building platform. Why? Because distribution and the power of selection is the direction the industry is moving. The questions to ask yourself, who will be next and where do you want to be in the next few years?

https://www.insurancejournal.com/news/national/2016/02/29/400150.htm

https://www.insurancejournal.com/news/national/2018/04/16/486552.htm