From Quantity to Quality
The Sales Agent in a Mature Market
Michael Elliott
LIMRA Senior Regional Executive, United
Kingdom and Ireland
Italian – Milan
2012
From Quantity to Quality
LIMRA’s Market Maturity Model shows where the
industry came from, where it is today, and where it is
going in the future….
From Quantity to Quality
Yesterday’s Agency
“Yesterday’s agencies were built around
recruiting to a solo practice.”
Agent or Advisor
‘New Games, New Rules: New Reality’
by LIMRA & Moss Adams
Administrative
Staff
Yesterday
3
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Today’s Agency
“Today, the economies of scale enjoyed
by consolidating sales offices into very
large mega-offices has reached the point
of diminishing returns.”
‘Leading Indicators’
by LIMRA
Today
4
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Tomorrow’s Agency
“Tomorrow’s agencies will be built around
collaborating teams”
‘Forces of Change: Issue Facing Distribution Leaders’
by LIMRA and McKinsey & Company
Tomorrow
5
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Two kinds of Agent are emerging:
A Traditional Agent = Protection and Savings;
A Contemporary Agent = Consultation Specialist


‘Forces of Change: Issues Facing Distribution Leaders’
by LIMRA and McKinsey & Company
6
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The Modern Financial Planner
 Educated to degree level and has professional
financial services qualifications;
 Likely to be paid by fees or a combination of
fees and commission;
 Prioritises financial advice over selling;
 Is provided with a knowledge of investment
strategies;
 Is likely to have a career path beginning with a
tied agency to gain experience.
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The Modern Financial Planner does …
 Assessments: a list of outgoings and incomings;
 Goal Setting: financial goals help direct financial
planning;
 Plan Creation: the financial plan details how to
accomplish clients’ goals;
 Execution: may involve assistance from other
professionals such as accountants, investment
advisers and lawyers;
 Monitoring and reassessment: for adjustments to
goals, new life events, changes in incomings and
outgoings.
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A Day in the Life
On a typical day a financial planner's tasks
might include:
 Marketing his or her services to potential clients
by giving seminars or networking;
 Meeting with clients to assess their financial
needs and goals;
 Updating clients on potential investments;
 Adjusting clients' financial plans to
accommodate life changes such as marriage,
divorce, disability or death of a spouse.
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Europe – leading the drive to higher standards
 Czech Republic on course to certify first
European Financial Planning Association
qualified advisors;
 European Commission – Markets in Financial
Instruments Directive (MiFID) II proposals will
ban commission for independent financial
advisors and provide greater transparency in
advisor/client relationships;
 UK’s FSA will ban commission for all financial
advisors and raise standards by exams.
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The demand for financial advice can only grow
Source: LIMRA 2009 Industry Predictions
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Moving away from commission-based
selling
 Danger of commission-driven salespersons
selling products without regard to their suitability
for the client;
 Scandals involving unsuitable products sold on
commission in Australia, India, the Netherlands,
South Africa and the UK.
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UK - Retail Distribution Review (RDR)
 Launched by the FSA in June 2006 to address
persistent problems in the regulation of financial
services. Comes into force 2012;
 Insufficient consumer trust and confidence in
the products and services supplied by the
market lie at the root of what the RDR seeks to
address.
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Retail Distribution Review
 Two main levels of advice: independent and
restricted. Non-advised services, including
execution only, will still be allowed;
 Commission for financial advice on investment
products to be banned from 2013;
 Investors to be told how much advice is going to
cost and how they will pay for it;
 All investment advisers to be qualified to a new,
higher level, equivalent to the first year of a
degree course.
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Measures fundamental to desired
RDR outcomes:
 Improve the clarity with which firms describe
their services to consumers;
 Address the potential for adviser remuneration
to distort consumer outcome by ending
commission-based payment;
 Increase the professional standards of financial
advisers by examination.
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Professional Qualifications
 The Retail Distribution Review is designed to
create a framework that will make individual
investment advisers more personally
accountable for their knowledge, skills, and
professional conduct.
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What will be the effect of
ending commission in the UK?
 A growth in the market for non-intermediated
sales of simple investment products;
 Loss of commission stream may translate into
fewer opportunities to help those on modest
incomes;
 Growth of bancassurance, direct and worksite
marketing;
 ‘Simplified advice’ could be increasingly
important for the mass market.
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Solvency II
 The new solvency regime for all EU insurers,
coming into force in 2012. Applies to all
insurance firms with gross premium income
exceeding €5m or gross technical provisions in
excess of €25m;
 Aims to implement solvency requirements that
better reflect the risks that companies face, and
deliver a supervisory system consistent across
all member states.
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Solvency II - Opportunities
 More effective risk analysis could help firms
offer keener prices on particular products,
carving out a market niche or forcing less
adaptable competitors to withdraw;
 Exiting from certain business lines would
release resources for more profitable products;
 Companies with Agency sales forces will find
enforcing compliance easier;
 Providers can dictate which products the sales
force will sell, minimising the impact on
withdrawal of product to cope with Solvency II.
From Quantity to Quality
Learn from the past to influence the future