Four years ago, it was reported that the average age of a financial advisor in America was 51, with 43% over the age of 55 and many heading towards retirement (1). One year later, an industry publication noted that the average age of a US life insurance agent was even higher — 59 (2).
Many veteran life insurance agents have worked for years building a book of business by focusing on entrepreneurs, business owners, and professionals — in other words, the high-net-worth market. It has served them well and now, as they begin to look back on their careers, they are also looking forward to their options.
One option is to sell their book of business to a younger associate. To be successful, this process should be carried out over a number of years with the junior agent developing relationships with the clients. Most veteran agents became successful because their practice was relationship based, not transaction based; handing off the business to another is hard unless there is a relationship.
Another option is to simply slow down — to throttle back the practice and take more time to enjoy life. This can mean shorter days and longer vacations, still with one foot in the office door to keep the relationships strong and develop additional business — although not at previous levels. For many life insurance producers, that option is appealing.
Both options present challenges, but one challenge can be resolved rather easily. Unlike the financial services market in general, life insurance has not kept up with the technological advances in investment management. Software and online services make investment portfolio selection, as well as asset tracking and reporting, easier than ever, thereby cutting office costs. The same cannot be said of life insurance, where policy tracking and management is still a cumbersome and expensive back-office process.
Clients of most veteran life insurance producers utilize a trust company to house their policies for estate planning and distribution reasons. A new trust company — the Life Insurance Trust Company — is providing services that will make clients happy and agents’ lives much easier by affording them an opportunity to lower costs and increase services.
The Life Insurance Trust Company utilizes one of the most sophisticated policy management systems available today. Developed internally over 15 years, it provides an annual review that not only tracks policy performance but also alerts all to policy triggers, such as conversion options.
The Life Insurance Trust Company utilizes the back-office services of their affiliated company, ITM TwentyFirst, the nation’s largest manager of TOLI trusts, so the agent can be assured that premiums are paid on time. With specialized insurance professionals on hand, the Life Insurance Trust Company can alert the grantor and agent to any issues that arise and contact the carrier to obtain the information necessary to make prudent decisions about the policy.
Although the trustee owes a fiduciary duty solely to the beneficiary, they understand the life insurance business and its products and will work together with the advisor to maximize the asset in the TOLI trust.
Because they do all the heavy lifting by gathering information from the carrier, the agent is relieved of the past back-office expense, which lowers their overall office expenses while maintaining or even increasing their client service levels.
For more information about the Life Insurance Trust Company, visit https://www.lifeinsurancetrustco.com/, or contact Leon Wessels at 605.574.1703 or firstname.lastname@example.org.
- Melanie Waddel, “43% of Advisors Older Than 55: Cerulli,” ThinkAdvisor.com, January 21, 2014.
- Andrea Wells, “Young Agents Survey: The Next Generation Steps Up,” InsuranceJournal.com, April 20, 2015.