Professional Documents
Culture Documents
program of tried and true recruiting practices and new ideas to reverse the tide of a declining career agency force.
This publication is a benefit of LIMRA International membership. No part may be shared with
other organizations or reproduced in any form without LIMRA’s written permission.
Ever fewer life insurance companies are recruiting and developing new agents. Agent
retention is at a seemingly permanent low level. LIMRA President and CEO Rich Wecker sees
implications in this situation beyond the long-shrinking career agency force. He says since career
agents are the main source of PPGAs, independent agents, brokers, and financial planners,
decline in the career ranks means the industry will eventually run out of producers.
A recent LIMRA study showed that U.S. demographic trends appear to favor the growth of
insurance products, financial services, and distribution expansion. Nonetheless, Mr. Wecker
points out, career companies will need to proactively focus their recruiting efforts to capitalize on
these trends. In this paper, the author lays out, based on his own background, how to reverse the
tide — how to recruit smarter, in ways that do justice to the substantial investment required to
develop even one successful agent.
For companies whose distribution strategies include career agents, this paper provides an
invaluable, comprehensive program of tried and true recruiting practices and new ideas. We
welcome your comments.
INTRODUCTION.................................................................................4
A SHORT HISTORY OF RECRUITING....................................................5
TODAY’S WORK ENVIRONMENT.......................................................10
THE BEST SOURCES OF HIGH-QUALITY AGENT
CANDIDATES..............................................................................12
APPROACHES USED BY TODAY’S BEST RECRUITERS............................16
ADDITIONAL PERSONAL SOURCES OF RECRUITS..................................20
SOME LAST WORDS ON PERSONAL RECRUITING.................................22
APPENDIX 1 — STILL VALID: TRIED AND TRUE
RECRUITING PRINCIPLES ............................................................24
APPENDIX 2 — RICH’S 100 RULES FOR ROOKIE
RECRUITERS..............................................................................27
INTRODUCTION
The number of career agents in the insurance industry has been dropping steadily since
1975. The number of companies recruiting new, first-time agents has continued to decrease
dramatically, leaving only a handful of companies recruiting substantial numbers of new agents.
The number of recruits contracted annually has dropped from over 54,000 to less than 25,000.
Five or six major companies now account for the bulk of new agents coming into the business —
sometimes bringing in as many as 80 percent of the new recruits hired in a given year.
Recruiting established agents from company to company has become the norm, with no end
in sight.
The four-year retention rate of new agents has leveled off at 16 percent. Adjusted for the
1980s, when replacement was rampant, the four-year retention rate has been at 16 percent for as
long as anyone can remember. Based on LIMRA studies, the cost to bring an agent to that fourth
year is $140,000.
What do these facts mean? They mean that unless something dramatic happens, the industry
is going to run out of producers. There will be no agents to staff the agencies of career companies
and there will be no career agents to become PPGAs, independent agents, brokers, or financial
planners.
Will we abandon the distribution channel that is responsible for 90 percent of the life
insurance sales in the United States? Are we content to let millions of people remain uninsured
because there are not enough agents to serve them? Are we resigned to being in an industry with
these poor results?
This paper is devoted to answering each of these questions with a resounding NO! Other
than poor retention,1 the main cause for the declining number of agents in our business is the lack
of recruiting; and this paper presents two approaches for improving the recruiting situation. First,
it identifies the most productive sources of high-quality agent candidates, “personal recruiting,”
and details the evidence for this fact. Then it describes the best way to employ personal
recruiting. It reveals the personal-recruiting activities of the best field leaders in the life insurance
business and presents a compilation of the best personal-recruiting practices in the industry.
A SHORT HISTORY OF RECRUITING
Sometime in the 1840s, life insurance companies began appointing full-time, professional
agents to sell their product. Sales, which had been modest up to that time, suddenly took off.
Since then, personal producers have been the primary way life insurance has been distributed.
EVOLUTION
Just about all personal producers came into the business as recruits of career companies that
trained, supervised, compensated, and housed them. Until recently, these producers remained
with the company that brought them into the business or with another career company. However,
the industry has evolved to a place where, today, vast numbers of producers have left the
company that recruited them and have become independent producers. The impact of this change
is evident in the fact that independent producers now write most new business (Table 1).2
That would be acceptable if the same number of new recruits were coming into the business
as in the past to replace those producers who retire, die, enter management, or leave the business.
But this is not happening. Many career companies have abandoned the career agency distribution
channel, while others have severely cut back on their recruiting; thus, far fewer new recruits are
coming into the business than are necessary to sustain it (Figure 1).
The high point in recruiting occurred in 1975, when 54,736 new agents entered the
business.3 The low point was in 1996 when only 24,753 new agents were recruited. New-agent
recruiting has increased in each of the past four years, providing some hope that the recruiting
situation has turned itself around. Still, it is far from where it was or where it should be. In rough
numbers, today we are recruiting one person for every 8,000 U.S. residents; in 1975 we recruited
one person for every 4,000 U.S. residents.
Meanwhile, a recent LIMRA report noted that the “echo boomers,” the 40 million children
of the baby boomers (Figure 2), are approaching the prime years for buying life insurance.4
FUTURE PRODUCERS
If career companies continue to recruit fewer and fewer producers, where are tomorrow’s
agents going to come from? Or, more to the point, where is tomorrow’s business going to come
from? Consider these statistics:
●
Sixty-four percent of Americans own no individual life insurance and 47 percent of Americans
own no life insurance of any kind, including group life.5
●
Chief executive officers of U.S. life insurance companies expect 57 percent of their profits to
come from life insurance.6
●
Seventy-four percent of Americans would prefer to deal with a trained, experienced producer
who can advise them on the complexities of life insurance.7
More new recruits must be brought into the life insurance industry to maintain a flow of
business, to make sure families are protected against the ravages of premature death, to keep life
insurance companies as profitable as they can be, and to satisfy consumers’ desire for competent
professional advisors.
LIMRA’s Survey of Producer Opinion, conducted in association with the National
Association of Insurance and Financial Advisors, reflects the maturation of the salesforce in
general. The median age of the producers in the 1999 study was 50, an increase of three years
from 1996. In addition, the percent of producers over the age of 55 has increased from 23 percent
to 32 percent.8 At this rate, it won’t be long until most of the field force is past retirement age,
meaning that even less life insurance will be sold. And that is the key consideration! Life
insurance is sold, not bought. Without an agent, there are no life insurance sales and without life
insurance sales, there is no life insurance ownership, and therefore, no life insurance business.
Is it any wonder that we are now selling almost seven million fewer policies annually than
we did in 1985?
Currently, less than 3 percent of premiums and 10 percent of policies are sold through
nonproducer sources.9 That’s the way it is today and that’s the way it always has been. There is
no reason to believe that the Internet can accomplish what direct mail, telemarketing, media ads,
mailing stuffers, or other direct-response methods have failed to accomplish.
NEW PARADIGM
There is no getting around the fact that we must recruit and retain more high-quality agents.
But we can’t do it the way we did previously. In the past, the standard recruiting strategy was to
hire as many agents as possible and hope that enough would succeed to make a profit. That is no
longer acceptable, because it is too costly to recruit and train so many failures and it is a great
disservice to clients who should have agents who will be around to serve them for a lifetime.
In today’s competitive and highly complex work environment, the only acceptable strategy
is to pursue only high-quality candidates and contract only those candidates who have an
excellent chance to succeed — and to do so in numbers large enough to continually replenish the
industry’s field force. We can accomplish this mission if our recruiting approaches are in tune
with today’s prospective job candidates and if we concentrate our recruiting efforts on the most
efficient and most productive recruiting methods. How to do those things is what this paper is all
about.
TODAY’S WORK ENVIRONMENT
Futurist Lowell Catlett describes society as it is today compared with a generation ago. “It’s
an interesting, weird world we live in and it’s going to get weirder. We’re doing things a lot
differently than we did a generation ago. Business is different, families are different, and our
society is different, with different sets of needs.”10
We differ in several ways. First, we are living longer. During the second half of the 20th
century, life expectancy for 60-year-olds increased by 29 percent, from 77 to 82 years. And more
important, seniors are living substantially healthier lives during their added years. Second, we are
still a nation of immigrants. The foreign-born population in the United States was 5 percent in
1970 and is 10 percent today. It was 14 percent in 1900. Third, we are richer. Since 1946 we
have had none of the crashes, panics, and busts that characterized history since time immemorial.
Fourth, we are growing. There are more Americans in 2001, absolutely and relative to Europe. In
1900 the combined population of the four largest European countries — Britain, France,
Germany, and Italy — was more than twice the population of the United States. But the
American population grew four-fold and now has more people than those four countries put
together. Projections for 2050 show the United States will be about twice as populous as those
countries.11
There’s no doubt about it. We are all living in a world that has changed dramatically in the
past two decades. One of the most radical changes has been in the business world. Think of all
the new words that did not exist a short time ago and how the meanings of those words have
changed business: the Internet, email, outsourcing, wireless technology, fax machines,
telecommuting, e-commerce, casual dress, flextime, and teleconferencing.
WORKPLACE TRANSFORMATION
Work and employment too have changed. Here’s how one observer put it: “The United
States’ contingent workforce — consisting of roughly 45 million temporaries, self-employed,
part-timers, or consultants — has grown 57 percent since 1980. Going, if not gone, are ‘nine-to-
five’ workdays, lifetime jobs, predictable hierarchical relationships, corporate culture security
blankets, and, for a large and growing sector of the workforce, the workplace itself, replaced by a
cybernetics workspace.”12
Today’s job candidates know they are entering a different marketplace. Candidates are not
looking for the “invisible contract” that their parents or grandparents might have had with their
employers. They are mobile, independent, and confident. They have heard how some careers
come with signing bonuses, finder’s fees, and stock options. They are demanding family-friendly
work schedules, challenging and rewarding work, a pleasant working environment, and an
opportunity to learn and grow.
And it is only natural that the insurance and financial services industry also has changed.
When LIMRA asked brokerage and independent distribution companies what they do to
differentiate themselves from the competition in servicing producers, the overwhelming response
was providing Internet support.13 A short time ago, such an answer would have made no sense.
IT’S PERSONAL
What is true for those looking for a career is just as true for those who have a career looking
for people. Today there are as many sources of new recruits for our industry as there are
recruiters. The success of these sources in bringing quality producers into the business ranges
from moderate to poor. The general rule is that the more personal the source, the more productive
it is.
Certain activities are far and away the best and most productive sources of quality agent
prospects. From day one, managers must be taught how to develop these sources of prospects
and learn that they must expend the time and energy necessary to develop leads from these
sources.
One of these sources is personal observation. A lot has been written over the years about
personal observation as a prime source of recruits. Managers’ years of experience in recruiting
and observing successful agents have given them a sixth sense about who can be successful
selling life insurance. Managers and recruiters are taught from the beginning to look for a
candidate who has a success pattern, has lived in the area for five or more years, has sales or
management experience, is a college graduate, has been in leadership positions, is active in the
community, and can fit into the existing organization. The better the manager or recruiter knows
the candidates or has observed them in action, the better the recruiter can identify candidates who
fit the pattern.
That’s why other best sources of high-quality producers (who remain in the business and
prosper) are other producers, agency employees, or individuals who are well acquainted with the
agency, the staff, and the work the agency does. These individuals know what it takes to be
successful. They have a feel for the most effective personal traits.
The key to being an outstanding recruiter is to recognize this fact and to inspire your
personal supporters to bring you candidates on a consistent, almost automatic, basis.
THE PROOF
Since 1932 LIMRA and its predecessor organizations have been collecting data on people
who apply for the job of selling life insurance. During these 70 years, they also have been
collecting data on those applicants who were hired. That probably amounts to a couple million
individuals. In other words, LIMRA has been tracking insurance producers before and after they
were contracted. With that record, it’s probably safe to say that no one knows more than LIMRA
about what kind of individual it takes to sell life insurance — or where the most successful
producers come from.
RECRUITING SOURCES
Based on LIMRA statistics, in 2001 recruiters are using impersonal sources almost as much
as personal sources to recruit inexperienced candidates for ordinary life and health companies in
the United States (Table 2).
But in terms of sales representative production and survival, candidates from impersonal
sources are among the weakest (Tables 3 and 4). (LIMRA just began collecting data on Internet
recruiting this year, so we do not yet have survival and success rates on that source.)
Candidates recruited through personal sources, such as manager or sales representative
referrals, are clearly more likely to be successful. Why is that?
The top reason is probably that a manager, agent, or someone closely acquainted with the
agency and its work is keenly aware of the type of individual who can best perform an agent’s
tasks and who will succeed as an agent.
Another reason is that individuals recruited through personal sources are more likely to
have full-time jobs than are individuals recruited through impersonal sources, such as newspaper
ads. The latter are more likely to be unemployed or to be employed part-time. Current
employment status is a good predictor of survival and success in this industry — individuals who
indicate on LIMRA’s Career Profile® that they have full-time jobs experience higher 12-month
survival and success rates than any other group.
Candidates recruited through impersonal sources are also more likely to be “job-hoppers.”
That is, compared with candidates from personal recruiting sources, they are more likely to have
had three or more jobs in the past five years. Survival rates are consistently lower for people with
histories of job-hopping.
Candidates recruited from personal sources are also more likely to come from sales,
managerial, or small-business backgrounds than are candidates recruited from impersonal
sources. Consistently, this type of entrepreneurial background is associated with higher-than-
average success and survival rates.
Research comparing the recruiting practices of high-retention and low-retention companies
clearly shows that the high-retention companies use more personal recruiting sources, while the
low-retention companies use more impersonal recruiting sources.
The bottom line: Recruiting source is strongly related to the quality of the candidate. While
it may be easier to place an ad than to collect personal referrals, the extra effort is well worth the
investment of time and energy.
APPROACHES USED BY TODAY’S
BEST RECRUITERS
So how do these personal recruiting statistics relate to real-life 21st-century recruiting?
To answer that question I went to the Research Agencies Group (RAG), an organization of
outstanding managers and general agents with which LIMRA is fortunate to be associated. This
study group was formed over 50 years ago to help LIMRA keep in touch with what is happening
in field management. The members meet twice a year at their own expense and present strategic
research papers on various topics important to field leaders. Many of these papers are published
in LIMRA’s MarketFacts Quarterly magazine, LIMRA Online, and other publications. We asked
these managers to share with us their thoughts on personal recruiting sources.
Unanimously, they endorse personal recruiting and characterize it as their best source of
recruits. Lee Harrison of Tallahassee notes that agent referral and personal observation are the
only regular recruiting sources he uses.
INCENTIVES
Although everyone provides specific incentives for referring agents, they tend to agree that
their agents do not refer candidates purely for the rewards. As David Schulman of Ft. Lauderdale
said, “We have found that although the agents like the cash and recognition, what really
motivates them to recruit is their desire to share in the responsibility of maintaining the culture
and image of the agency.”
Specific incentive rewards vary only slightly. Bob Savage of Toledo pays an agent $500
when a referred recruit is licensed and when the new recruit completes two more levels of
accomplishment, the referring agent earns another $1,000. Schulman says each of his agents can
also earn up to $1,500 per candidate, based on the candidate’s achievement. Rewards are
presented in cash at an annual banquet. In addition, the referring agent is treated to lunch every
time a referral turns into an interview. Bill Lohnes of Atlanta pays up to $2,000 to any person
who refers a successful candidate.
Harry Hoopis of Northfield, Illinois, has many incentives for his referring agents. A reward
is mailed to the agent’s home for every referral that results in an interview. These rewards range
from movie tickets to flowers to various gift certificates. If an agent meets with a recruit, he or
she earns a half-hour limousine certificate, which can be accumulated and saved for one long
limousine ride. If a referral actually contracts with the agency and stays at least 90 days, the
agent is rewarded with a custom-made suit. “These rewards are appreciated and desired by
agents,” Hoopis says, “especially the newer ones. They create high morale and continual
recruiting support.”
RECOGNITION
Harrison takes a slightly different approach: “We pay financial incentives to any associate
who nominates a new hire,” he says. “The incentive is a percentage of override for the new hire’s
first-year commissions. We have designated agents who agree to compensation for helping
recruit new agents and once they are contracted, work split cases with them. We use recruiting
specialists who are hired and trained to regularly solicit nominations from our associates.” As for
nonmonetary rewards, Schulman’s approach is typical: “Recognition is given to all agents who
participate in the recruiting effort in every monthly bulletin and at every weekly meeting.
Periodic recruiting reminders are placed in agent mailboxes and distributed with commission
statements.”
Soliciting nominations is a big part of all of the programs used by the RAG members.
Savage does it by dividing his staff into groups: “Last year, we hired a full-time recruiter for the
first time. We spent the year putting in processes that we think will result in adding 10 to 12
people a year. We are pleased with the progress we are making. The recruiter has looked at our
62 agents and divided them into three groups.
“Group A consists of those most likely to be in a position to help us find new recruits.
Group B are those who might be in a position to help us. Group C is everyone else. The recruiter
talks to the Group A people on a systematic basis and gives them different ideas of what we are
looking for. The main purpose of this meeting is to get them to put recruiting in the forefront of
their thinking. She meets with Group B on a much less frequent basis and Group C least of all.”
SETTING EXPECTATIONS
Hoopis, on the other hand, leads by example. Whether it is providing referrals, meeting
with candidates, or any other step in the recruiting process, he gets involved. He also says it is
essential for agency recruiters to share the goals and activities of the recruiting department with
the agency staff and associates.
Hoopis says, “From an activity standpoint, it is important to establish a set number of
expectations for those within the agency, especially those in management. Sales managers, for
example, are expected to make five referrals a week. Each ‘agent into management’ candidate is
expected to provide five referrals a month. For all other agents, the recruiting specialist and the
individual agents meet and agree upon a specific activity goal, which the specialist follows up on
regularly.”
Lou DiCerbo of New York City asks for four quality referred leads at every agent’s
quarterly review. To facilitate these requests, he distributes a form that the agents can use to
submit their referrals. The form includes a “desirable attributes” profile that includes these seven
qualities: likable, impressive, record of success, mature, skilled communicator, shows initiative,
and intelligent and ethical. The form provides a quick definition for each quality. For example,
“Likable = You enjoy spending time with the person.” He then provides space for agents to list
referrals — their names, phone numbers, and any appropriate comments. Interspersed among the
spaces for names are such comments as, “We have had good results with bankers who want to
become professional salespeople.” “Do you know anyone who has been caught up in corporate
downsizing?” “Do you know any clients, relatives, or sons or daughters of friends who might fit
our profile?” “Please check the business cards in your desk for candidates.”
DRAWING A PICTURE
All RAG members give their nominators a picture of the type of agent they are looking to
recruit. John Kerr of Waltham, Massachusetts, divides his target candidates into two groups:
“Basically, we are looking for two types of candidates. The first we call a Gold Candidate. This
individual has access to a market we are interested in and are experienced in serving. We are
looking for someone with the relevant knowledge and experience so we can develop a plan to get
the person off to a very fast start.
“The second type we call the Green Candidate. This is typically a younger, less experienced
individual we can team up with a seasoned veteran to work as a sales assistant while developing
his or her own market. As we have had success with both types, we promote this approach
heavily and have found that the more success we have, the more referrals we get.”
NOMINATORS
Most of the RAG members also use other forms of personal recruiting. Schulman uses
nominators, or centers of influence. He has found them to be a good source of high-quality
recruits. He develops nominators though personal knowledge as he networks with various
community, business, and charitable groups. Nominators receive mailings and/or gifts
throughout the year. Schulman also mentions another type of personal recruiting. “People who
have gone through all or part of our selection process but choose other careers are also good
contacts to maintain,” he says. “Some of them become nominators, while others may choose to
reconsider their decisions. Contact is maintained with the same system as used with nominators.”
Gregg A. Knudten, of Encinitas, California, who is with Lutheran Brotherhood, says
although his best nominations come from agents, he makes great use of Lutherans and pastors.
“We have nine individuals on our Leadership Team: five co-general agents, one assistant general
agent, and three agency resource managers. The agency resource managers spend most of their
time working with churches to set up educational workshops through relationship building with
the pastors, church staff, and church councils. They are able to obtain names that are then given
directly to one of our five recruiting specialists.”
Schulman also uses nominators whom he develops through personal knowledge and
networking with various community and business groups and charitable organizations.
Nominators receive quarterly mailings and gifts throughout the year to remind them to keep
referrals in mind.
In a nutshell, then, all of these highly successful managers and general agents use personal
recruiting as their prime — and sometimes exclusive — source of recruits.
ADDITIONAL PERSONAL SOURCES OF RECRUITS
In addition to the recruiting approaches described in the previous chapter, many other
sources use the personal approach. Here are the best approaches.
Agents have potential gold mines in their books of business, not only for cross-selling
purposes but also for possible new-agent recruits. Managers should schedule periodic reviews
with their established agents to identify potential candidates. Quarterly production reviews with
all established agents provide an excellent opportunity to ask for referrals of prospective new
recruits, as well as to continue to support the needs of an established organization. Bringing a
description of the market you are trying to penetrate and the type of individual you are looking
for will go a long way in drawing high-quality names from established agents. Try this approach:
“Bob, I’m trying to find more time to devote to my established agent development program and
the only way I can get that time is to ask my established agents to help me get my recruiting job
done.”
Building total support for the recruiting effort can make it a lot easier for a manager to build
a successful agency.
MENTOR AND SUCCESSOR AGENT PLANNING
The use of agent mentors and succession planning is a hot issue in today’s career
distribution world. What better way to double the size of an agency than by recruiting a successor
for each established agent in the office?
The benefits are obvious:
●
The company has protection for policyholders should an agent die, become disabled, or retire.
●
The new agent has an established agent with whom to work, learn, and grow.
●
The mentor has an opportunity to split business and ultimately develop someone who might
take on business when he or she retires.
●
Clients are assured of never becoming orphans.
●
The manager doubles the office sales staff.
Not every agent will become an excellent mentor. Some agents are better suited for that role
than others and may be asked to mentor more than one individual.
Working with a select group of mentor agents in the recruiting, selection, screening, and
interview process can increase their involvement and the success of the mentoring relationship.
A well-thought-out succession plan for each established agent can provide a blueprint for
recruiting the next generation of successful agents and help build a vibrant agency.
TERRITORIAL ANALYSIS
Performing an analysis of where an agency’s customers live or work can go a long way in
helping to determine where to recruit agents. The presence of orphan policyholders throughout a
territory can create recruiting opportunities that are not readily understood without an analysis of
the total customer base.
Asking agents to review their client bases by looking for someone to fill a spot you have
open in a particular territory can be an easy way to get referrals from agents and to focus on why
you truly need to hire someone.
SOME LAST WORDS ON PERSONAL RECRUITING
By invoking the overwhelming evidence of the value of personal recruiting from LIMRA
research, sharing my own experiences as a recruiter, and recounting the practices of some of
America’s best managers, I have tried to convince you that the bulk of your recruiting must be
through your personal efforts and the efforts of your staff and centers of influence. If you’re still
not convinced, here are some additional points to consider.
Atmosphere
The most significant way to attract agent and staff referrals to an agency is to create an
atmosphere where people truly want to work. An atmosphere that is supercharged and electric
will make agents feel comfortable bringing in new recruits. An agency that looks professional
and is professional is the best environment to create a high level of agent support for recruiting.
The most significant responsibility of a leader is to communicate the vision that he or she
has for the agency and to gain the support of the established agents to achieve that vision. Agents
may not help managers recruit for money, rewards, or even recognition, but they will support
great leadership.
Making agents feel involved and part of the team is essential to a leader’s success. The key
to success in recruiting is to recognize that you cannot do it alone and that you need a team
around you to make it all happen.
APPENDIX 1
STILL VALID: TRIED AND TRUE RECRUITING
PRINCIPLES
Selling and servicing life insurance and related products is, and will always be, a people
business. That means that any sales organization is only as good as its people. The quality of the
people hired will always determine the level of success of the organization. No matter how you
say it, recruiting is still the number-one job of career life insurance sales management.