It has been interesting, and also a bit sad, to watch the changing scene in what we have called the Agency System. In comparing todays roster of the National Association of Insurance and Financial Advisors membership with that of prior years, 2 things stand out. First, the number of agents (or advisors) listing themselves as independent or affiliated with independent organizations is, in every local association, equal to or greater than the number claiming affiliation with a life insurance company. The second shocker is the number of once large, even dominant, agencies that either no longer exist or continue as a shell of their former selves.
Such a profound change certainly raises the questionwhat happened? No doubt there are many answers to the question. In some cases, companies made deliberate decisions to change distribution systems or their mission. In other cases, just plain neglect of their agency people lowered their profile. Additionally, foreign acquisition of U.S. companies has in some cases caused abandonment of traditional U.S values that pervaded our distribution philosophy.
But there is one reason that I believe is readily identifiable as a major cause of this transition. I refer to life insurance companies practice of trying to “work both sides of the street” in their marketing efforts. Perhaps 3 examples will illustrate my point.
Company “A” once had 2 excellent agencies in our community–one, home service; the other, ordinary. They also had a dynamic group department insuring some of our largest employers. Their field management was respected locally and nationally (one was a past president of the National Association of Life Underwriters). Their agents were prominent in both NALU and CLU activities.
But along the way, the company began to show more interest in brokerage firms and increasingly focused its attention in that direction and neglected to nourish a well-established field force. First, recruiting slowed, then stopped and then came the decline in the number of people who identified with the company.