By Kate McCaffery
On March 10, the Empire Life Insurance Company dropped the news that it had acquired six BridgeForce Financial Group member firms and amalgamated them into one wholly owned subsidiary of Empire Life, now known as TruStone Financial Inc.
This newly formed managing general agency (MGA) was created because the company wanted to invest in the advice channel, says the president and CEO of both Empire Life and TruStone, Mark Sylvia. He adds that the company hopes eventually to expand this distribution network across the country.
The move raises questions about just how independent the MGA is or will be from its parent company going forward. In speaking with the Insurance Portal, Sylvia elaborated on this, discussed the company’s plans for the new MGA, and also the carrier’s appetite and plans for future acquisitions.
Board level involvement
Although Sylvia himself is the president and CEO of both companies, he says the parent company’s involvement with the new MGA will primarily occur at the board level. “We have other subsidiaries, and we have investments,” he says. “If we want management to run a company, we let them run the company,” he adds. “The day-to-day operations, the interactions with advisors, the management of the operation will all be in the hands of the management.”
He says the carrier’s acquisitions are an investment in the country’s advice business. “It’s a good business to invest in, which is why we’re investing in it,” he adds.
In addition to keeping the acquired firms’ management – the new firm will be led by Michael Williams, former partner with one of the acquired firms, while the other principals will continue as part of the TruStone senior management team – he says the MGA will also continue to do business as a BridgeForce member. “The management team is still in place and they’re doing what they were doing before. They’re all comfortable marketing under the BridgeForce banner. We think the BridgeForce banner is a benefit to us. We want to continue to market through that and have all the support services they’ve built that advisors value.”
The customer relationship
Advisors, meanwhile, he says remain central to the process of selling insurance. “When people are looking for solutions to financial questions they have, in Canada, continually turned to advisors. That’s the reason why we’re investing in the advice channel. It’s here. It’s going to be here in the future, and it provides a valuable service.”
He says the perennial question about who “owns” the client relationship in these circumstances has a clear-cut answer: “We are not going to tell advisors where to place their business. That is their decision with their client, not ours. We earn those relationship opportunities by having good products, good service and good prices,” he says. “If an advisor and their client decide that the best solution for a term insurance product is Empire Life, that client of the advisor is a customer of Empire Life – for that product. That’s our relationship.”
He says this independent decision-making process is something the company believes in and values. “The advisors and their customer choose which insurance company they place their business with. We believe that is how it should be.”
Product shelf influence
He says limiting what advisors can sell, meanwhile, would in fact limit the firm’s ability to recruit advisors to its network. “If you shorten the shelf, you limit (that) opportunity.”
More, he points out that the majority of the company’s business comes from MGAs that the company has no financial interest in at all. “We have no willingness to make them feel like their relationship with us is a lesser relationship than other MGAs. We will not be providing a proprietary product to TruStone. Any products that we make available for our advisors are generally available through all of our MGAs,” he says. “We cannot provide products or services to one of our MGAs that we’re not willing to provide to another. What would be their incentive to do business with us?”
Future acquisitions
Finally, Sylvia discussed the carrier’s acquisition ambitions, saying the company doesn’t have specific acquisition targets, as there are a limited number of MGAs left in Canada that aren’t already associated with large financial institutions. “To try and predict how much of this market space we could obtain is very, very difficult. It would be highly speculative. There’s a small number of opportunities.”
As those opportunities emerge, however, he says the company will evaluate each one to determine if it is a good fit. Part of this fit is cultural. “Is the organization culturally similar to our organization? But also, is their target market similar to our target market?”
He adds that private wealth and high-net-worth businesses are not the company’s market. “In the high-net-worth business we probably wouldn’t look. But any distribution opportunity in the MGA space that is a good fit for us culturally, and is in our market, we will look at any opportunities like that to continue to grow our business,” he says. “We’re trying to invest in the advice channel. This gives us another opportunity to expand in that space. You’ve asked about planning? We hope to eventually have a very strong (advice) network, coast-to-coast.”
