Independent financial advisors excel

By Alain Thériault | September 25 2010 08:25PM

In the first half of 2010, independent advisers distinguished themselves in the sale of universal life insurance policies.

This is the initial conclusion reached by the Life Insurance Marketing and Research Association (LIMRA), although the firm was still analyzing data when this magazine was going to press. "Independent sales were down last year but they are definitely recovering this year," says Karen Terry, Manager of product research at LIMRA.

According to Stephane Vigneault, this was also the case at Sun Life Financial. The insurer's Regional Vice President for Quebec, says that Sun Life's independent network tends to focus on customers who are aged 50 and older as well as businesses, which are markets in which large deposits to universal life insurance (UL) policies are encouraged.

"We increased our universal life insurance sales by 27% in the first quarter, including excess premiums. The number of policies sold increased by only 3% during this period, while our average premium has almost doubled. I think the average premium is about $8,000 in our sales force, all products combined. For universal life, it is a lot more," he says.

According to Joe Kordovi, Vice President and Pricing Actuary for life insurance products at Transamerica Life Canada, the independent network is successful when it comes to selling UL because its advisors are good at explaining the benefit of paying more than the minimum premium. "A large portion of our second quarter universal life insurance sales were made with excess premiums that were higher than the industry average," he says.

Tax shelter

Mr. Kordovi also believes that independent advisors have done a good job explaining tax shelter concepts, and the principal of dollar cost averaging.

A large managing general agency (MGA), Groupe Cloutier, confirms the independent channel's success. Patrick Cloutier, Vice President of sales and business development, points out that most sales are for products where bonuses are reduced or absent, which lowers management expenses.

Universal life is not the only area in which the independent network shines. Since the beginning of the year, Groupe Cloutier has also had a great deal of success with term insurance.

At Peak Financial Group, an MGA which also deals in mutual funds and securities, the insurance division performed particularly well in the second quarter. Peak's President, Robert Frances, says that they have seen growth across all product lines, not just in universal life.

"The population is aging and becoming more aware of the need for insurance. As well, more people become sensitive to risks after a crisis," says Mr. Frances.

In addition, he believes that the independent channel is able to distinguish itself because independent advice is increasingly important in today's regulatory environment. "The customer wants to be sure that his advisor is not pushing one company's product instead of another.