The Insurance Portal recently obtained a copy of a letter in which Financial Horizons, a managing general agency (MGA), explained to a Quebec-based advisor – following a review of relationships with advisors – that it was ending his contract.
The letter informed the recipient that Financial Horizons was terminating his contract effective September 23, 2024 and that they would no longer accept business from him 30 days effective from the date on the letter.
At the same time, the MGA informed him that it would terminate the contracts he had obtained from insurers through the MGA. He was expected to transfer his business with these insurers to another MGA by Nov. 25, 2024.
Any business not transferred on time could be reassigned to another advisor, without compensation, explained the letter from Financial Horizons.
Asked to comment on this letter, Denis Blackburn, Financial Horizons’ Quebec Region President, did not respond to requests from Insurance Portal.
Not an isolated case
If we see that they have started the transfer to another MGA, we give them extra time to allow the carriers to complete their transfers – Cathy Hiscott
Financial Horizons is not alone among MGAs in weeding out low-activity advisors. PPI has traveled a similar road before. Cathy Hiscott, President and CEO of the MGA, answered Insurance Portal's questions about their own advisor relationship review project.
In 2021, PPI announced by letter that it was canceling the contracts of advisors who had not dealt with it for some time. “We sent a similar message to our advisors in 2023,” adds Hiscott.
PPI's letter gave advisors 60 days' notice by which time they had to transfer their business to another MGA, or to another advisor. They were obliged to stop accepting new business through PPI upon receipt of the notice.
Since then, Hiscott explains that PPI continues to monitor its advisor activity and terminates relationships with those advisors “who are not actively doing business with PPI or not actively engaged in the business fulltime.” The MGA also ends relationships with advisors who are not “continuing their education, staying on top of technology, product knowledge, compliance and regulatory requirements,” she explained.
Everyone manages their business as they see fit - Phil Marsillo
Hiscott is flexible about the 60-day deadline. “If we see that they have started the transfer to another MGA, we give them extra time to allow the carriers to complete their transfers,” she explains.
Phil Marsillo, President and CEO of IDC Worldsource, declined to elaborate on the decision by some MGAs to cut ties with advisors they deem inactive. “Everyone manages their business as they see fit,” he said in an interview with Insurance Portal. Marsillo is also President of the Canadian Association of Independent Life Brokerage Agencies (CAILBA).
As for IDC's intentions, he was brief. “We're not there yet. We're a network of independent advisors. We have no obligation (of business volume to advisors). Would we like them to place (their business) only with us? Yes, but at the end of the day, they have a choice,” he says.
A question of cost
One of our top firms got this termination letter from the other MGA - Corey Cott
For its part, PPI says it's doing this so it can focus its efforts on active advisors and guarantee them a high level of support and attention.
Corey Cott, Senior Vice President, Sales, Qualified Financial Services (QFS), says he's seen an influx of such cases. “One of our top firms got this termination letter from the other MGA,” he revealed in an interview with Insurance Portal.
In his opinion, the compliance explains the decision of the two MGAs. APEXA is a compliance platform to which contracted advisors subscribe and is “a huge cost”, says Cott. Dealing with an unproductive advisor therefore becomes a burden for the MGA. Like most MGAs, QFS subscribes to APEXA. This means it has to pay a bill based on the number of registered advisors. Cott says that QFS is in the range of 1,000 to 2,000 advisors.
Despite this, QFS has decided to leave the choice up to the advisors. “They have the right to place business with the MGAs they want to. We don’t force them,” says Cott, adding that the majority of advisors registered with QFS deal with them on a regular basis.
There's no reason why an advisor shouldn't do all his business with us - Gino-Sébastian Savard
Gino-Sébastian Savard, President of MICA Cabinets de services financiers, says he's not aware of a wave of terminations. “These advisors don't knock on our door. They don't have the profile we're looking for, and that's well known in the industry,” he told Insurance Portal in an interview.
“We don't accept advisors who don't do all their business with us,” he says, adding that the combination of the MGA and MICA Capital, can meet all their needs for insurance, mutual funds, exempt market funds, etc.
He predicts that other MGAs, if they are able to offer a full range of products and services, will eventually impose the same requirement in order to cut costs. “MICA has over 160 employees for 320 advisors. We have high-performing advisors, and we support them so that they perform at their best. We give a lot of service, but I at least want to get something back,” he explains.
The majority of the firm’s 320 advisors are licensed in life and health insurance. Savard adds that between 125 and 150 of his 320 advisors sell insurance on a regular basis. Individually, their volume of premiums submitted “is very high,” he says. The total volume of these advisors enables him to have direct contracts with 16 insurers. According to Savard, MICA's well developed commercial insurance business contributes to this high level of production.
An open door
I see a lot of desperate people, who have received a termination letter with a deadline - Louis-Xavier Savard
Founding president of Groupe Financier Signature, Louis-Xavier Savard, for his part, takes issue with the termination of less productive advisors. Savard, who heads the MGA, which is associated with Groupe AgenZ, is especially upset by the short deadline.
“That's what stresses them out the most,” says Savard. “I see a lot of desperate people, who have received a termination letter with a deadline. They have to transfer their clientele to another MGA or advisor, or risk losing all of their customers; they don't know what to do.”
Groupe Financier Signature opens its doors to them. It welcomed four in December 2024. At the time of writing on Feb. 12, Savard had had no further requests. “The December wave is over,” he explains.
Among the four advisors he welcomed, he cited the case of an advisor who had dealt with the same MGA for 40 years. She had to transfer her clientele within 30 days. Savard says he was able to transfer her business, as well as that of three other advisors. He adds that in one case, one of the advisor's insurers refused the MGA transfer.
He also deplores the fact that older advisors are being forced to end their careers on such a note. After welcoming them, Savard says he will endeavor to match each of these advisors with a younger one. They can then begin a business partnership or succession process.
Succession problem
At QFS, Corey Cott believes that the terminations reflect a broader problem: that of succession planning. “The average advisor in the industry is in the high fifties. Many MGAs don’t have succession tools for advisors. A lot of advisors come to QFS after receiving a termination letter from another MGA and ask: ‘What do I do now?’ Some of them have quite big books,” explains Cott.
“We are trying to address that problem internally with our advisors now,” he adds. QFS has been offering IGNITE since 2019, a program that helps advisors and their successors with succession planning.
Cott recalls that he, along with his brother Jesse Cott and sister Haley Cott, senior vice president, finance and operations, and senior vice president, sales support and administration, respectively, went through a succession plan initiated by their father, Kevin Cott, founder and chairman of QFS. “The same thing has to happen with advisors,” says Corey Cott.
For its part, PPI says it supports inactive advisors who want to sell their block of business to another advisor. “If they are interested in selling their book, our sales leaders work with them one-on-one to find a successor, and they can also use the resources available through our Matchbook service (powered by FindBob) to help value their business and find prospective buyers,” says Hiscott. This online tool helps advisors assess their client base and find potential buyers, she adds.
In its termination letter, Financial Horizon invites advisors to contact them if they need help finding a suitable advisor to take over the servicing of their clientele.
