A letter to the Editor by Marc R. Brazeau, RHU

Dear Editor,

After listening to the various insurer announcements cancelling the travel incentives for their independent distribution channel, I could not stop scratching my head in disbelief.  This astonishment is certainly not over Leslie Byrnes’ nor Jim Ruta’s claim that the withdrawal of such incentives offered to industry professionals now has us in a better era within the financial services industry. How a group of people within this industry can become so focused on these pebbles when we truly have bigger and real fish to fry is the true mystery. Ms. Byrnes writes of not hearing any pushback which begs the question, “Did you actually speak with a reasonable number of leading producers as to why they enjoyed such incentives, let alone find out for whom this “perceived conflict” was actually such an issue?

Here is my take on this truly sad unravelling of such a recognition component for fine legions of men and women who have risen to the top of this industry.  When this conference travel actually comes into play, what is not mentioned in any of these articles is such recognition at the entry qualifying level effectively creates a 1.5 to 2.5% taxable incentive to these top 20% producing industry advisors. Then, do a bit of math of the top conference qualifiers and do a “somewhere in the middle of the pack” calculation taking that 1.5% to 2.5% bump in compensation much downward. Now I ask, “Really people, really” why such the stir?  By far, not an outrageous incentive, rather, an opportunity for an insurer to warmly thank their top producing advisors. Now, one may ask, why not simply pay them as a cash bonus? Well, as a product manufacturer, you get to pay your top producers and are able to personally say thank you.  Last time I checked, and similar to how I treat my top revenue generating clients – good strategy I would state at this point! 

Appreciation for hard earned business

Sales people typically enjoy feeling appreciated for their hard earned business (yes we are all, in the end, in the business of selling no matter what your card states, be it commission, fee, or derivative of the new types of revenue streams. One must drive income to grow one’s business. Therefore, you best learn to be a good sales person if your business is to thrive). If Mr. Ruta, as an industry veteran, wishes to frown upon these types of incentives (as do some advisors whom are eligible for such standing also do from time to time I will acknowledge), one is free to simply decline attendance in lieu of other traditional conferences at their own expense. But why impose their view onto others is, quite frankly, your nose in my business at this point. 

“I propose the industry critics go after the real issues if they are to create value by their presence and noise”

What is interesting on that remark I must point out, is the fact that several years ago our industry put out a directive to generate an advisor disclosure form to demonstrate how we are paid (for the client’s awareness). This included, within this disclosure document, a statement(s) as to how the advisor was remunerated; be it commission-based, fee-based, bonus/override and yes, incentives which may include paid conferences. At that point, one must note, the Canadian marketplace did not stop buying products and services simply because highly motivated advisors qualified for a conference as stated by their disclosure documents!  But what is interesting is how different advisors in various segments of the financial industry changed their revenue models, yet not one of them is a “one fits all” after the introduction of such new approaches. Therefore, I ask, why apply the red scarlet letter to those people attending insurer paid conferences when one simply “perceives” a conflict of interest since it forms part of the disclosure documents? Doesn’t your wholesaler also spend more time with you to establish a relationship, educate you, and share a wealth of tips when one brings them more business? So where does all this “perception” end?

Result of a considerable amount of work

This conference incentive is offered as a result of significant business volume and which is the result of a considerable amount of work. I am not aware of many advisors if any, who achieve such status, except for those who have developed steady and significant work habits resulting in clients seeking to retain their services. But yes, like everything else in life, we do have the one-hit wonders or questionable financial advisors (or feel free to insert any other career choice since problem people exist everywhere) that, the majority of the times, they crash and burn as their less than honorable intentions become known. Thus, I question burning everyone else at the stake since you will never fix the “one off”. In the interim, pointing out people in a crowd who have proudly and honorably harvested their grapes, I strongly propose to let them enjoy the wine should they choose to visit the winery once invited as a VIP guest.

“Sadly, we too often witness the herd-like approach to a perceived problem and wonder if this so-called wisdom is actually nothing more than a quiet, ulterior motive”

My experience from attending various conferences offered by different insurers has permitted me to meet attendees who continue to achieve that level of success from the sum of the various relationship incentives offered by these host insurers. This approach should not change nor be frowned upon as a whole. Otherwise, the nit picking will never end instead of the intelligent addressing of more meaningful issues? If industry leaders have nothing else to do but chase such butterflies simply because it looks pretty on the surface in the name of perceived industry beauty, this butterfly, like this issue, is still after all nothing more than a small bug underneath the surface. Therefore, best leave it alone and enjoy the view if you so choose, or you are free to look away since it has created no material harm to anyone. Otherwise, you are stating that when an advisor directs business to one insurer over another you are stating that some of your CLHIA insurers, as an example, have bad UL products over the others simply sold in the name of a travel incentive. I propose every insurer has nuances over each other which competitive pressures makes each of them look over their shoulders from time to time towards refining their product line. If you disagree with my analogy, I invite one insurer to call out a peer’s product in the name of the client’s interests and see how that goes. 

Leave it in the hand of clients

One important item we should all consider, is that the best mechanism in place to question the escalating recognitions provided to the top advisors should ultimately be left in the hands of the client. Since we do place a quite a value on our clients, we should, at the very least as an industry, treat their intelligence with respect. If such a client becomes offended by the disclosure of these types of incentives, please keep in mind that they are always free to place their business elsewhere if they disagree with you accepting them. In the end, I propose the industry critics go after the real issues if they are to create value by their presence and noise. 

In closing, I wish to congratulate Sun Life and Industrial-Alliance to date for standing up for their value added component towards their key relationships within the marketplace.  Their pause to not jump onto this bandwagon, at the very least, states their desire to carefully reflect over this value added feature within their market relationships. Sadly, we too often witness the herd-like approach to a perceived problem and wonder if this so-called wisdom is actually nothing more than a quiet, ulterior motive. In this case, I can’t help but wonder if a few insurers simply hoped, should these travel incentives all end, how it would become a nice added touch on the bottom line (Yes, that last comment actually came to me from various senior people from different insurers commenting how this was an easy item to sell as “all for the good of the advisors and clients”).  Imagine this… if the insurers, who were hoping to make that tactic work and end travel incentives, were dropped by some of those advisors who did lead the pack over this change, they may be forced to do an about-face to compete for relationships once again…especially if not all insurers followed …oops, then some of them may witness what happens when one doesn’t stand up for the people closest to you over such petty issues.

In my case, my bags are still packed and ready to travel.

Marc R. Brazeau, RHU

Timmins, ON