This letter is intended to set the record straight on a few matters that were stated from a recently released report entitled, “The CCIR cooperative MGA-focused Thematic Review - Consolidated Observations Report”. This review was released in a handful of industry publications and led primarily by the Financial Services Regulatory Authority of Ontario (FSRA).
Experior would like to commend our regulators and their pursuit for solutions to uphold the FTC (Fair Treatment of Consumers) initiative.
Our company’s mission statement is “Building financial foundations for families to empower them today and leave a legacy for tomorrow.” In other words, from our inception, our motivation has been to put clients first, and by default, ensure the fair treatment of consumers.
The findings of the FSRA report were released after a 6-month audit of a small aggregate “thematic” group that Experior was a part of, along with two other MGAs. For those who are not aware, Experior has been growing year after year at a steady and sustainable pace for almost 9 years.
Below are a few big concerns that came of the report that we at Experior would like to correct:
“The review also found the MGAs had a “high proportion” of newly sponsored agents and that a large proportion of life and health insurance gross income at most of the MGAs came from permanent life policies. Agents selling “complex” coverages, such as universal life, should be trained to ensure such products are sold based on client need, the report said.”
Experior has been fortunate to attract agents from many walks of life. Most of whom were already licensed before joining Experior. Of the 1600+ licensed agents we currently have in Canada, fewer than 20% of them have less than 2 years’ experience (18% in Ontario which is our largest demographic). The average tenure of an agent of Experior across Canada being 8 years. This is not in line with the statement made that said, “all MGAs had a high proportion of newly sponsored agents with less than two years of experience as licensed agents”. Again, at our firm our agents do not resemble the claim made from the report.
Another observation that was shared from the report was the following: “Agent review trends and consumer harm”.
FSRA Market Conduct became aware of agent activities such as:
- targeting vulnerable population(s)
- tampering with official documents
- potential cheating on licensing examinations
Approximately 32% of LARFs (Life Agent Reporting Forms) received by FSRA since inception relate to the three reviewed MGAs.”
What was not included in FSRA’s numbers was that Experior as an MGA has never been reported, and only one agent in our 9-year history (keep in mind that we have over 1600 agents) has ever been reported. The agent complaint was in 2019 and given that Experior knew this individual had been with numerous MGAs prior to joining Experior, the complaint was dealt with immediately and with great scrutiny. This error in the reporting of the review begs the question, why was Experior included in this blanket statement? Why was this not more clearly reported in the review? Since our inception, Experior has never had a claim with our Errors and Omissions Insurer. Something that no other “thematic” MGA can claim.
The one similarity between these other two MGAs and Experior is a multi-tier compensation structure. However, all three MGAs differ drastically, not only in terms of their respective recruiting practices, but also in their focus to provide choice and suitable options for their clients. This is why at Experior, we attract and retain agents with many more years of experience, despite Experior being the youngest of the MGAs in this audit.
Another comment Experior would like to clarify, about how “multiple agents are paid for a single sale”, not only applies to the three MGAs in the review, but also to most MGAs and their AGA’s in Canada. The large “consolidator” MGAs rarely focus on the direct recruiting any longer. Their AGAs typically are tasked with recruiting, and many of them have their own “in-house” version of a multi-tier commission structure they’ve built into their model. Amongst MGA’s it is also common for agents to seek advice or mentoring from other more experienced agents, in return for a split of the sale. This is sometimes called “joint field work”, or “specialist work”. In other words, we believe most compensation models in the MGA space is multi-tiered compensation, one way or another. On a side note, Experior entered the USA market in 2019 and came to realize very quickly that every MGA in the USA is multi-tiered, but the carriers themselves pay the agents directly up to 15 levels.
The report also fails to address a growing concern in our industry; which is, who will be bringing in the new, young talent into the industry, should the stated three MGAs in the review stop recruiting? The report and subsequent articles paint a picture that recruiting new agents into our industry is somehow negative and destructive. In the 90’s, MGAs built their businesses primarily by attracting agents from career shops. In the 2000’s and beyond, many have continued their success by attracting agents from the two biggest multi-tiered structured companies in our business, which originated in the USA. The biggest MGAs only get bigger by swallowing up smaller MGAs and AGAs. These two multi-tiered companies were and continue to be feeder companies of agents to this business plan of consolidation, which doesn’t address the need to bring in new agents to serve clients. The industry needs a way to recruit and attract a younger agent, as older agents slow down and retire. At Experior, our experience and research continue to show that a multi-tiered approach, being run compliantly, the way Experior continues to do so, has not only allowed for new, young talent to discover a wonderful career in our industry, but has also had a positive impact for our clients and for the Fair Treatment of Consumers initiative.
This report also mentioned “new agents not having proper training or mandatory meetings.” Experior provides more training than any MGA in the industry to our knowledge. Our CEO, Jamie Prickett has personally sold for two of the largest MGAs in Canada prior to, and during the building of Experior, and mandatory trainings were non-existent. This is an area that we intend to continue to accelerate and improve to ensure our agents are always properly trained and informed.
But as for training itself, every week we have product/carrier training for 2 hours with 1 or 2 carriers. Any agent who attends these live, are tracked and provided Continuing Education Credits (CE credits) from the carriers. On average, in a year, an agent could expect to earn up to 80 CE Credits (as not all the sessions provide CE credits, or it would be closer to 100 hours). This also means over the course of 2 years, some of our agents are receiving over 150 CE credits, which is far more than the 30 that are required.
Jamie also runs a bi-weekly training sessions with our Executive Directors (top level management at Experior, who also offer additional oversight to their team of agents), with approximately 80-90 individuals in attendance. Each meeting covers various topics like field issues, compliance, training, and of course recognition which we love to do.
In addition, the review alleged that the three MGAs don’t do Agent Surveys of business practice. The truth is that Experior does an annual review of every agent, which needs to be verified by their Executive Director, adding an extra layer of oversight. Also, an annual Anti-Money Laundering review is required, otherwise commissions are held until the documents have been completed.
Experior is not a one trick pony, and we are growing at our own pace, but we are here for the long haul and will not work with anyone who doesn't share who doesn't share in our values and mission, “Building financial foundations for families to empower them today and leave a legacy for tomorrow.”
The report had serious concerns “about one MGA’s excessive recommendation of a sales concept called IRP (Insured Retirement Plan).” The Insured retirement plan is a retirement tax planning strategy using life insurance. They allege the use of a complex product like Universal Life and this strategy is too complex for rookies to grasp, and we agree with them 100%. It is not a one size fit all solution.
During this review, we were required to share with FSRA a breakdown of our revenue sources as a company, and the article stated the following:
The review found over 90% of all three MGAs’ 2021 Canadian gross income came from Life and Health insurance business. Other lines of business included mutual funds and various referral services.
L&H gross income by product and insurer in Canada
- gross income by product
- the review obtained proportional breakdowns of L&H insurance gross income by product category that showed what products were distributed by each reviewed MGA
- a large portion of 2021 L&H insurance gross income came from the sale of permanent life insurance products, specifically UL products.
The actual 2021 numbers for Experior are below, and it is clear that a “large portion” of Experior’s 2021 gross income is NOT derived from the sale of Permanent Insurance products, especially UL:
38% from Segregated Funds
27% from Term Life
33% from Permanent Insurance (with an approximate 50/50 mix of UL and various whole life products)
2% from Other (Mutual Funds and a handful of referral products)
As for oversight of sales, Experior has embraced technology to help increase compliance and suitability reviews. Whenever an agent makes a sale with one of Experior’s partner companies, we require them to upload all relevant documents to their Experior back-office, our secure and proprietary agent business solution. Once received, our staff reviews for accuracy and potential red flags. Relevant documents include a copy of the application and illustration, a copy of the Reason Why Letter, a copy of the Advisor Disclosure form (which we wonder when the name of this document will be changed since life agents can no longer use the term “advisor” in Ontario), and an LIRD form, if applicable. From our experience, traditional MGAs do not require, nor review these documents. Agents are also required to complete an FNA or Needs Analysis for all their clients. Our most recent update to our back office, whereby our agents can attach the completed needs analysis to the client information file, shows our continued focus on improvement and compliance. Our staff can then review the file and ensure proper compliance and FTC requirements are always followed.
The 3 MGAs included in the review were required to sign a Non-Disclosure Agreement as company data was shared with the three participating MGAs about one another, and for that reason, we will not share any of that protected information. Experior’s goal is to set the record straight. We are not the same as the other two MGAs. They run their sales & recruiting training their way, and we run ours the Experior way. We take pride in the tri-brid model that was created and adopted as the difference at Experior, which takes the best from the three types of industry models: MGA/Independent - MLM/Recruiting - Captive/Career
Our hope with this letter is for the public to know that Experior is unique and can’t be unfairly lumped in with similar “thematic” MGAs, or any other MGA for that matter. We won’t accept that we were painted with the same brush as the others. The Fair Treatment of Customers is a priority that we at Experior take seriously. Our culture of training, support and doing what’s right for the client, is of the utmost importance to Experior, and something we expect all our agents to follow. We have done this since our inception, and we will continue to do so moving forward.
Compliance department to be expanded
Throughout this audit and experience, our team at Experior has learned a lot, and one of our immediate decisions is to further expand our compliance department. We are currently seeking to hire new members to our compliance team. In addition, we will continue forward by doing an even better job with agent monitoring and implementing mandatory training throughout the year.
In conclusion, Experior is committed to continuously improving and getting better, for our clients and agents alike. Our immediate steps will be to improve agent monitoring and implement mandatory training throughout the year. We will continue to comply with FSRA and all our regulators, to ensure Experior continues to far surpass what the minimum regulatory requirements may be, and to always ensure The Fair Treatment of Customers.
Jamie Prickett, Co-founder & CEO
Lee-Ann Prickett, Co-Founder & President
Nathania Millette, Director of Operations
Shelden Smollan, Chief Experience Officer
