Insurance brokers work in an aging industry the average agency owner is in their 50s and the average producer is in their late 40s, according to a recent Reagan Consulting study. What the Atlanta-based management consulting firm found isnt new, says Reagans Executive Vice President Tom Doran. Attracting young people to this industry is challenging, he says. Its been that way for a while.
Still, the discoveries Reagan found about brokers hiring practices were shocking, says Doran, 54, who been in the industry for 22 years. Over the past five years, just 35% of new hires came from outside the industry and just 6% were recent college graduates, Doran says.
Thats a staggering statistic, he says, and its a practice that cant continue. Were cannibalizing, Doran says. It does not seem to be a long-term sustainable model. Exacerbating the situation, the study says, is a majority of new hires were free agents, or experienced brokers who move from agency to agency, which accounted for 55% of hires over the past five years.
Reagan Consulting President Kevin Stipe called the industrys recent hiring practices troubling. Is there another professional services industry that hires so few from outside the industry or from college? he says. In light of the fact that our industry is aging and that nearly half of a typical agencys business is handled by producers age 50 or over, this is alarming. Is the industry facing a perpetuation crisis?
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Penn Mutual Life Insurance Company is addressing the situation by targeting younger employees, says Bill Stevens, vice president of career distribution. About half of Penn Mutuals workforce has experience and the other half are inexperienced, he says. Just a few years ago, it was a 70-30 split in favor of those with experience, Stevens says.
The benefit is twofold: senior advisers have several clients but a limited amount of time, Stevens says, whereas junior advisers dont have clients but have plenty of time. Partnering them helps the senior adviser touch more clients more often and helps junior advisers learn the business, he says. Millenials tend to love being on teams, Stevens says.
Along with college grads, Penn Mutual is also targeting employees in their mid to late twenties who are looking to make an early career change. Those are the people that seem to do really well, Stevens says.
Reagans study which gathered baseline data from 4,641 brokers from 562 firms and conducted a follow-up survey with 112 firms that hired 1,505 new employees over the past five years found that 55-60% of firms arent hiring enough new employees. The success rate of new hires could account for a firms under hiring, Doran says.
The study found a 56% success rate for new brokers, however, theres a wide discrepancy among firms. The top 25% of firms had a success rate of 84% compared to a 22% success rate for the bottom 25% of firms. A firm needs to understand how many brokers it needs to replace retirees and keep up with growth, Doran says. Youve got to know who you are and what you can do and what you cant do, he says.
Along with recruiting younger talent, Doran says the industry needs to do a better job representing itself, and his hope is that Reagans study will prompt brokers to do just that. This is still a great industry, he says.
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