Having a full product shelf is a critical success factor for MGAs looking to grow their business, but it is not enough, according to The Retail Brokerage Report from Investor Economics (IE).
For MGAs, providing access to products from a wide range of insurance carriers is required to deepen relationships with existing advisors and attract new ones, notes the IE report. However, the report also found that the product shelves of MGAs are becoming increasingly homogenized. For example, the study determined that the same dozen insurers appeared on the shelves of half the MGA participants in the study.
This reality has prompted MGAs "to look beyond the product shelf to value-added services as a means of distinguishing themselves," says the report. Important elements of these value-added propositions include: extensive sales support, access to proprietary marketing materials, a robust technology platform, training and development and more. Competitive compensation is also important noted most study participants, "but a high level of override payout alone is unlikely to ensure the advisor's loyalty while inflicting damage on the (MGA) firm's bottom line."
A deep product shelf and value-added services help to give advisors fewer reasons to move MGAs, but winning advisors' loyalty requires more. "It is the strength of the MGA's relationships with individual advisors that ensures they, in turn, feel like ‘they have a home.' The intangibles of the firm's culture and focus on developing strong relationships and camaraderie between head office, regional offices, resident experts and advisors were cited in a number of interviews."
The study found that MGAs who reported high advisor loyalty had a four-pronged strategy: access to product, competitive compensation, value added service and strong relationships.
John Hamilton, President of MGA Financial Horizons Group comments that due to the value-added support that MGAs are offering, he has a general impression that the movement of advisors between MGAs, particularly between the major firms, has slowed down. "Your major MGAs are providing good value to their advisors, they're building a partnership." They build these partnerships in a variety of ways, i.e., incentive programs, client management systems, advanced educational programs, a feeling of belonging. "Certainly, all of your top 10 MGAs provide that."
Paul Brown, President and CEO of Worldsource Insurance Network says, "It's a relationship-based business. Different advisors are looking for different things, but effectively it all comes down to a level of support whether it's emotional support or business development support or being accessible and providing good service."