A new study from LIMRA and EY indicates significant growth of advisory services in financial professionals’ business mix across multiple types of advisor channels, but that’s putting a damper on the amount of life insurance advisors are selling.
The U.S. study indicates that the largest growth of fee-based advisory services comes from full-service broker-dealer advisors, which grew nearly five times, to 48 per cent in 2018 from 10 per cent a decade ago.
But the push to sell more products has affected the sale of life insurance by career insurance professionals. Once the dominant product line for these financial professionals, today it accounts for less than half of their business. Other LIMRA research confirms that career insurance agents now receive less than half of first-year commissions from the sale of life insurance. Annuities, investments and other products and services now make up a larger percentage of the business mix for career insurance professionals.
Income increase due to more clients
While many advisors benefited from market gains that increased the value of their book of business and the volume of assets they manage, half of the survey respondents reported that the increase in their income was due to growth in the number of clients. As a whole, survey respondents reported a 22 per cent growth in their client base over the two-year period.
“Not surprisingly, almost all advisors (99 per cent) rely on referrals to expand their client base and it is considered the most effective way to get new clients,” said Laura Murach, LIMRA associate research director for distribution.
“Interestingly, advisors’ websites and social media accounts are considered the next most valuable tools to market to new clients, which were rarely used 10 years ago.”