Top 5 Myths of Working as a Life Insurance Adviser

June 12, 2013

in Insurance

By Gary Tay (guest contributor)

Life insurance is something very close to my heart. It was one of the first financial products I marketed since I joined a local bank as a financial consultant five years ago. Today, I am a firm advocate of proper insurance planning and am glad that my career decision has allowed me to gain tremendous exposure by meeting people from all walks of life.

However, like all jobs, it is not always smooth sailing. It is a well known fact that 90% of financial advisers, especially those of tied agencies, do not stay long in the industry. To date, I have changed at least three insurance advisers over the past three years, all of whom are young and aspiring graduates who decided to call it quits.

It is a worrying trend given such high attrition rates. I believe it can be attributed to the wrong expectations people have when they start out as an insurance adviser. Sadly, many of these misconceptions are initiated by insurance agencies that are desperate to recruit at all costs. A typical ad for insurance adviser looks like this:

130612 Figure 1

Figure 1 – Typical ad for a life insurance adviser position

(I have plagiarized this image from my colleague Seth Wee’s website.)

I would like to dispel a few myths that aspiring life advisers may have and also set the expectations right. For other readers, it might also be helpful to know the challenges that your life insurance agent may be facing.

Myth 1: One can earn unlimited income

Truth:

Income is never unlimited. The reason is because to generate income, one requires time and work.  If time and work has limits, so does one’s income. Once one’s time and efforts has reached a ceiling, so does the income. One has to be careful of such misleading statements.

Income (unlimited?) = Time (limited) + work (limited)

Myth 2: People need your help

Truth:

People do not want your help. Yes, it is true that many Singaporeans are severely underinsured and underfunded for retirement. However a recent AIA survey conducted in 2011 has demonstrated that Singaporeans are more concerned about upgrading to the latest iPhone models than about purchasing the right insurance.

To put it simply, life insurance is a “need”, but people however act on “wants”.

Myth 3: An insurance adviser is a respected profession

Truth:

People do not respect insurance advisers because it is a sales job. Regardless of one’s education or experience, as long as one’s remuneration is based on marketing a product, the customer will always hold the upper hand. Lawyers get paid even if they fight a losing case. Doctors get paid even if the surgery is not successful. A true professional is paid when he does a job, a sales person is paid only when he closes a sale.

Myth 4: Income commensurate with ability, unlike a fixed salaried position

Truth:

Ability here refers to marketing ability, not the ability to give proper insurance advice. As it is a sales job, one will find that a lot of time and effort is spent on prospecting and generating interest to prospects rather than providing advisory work. This is especially true of new advisers.

In addition, one can quickly recognize that most top performers in the insurance industry are often those blessed with the gift of the gab with attractive personalities rather than those who are most competent in giving insurance advice.

Myth 5: Being in insurance means running your own business

Truth:

Life insurance is a flawed business. Can you think of another job in the world where one has to consistently prospect for new clients even though they have 350 clients? Any business with 350 clients will be laughing all the way to the bank. Not for life insurance. As 1st year and renewal commissions run out, one has to constantly find new prospects to close. If one closes 50 cases a year, in 7 years time, he would have 350 clients. If the adviser chooses to meet one client a day per year for a financial review, he would effectively have no new business coming in, thus destroying his income stream. The nature of the business means one has to constantly source for new clients and give up existing ones.

The real winners of course are insurance companies who continue to profit from premiums paid by customers whose advisers leave the companies.

Is being an insurance adviser a sustainable career?

Despite it being a noble profession, people do not have very high regard for the average life insurance adviser. It is common for new advisers to find that their friends start alienating them for fear of being prospected. People in general respect other highly paid professionals in finance like investment bankers even though an insurance adviser can leave a positive footprint in other people’s life unlike the former that only make one filthy rich, but have little or no contribution to society.

My experience suggests that sustainability in the industry is attributed more to personality rather than competence. If you are wearing a dress, have a mesmerizing smile and have flocks of rich men prepared to meet you anytime of the day, the life insurance industry is a place where one can truly earn an extraordinarily high income at a young age. However if one does not satisfy the above criteria, it is of utmost importance to plan a strategy of conducting business rather than depending on hard work alone. Hard working and good natured people do not necessarily succeed in life.

As for the misleading advertising conducted by insurance companies, remember the old adage: “When it sounds too good to be true, it probably is.”

 

By guest contributor Gary Tay, who blogs at Reflections of an Independent Adviser.

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{ 1 comment… read it below or add one }

keithrooster July 20, 2013 at 11:48 am

As an ex-agent (not so consultant) agreed with your view. Left due the fact that I realised that they are only interested in the premium only. Claim experiences with them is embarrassing.Leaving my client very upset.

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