AIG Financial Distributors CEO: It’s ‘Not Cheap’ to Run a Career Agent Sales Force in Life Industry
July 10, 2014 by Fran Matso Lysiak
OLDWICK, NJ – It’s “not cheap” to run a career agent force in the life insurance industry, said the president and chief executive officer of the sales and distribution arm of the life and retirement business of American International Group as the organization gears up to launch its own “university” intended to develop current sales professionals and train future generations of financial advisers and insurance agents.
The initiative represents the latest under the restructuring of AIG’s life and retirement business, which started around April 2012, Steve Maginn, president and CEO of AIG Financial Distributors, which is responsible for selling everything under the life and retirement umbrella, told Best’s News Service.The company is using the major training and development efforts that had already been taking place, and bringing them under one entity, Maginn said. The university is seeking to leverage those talents, resources and capabilities “across the entire organization.”
Earlier this year, AIG launched a new distribution group — dubbed the AIG Financial Network — that it said will “transform” the career agent channel of its American General Life Insurance Co. business, and geared it to experienced and new financial sales professionals and representatives (Best’s News Service, Jan. 13, 2014). The network will extend securities registration to all of its financial advisers — its predominant focus going forward, according to the company. The career channel is building on its focus on protection products, including life insurance, with advisers but also expanding to include retirement planning.
Maginn said AIG is seeing career agents from some mutual life insurers come to AIG since the network’s launch. In general, it’s a very difficult time for the life insurance business, Maginn said, noting an industrywide decline in the sales of life insurance.
With interest rates low, it’s very difficult to price products in such a way that it can be profitable for life companies, “particularly given that career distribution is a fairly expensive proposition,” Maginn said. “It’s not cheap to run a career force,” he said, noting some of AIG’s competitors have decided to exit the life insurance business or are exiting the career distribution model.
At the same time, the university initiative represents an “ideal time” to do this training and development to be prepared for the next phase that comes around, Maginn said. As the need for life insurance grows — and as others might exit this market — AIG remains committed to it, he said.
Concerning the well-known agent shortage plaguing the industry, across all of AIG’s retail businesses — whether captive agents or independent advisers or others, “we’re finding recruiting to be a significant challenge,” Maginn said. There is a shortage “of quality people who want to get into the business of selling life insurance, who want to get in the business of being a financial adviser.”
AIG also now has a centralized recruiting effort, which includes actively recruiting returning military from Afghanistan and Iraq, he said.
Over time, AIG hopes to be able to hire and train the best talent, Maginn said, noting the university aims to give them an opportunity to learn a skill and product line and gradually increase their knowledge to be able to provide more products and services to their clients, Maginn said, noting AIG Financial Distributors also includes four independent broker-dealers.
The financial network, for example, typically had been the middle-market business that only sold life insurance, he said. But now it’s in the process, over the next couple years, of having those agents get licensed to sell securities and gradually move them “up the chain” to becoming financial planners, Maginn said.
AIG Financial Distributors named John D. Stout as senior vice president of sales training and development to launch and lead the university. He served in a series of executive positions at Limra International, MetLife, Foresters, and Futurity Insurance Group. Most recently, he headed JD Stout Consulting, providing consulting services for life and annuity companies. Stout will report to Maginn.
The training facility will be based in Nashville, Tenn., but webinars and video conferences to online training and testing will be offered, Maginn said. The goal is to be “the premiere provider of protection, investment and income solutions needed for financial and retirement security.”
AIG Life & Retirement Group is the fourth-largest U.S. life insurer based on 2013 admitted assets of $263.5 billion, according to A.M. Best Co.
American General Life Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
