Transforming Insurance Agents Into Financial Advisors

Insurance agents are becoming trusted advisors who support consumers throughout the many life stages along the customer journey.

Insurance companies are on the cusp of becoming banks, as many aim to transform their current holdings into the foundation for broader future financial endeavors. Yet, while agencies continue to contemplate next steps for such efforts, insurance agents are particularly poised to transition from sales leaders to financial advisors in their quest to bring relevant products under one convenient umbrella.

Over the years, banks and insurance companies have come to see each other's products as complements to their core offerings. Financial firms are especially focused on enhancing the customer experience in an effort to differentiate services and remain competitive in today's increasingly aggressive market. Agents are in the unique position to bridge the sales and service worlds by bringing current relationships to the next level. But what qualities do insurance agents possess that make them ideal financial advisors in this emerging world of hybrid institutions?

They understand the value of consistency and convenience

Much of today's market revolves around reaching customers where they live. Overall, consumers seek to connect with financial brands on their terms via methods that are most convenient for them. Thus, as agents move to become full-fledged advisors, they will be able to offer customers an array of products all at once, essentially becoming the "go-to" guide for all their financial needs.

Kevin Sheetz, CEO of Powerlytics, notes that insurance brands will ultimately choose to transition because they wish to support their organization's desire to become a one-stop shop for their customers and grow their businesses by expanding their product portfolio. "For the insurance industry, expansion and evolution means offering customers a convenient way to cover a wider array of their financial needs," he says. "This strategy provides carriers more products to cross-sell, which in turn, will hopefully strengthen their relationships and make it less likely that the consumer will move their business to the competitor. This can be spurred by companies understanding that the cost and time associated with acquiring a new customer is greater than keeping an existing customer happy and satisfied."

By bringing all products and services under this single umbrella, financial advisors will also be able to offer an element of consistency, as they will be able to tailor the experience to the particular individual's needs. Understanding the consumer's entire story will allow advisors to move beyond insurance to provide the guidance necessary for smart, informed financial decisions at every step along the customer journey.

They've already established the foundation for trust

Consumers have become increasingly wary of the financial services sector since the recession, as most are still hesitant to trust these institutions. However, for insurance agents that already boast a loyal customer base, trust will likely withstand their transition to full financial advisor. Sheetz notes that good agents can develop this deep sense of trust with customers because they have an intimate knowledge of various needs in their lives. They're able to establish trust by preparing consumers for all the major events-good and bad-that may occur in their lifetime, positioning them as advisors who will help pick up the pieces and ensure that financial disaster will never be an issue.

Consumers want to develop financial relationships that'll carry them into the future, as they wish to know that these advisors will always have their best interests at heart. "Those who cultivate trust and establish strong relationships early in the customer journey will garner repeat business for years to come, as these customers seek long-term advisors to guide them through crucial insurance purchases at various life stages," explains Neill Osika, vice president, financial services at TeleTech.

Yet, while thriving agents will already have their customers' trust, Sheetz clarifies that those without solid financial educations will need to become SEC licensed and receive additional instruction on how best to cross-sell to their customers. Though many agents may not have the appropriate background, all have the opportunity to learn the basics and build their expertise by taking additional professional level courses in order to provide informed advice. Such dedicated individuals will then be able to apply this knowledge to the consumer experience in an effort to strengthen trust even further and fortify relationships.

They support the need for human connection

In recent years, financial institutions have come to believe that consumers no longer want to interact with agents, for they seek self-service options instead. There's an assumption that, because of today's digital tendencies, people simply don't want to engage with people. Yet, while many do choose to fly solo at the beginning of their customer journey, most still require the advice and guidance of an agent or advisor.

"You see, while Millennials and Gen Xers generally prefer to research the market alone, most still require the aid of an informed agent before committing to any products or services," Osika emphasizes. "Contrary to popular belief, these consumers do want human contact. They want to engage in conversations and understand the intricacies of what these insurance companies have to offer."

Though we live in an era where consumers are more independent and informed than ever before, many still seek the expertise of someone who's been trained to guide them through such major decisions. Thus, the transition from insurance agent to financial advisor makes complete sense, as said agents are already attuned to the consumer's wants and needs. They've developed the rapport necessary to help customers recover from an accident or damage to their home-moments of great stress and raw emotion-so they are perfectly poised to help people prepare for retirement or apply for loans, as they already possess the inherent trust necessary to further develop such extended relationships.

State Farm Nurtures Relationship Growth via Continued Conversation

According to State Farm's mission, the company seeks to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams. With more than 65,000 employees and more than 18,000 agents throughout the U.S., the brand has only continued to grow and expand its reach since the 1920s. Yet, it was not until the passing of the Gramm-Leach-Bliley Act that State Farm was able to launch itself ahead of the competition and fulfill its mission across all areas within the financial services industry.

Previously, the Glass-Steagall Act of 1933 prohibited banking, securities, and insurance companies from acting as any combination of an investment bank, commercial bank, and insurance company. However, the GBLA allowed institutions to consolidate, thereby leading to the launch of State Farm Bank in 2000. Today, State Farm offers more than 100 products across five different lines of business: property and casualty, life and health, annuities, mutual funds, and banking. But, while the company has expanded since its inception, agents and advisors still embody the underlying mission.

Anthony L. Brown, CLU, ChFC, CASL, LUTCF, sales leader at State Farm, explains that State Farm agents are independent contractors who live alongside their clients, reinforcing their connection to the community itself. Agents offer clients an opportunity to conduct an Insurance and Financial Review, which helps them look at their entire financial portfolio and make changes based on their needs.

"State Farm agents have great work ethic, a tremendous attitude, and they sincerely care about the well being of their customers," Brown highlights. "Agents go through a 6-9 month training program before opening their own agencies and meeting with customers. Along with ongoing training and seminars, we also provide an experienced and industry-trained support system to ensure that our customers receive the best advice for all of their financial needs. Our conversation doesn't stop once a product is purchased. We are there to help them as life events occur to provide continued support and advice."

State Farm agents offer regular financial reviews, which have become a valuable resource to customers, as they're able to help with debt reduction planning, education planning, gifting and legacy planning, large purchase planning, and retirement planning using the tools they have today. Agents continuously strive to provide clients with the best experience possible as they work to help them realize their goals and achieve their dreams throughout every life stage.