You don’t have to be wealthy to have an advisor, the results of an industry association membership survey showed.
The National Association of Insurance and Financial Advisors conducted its first comprehensive membership survey in nearly a decade. Among the findings are that members are offering more products and services than ever before, while still receiving the bulk of their income from commissions instead of fees.
The NAIFA survey was conducted at the end of 2018. The survey focused on who members are, the services they provide, the clients they serve and how they are compensated.
How They Are Paid
Fiduciary regulations may be moving many in the industry away from commission-based compensation to fee-based compensation. But the survey results show a different situation.
Nearly all the survey respondents (97 percent) said they receive sales commissions, with 83 percent saying those commissions are their primary form of compensation. In addition, more than two-thirds said they have not experienced a shift in compensation to fees.
“A lot of people are under the misconception that in order to have someone help you put together a financial plan, you have to have to have a lot of money and go to a fee-based advisor who is going to require you to have a large amount of assets under management in order for them to take your account in addition to having you pay a hefty fee,” Kevin Mayeux, NAIFA CEO, said. “We were glad to show to policymakers that our members are commission-based and serve low to moderate income households and with that, people can get some good advice and can put together a sound financial plan for their future in a way that does not require them to pay a lot of upfront fees.”
What They Offer
One of the biggest changes between the 2010 survey results and this most recent survey, Mayeux said, is that members are offering a broader range of products and services than in the past.
“Twenty years ago, our members were focused on life and different versions of life insurance,” he said. “Now you’re finding that many more folks are multiline, they’re selling health insurance, they’re selling disability insurance, long-term care, helping with retirement planning, college saving, and a variety of other products and services. So more and more we’re finding that when people are looking for advice, they want to go to a one-stop shop. Our members are much more knowledgeable about a variety of products and services and can put together a holistic plan.”
Although nearly all the survey respondents said they offer traditional life insurance products, more than two-thirds sell disability insurance and long-term care insurance. Six in 10 respondents sell fixed annuities and offer Roth IRAs. More than half sell mutual funds. About 44 percent sell Medicare supplements. More than one-third of respondents sell health insurance, offer 401(k) or 403(b) plans, or provide investment advice.
Survey respondents do more than sell products. Eighty-five percent said they do retirement planning, about two-thirds said they provide inheritance or succession planning, and 60 percent help clients with saving for and planning for college. About half said they provide wealth management services and 42 percent provide health care planning.
In addition, nearly two-thirds of survey respondents are registered to sell securities, with the majority describing themselves as broker-dealers or registered B-D representatives.
Who They Are
The majority of survey respondents (67 percent) have been in the business for 21 years or more, with another 20 percent having been in the business between 11 and 20 years. This result reflects the maturing of the advisor population nationwide and is a concern for the industry, Mayeux said.
“I think the industry at large has got to do a good job of reaching out to the younger generation and showing them that being an advisor is a good and noble calling and it’s a viable career path,” he said.
Sixty-one percent identify themselves as insurance agents, with 33 percent saying they are registered representatives and 32 percent calling themselves advisors.
Who They Serve
Nearly 90 percent of respondents said they serve middle-income families and individuals, and 77 percent counted small business among their clients. In addition, NAIFA members said they serve the senior market (68 percent), baby boomers (64 percent), millennials (43 percent) and lower-income individuals and families (41 percent). More than half of respondents (55 percent) said they serve high-net-worth individuals and families.
The survey results reinforced what NAIFA has been saying for years – that its members primarily serve middle- to lower-income families.
Almost half of the survey respondents (45 percent) said their typical client’s annual household income falls between $50,000 and $100,000; 34 percent said their typical client’s annual income ranges from $100,000 to $150,000, and 4 percent said their typical client earns less than $50,000 a year.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her atSusan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.
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