For companies whose distribution strategies include career agents, this paper provides an invaluable, comprehensive program of tried and true recruiting practices and new ideas to reverse the tide of a declining career agency force.

I/R Code 55.00

Strategic Issues Series 2001-3

Recruit and Retain

A Mandate for Career Companies

Richard A. Wecker, CLU, LLIF, CLFPresident and Chief Executive Officer

LIMRA International

© 2001 LIMRA International, Inc.®

300 Day Hill Road, Windsor, Connecticut 06095-4761, U.S.A.

350 Bloor Street East, 2nd Floor, Toronto, Ontario M4W 3W8, Canada

34 Clarendon Road, Watford, Herts WD17 1JJ, United Kingdom

61 Bimberi Crescent, Palmerston, ACT 2913, Australia

This publication is a benefit of LIMRA International membership. No part may be shared with

other organizations or reproduced in any form without LIMRA’s written permission.

5615-0601-136-LRRD Printed in U.S.A.

PREFACE

Ever fewer life insurance companies are recruiting and developing new agents. Agent

retention is at a seemingly permanent low level. LIMRA President and CEO Rich Wecker sees

implications in this situation beyond the long-shrinking career agency force. He says since career

agents are the main source of PPGAs, independent agents, brokers, and financial planners,

decline in the career ranks means the industry will eventually run out of producers.

A recent LIMRA study showed that U.S. demographic trends appear to favor the growth of

insurance products, financial services, and distribution expansion. Nonetheless, Mr. Wecker

points out, career companies will need to proactively focus their recruiting efforts to capitalize on

these trends. In this paper, the author lays out, based on his own background, how to reverse the

tide — how to recruit smarter, in ways that do justice to the substantial investment required to

develop even one successful agent.

For companies whose distribution strategies include career agents, this paper provides an

invaluable, comprehensive program of tried and true recruiting practices and new ideas. We

welcome your comments.

Ram S. Gopalan, LLIF

Assistant Vice President and Director,

Research Outreach

General Editor, Strategic Issues Series

CONTENTS

INTRODUCTION............................................................................4

A SHORT HISTORY OF RECRUITING...........................................5

TODAY’S WORK ENVIRONMENT...............................................10

THE BEST SOURCES OF HIGH-QUALITY AGENT CANDIDATES...........................................................................12

APPROACHES USED BY TODAY’S BEST RECRUITERS...............16

ADDITIONAL PERSONAL SOURCES OF RECRUITS.....................20

SOME LAST WORDS ON PERSONAL RECRUITING.....................22

APPENDIX 1 — STILL VALID: TRIED AND TRUE RECRUITING PRINCIPLES ......................................................24

APPENDIX 2 — RICH’S 100 RULES FOR ROOKIE RECRUITERS...........................................................................27

INTRODUCTION

The number of career agents in the insurance industry has been dropping steadily since

1975. The number of companies recruiting new, first-time agents has continued to decrease

dramatically, leaving only a handful of companies recruiting substantial numbers of new agents.

The number of recruits contracted annually has dropped from over 54,000 to less than 25,000.

Five or six major companies now account for the bulk of new agents coming into the business —

sometimes bringing in as many as 80 percent of the new recruits hired in a given year.

Recruiting established agents from company to company has become the norm, with no end

in sight.

The four-year retention rate of new agents has leveled off at 16 percent. Adjusted for the

1980s, when replacement was rampant, the four-year retention rate has been at 16 percent for as

long as anyone can remember. Based on LIMRA studies, the cost to bring an agent to that fourth

year is $140,000.

What do these facts mean? They mean that unless something dramatic happens, the industry

is going to run out of producers. There will be no agents to staff the agencies of career companies

and there will be no career agents to become PPGAs, independent agents, brokers, or financial

planners.

Will we abandon the distribution channel that is responsible for 90 percent of the life

insurance sales in the United States? Are we content to let millions of people remain uninsured

because there are not enough agents to serve them? Are we resigned to being in an industry with

these poor results?

This paper is devoted to answering each of these questions with a resounding NO! Other

than poor retention,1 the main cause for the declining number of agents in our business is the lack

of recruiting; and this paper presents two approaches for improving the recruiting situation. First,

it identifies the most productive sources of high-quality agent candidates, “personal recruiting,”

and details the evidence for this fact. Then it describes the best way to employ personal

recruiting. It reveals the personal-recruiting activities of the best field leaders in the life insurance

business and presents a compilation of the best personal-recruiting practices in the industry.

A SHORT HISTORY OF RECRUITING

Sometime in the 1840s, life insurance companies began appointing full-time, professional

agents to sell their product. Sales, which had been modest up to that time, suddenly took off.

Since then, personal producers have been the primary way life insurance has been distributed.

EVOLUTION

Just about all personal producers came into the business as recruits of career companies that

trained, supervised, compensated, and housed them. Until recently, these producers remained

with the company that brought them into the business or with another career company. However,

the industry has evolved to a place where, today, vast numbers of producers have left the

company that recruited them and have become independent producers. The impact of this change

is evident in the fact that independent producers now write most new business (Table 1).2

That would be acceptable if the same number of new recruits were coming into the business

as in the past to replace those producers who retire, die, enter management, or leave the business.

But this is not happening. Many career companies have abandoned the career agency distribution

channel, while others have severely cut back on their recruiting; thus, far fewer new recruits are

coming into the business than are necessary to sustain it (Figure 1).

The high point in recruiting occurred in 1975, when 54,736 new agents entered the

business.3 The low point was in 1996 when only 24,753 new agents were recruited. New-agent

recruiting has increased in each of the past four years, providing some hope that the recruiting

situation has turned itself around. Still, it is far from where it was or where it should be. In rough

numbers, today we are recruiting one person for every 8,000 U.S. residents; in 1975 we recruited

one person for every 4,000 U.S. residents.

Meanwhile, a recent LIMRA report noted that the “echo boomers,” the 40 million children

of the baby boomers (Figure 2), are approaching the prime years for buying life insurance.4

FUTURE PRODUCERS

If career companies continue to recruit fewer and fewer producers, where are tomorrow’s

agents going to come from? Or, more to the point, where is tomorrow’s business going to come

from? Consider these statistics: Sixty-four percent of Americans own no individual life insurance and 47 percent of Americans

own no life insurance of any kind, including group life.5

Chief executive officers of U.S. life insurance companies expect 57 percent of their profits to

come from life insurance.6

Seventy-four percent of Americans would prefer to deal with a trained, experienced producer

who can advise them on the complexities of life insurance.7

More new recruits must be brought into the life insurance industry to maintain a flow of

business, to make sure families are protected against the ravages of premature death, to keep life

insurance companies as profitable as they can be, and to satisfy consumers’ desire for competent

professional advisors.

LIMRA’s Survey of Producer Opinion, conducted in association with the National

Association of Insurance and Financial Advisors, reflects the maturation of the salesforce in

general. The median age of the producers in the 1999 study was 50, an increase of three years

from 1996. In addition, the percent of producers over the age of 55 has increased from 23 percent

to 32 percent.8 At this rate, it won’t be long until most of the field force is past retirement age,

meaning that even less life insurance will be sold. And that is the key consideration! Life

insurance is sold, not bought. Without an agent, there are no life insurance sales and without life

insurance sales, there is no life insurance ownership, and therefore, no life insurance business.

Is it any wonder that we are now selling almost seven million fewer policies annually than

we did in 1985?

Currently, less than 3 percent of premiums and 10 percent of policies are sold through

nonproducer sources.9 That’s the way it is today and that’s the way it always has been. There is

no reason to believe that the Internet can accomplish what direct mail, telemarketing, media ads,

mailing stuffers, or other direct-response methods have failed to accomplish.

NEW PARADIGM

There is no getting around the fact that we must recruit and retain more high-quality agents.

But we can’t do it the way we did previously. In the past, the standard recruiting strategy was to

hire as many agents as possible and hope that enough would succeed to make a profit. That is no

longer acceptable, because it is too costly to recruit and train so many failures and it is a great

disservice to clients who should have agents who will be around to serve them for a lifetime.

In today’s competitive and highly complex work environment, the only acceptable strategy

is to pursue only high-quality candidates and contract only those candidates who have an

excellent chance to succeed — and to do so in numbers large enough to continually replenish the

industry’s field force. We can accomplish this mission if our recruiting approaches are in tune

with today’s prospective job candidates and if we concentrate our recruiting efforts on the most

efficient and most productive recruiting methods. How to do those things is what this paper is all

about.

TODAY’S WORK ENVIRONMENT

Futurist Lowell Catlett describes society as it is today compared with a generation ago. “It’s

an interesting, weird world we live in and it’s going to get weirder. We’re doing things a lot

differently than we did a generation ago. Business is different, families are different, and our

society is different, with different sets of needs.”10

We differ in several ways. First, we are living longer. During the second half of the 20th

century, life expectancy for 60-year-olds increased by 29 percent, from 77 to 82 years. And more

important, seniors are living substantially healthier lives during their added years. Second, we are

still a nation of immigrants. The foreign-born population in the United States was 5 percent in

1970 and is 10 percent today. It was 14 percent in 1900. Third, we are richer. Since 1946 we

have had none of the crashes, panics, and busts that characterized history since time immemorial.

Fourth, we are growing. There are more Americans in 2001, absolutely and relative to Europe. In

1900 the combined population of the four largest European countries — Britain, France,

Germany, and Italy — was more than twice the population of the United States. But the

American population grew four-fold and now has more people than those four countries put

together. Projections for 2050 show the United States will be about twice as populous as those

countries.11

There’s no doubt about it. We are all living in a world that has changed dramatically in the

past two decades. One of the most radical changes has been in the business world. Think of all

the new words that did not exist a short time ago and how the meanings of those words have

changed business: the Internet, email, outsourcing, wireless technology, fax machines,

telecommuting, e-commerce, casual dress, flextime, and teleconferencing.

WORKPLACE TRANSFORMATION

Work and employment too have changed. Here’s how one observer put it: “The United

States’ contingent workforce — consisting of roughly 45 million temporaries, self-employed,

part-timers, or consultants — has grown 57 percent since 1980. Going, if not gone, are ‘nine-to-

five’ workdays, lifetime jobs, predictable hierarchical relationships, corporate culture security

blankets, and, for a large and growing sector of the workforce, the workplace itself, replaced by a

cybernetics workspace.”12

Today’s job candidates know they are entering a different marketplace. Candidates are not

looking for the “invisible contract” that their parents or grandparents might have had with their

employers. They are mobile, independent, and confident. They have heard how some careers

come with signing bonuses, finder’s fees, and stock options. They are demanding family-friendly

work schedules, challenging and rewarding work, a pleasant working environment, and an

opportunity to learn and grow.

And it is only natural that the insurance and financial services industry also has changed.

When LIMRA asked brokerage and independent distribution companies what they do to

differentiate themselves from the competition in servicing producers, the overwhelming response

was providing Internet support.13 A short time ago, such an answer would have made no sense.

THE SALES CAREER REDEFINED

Since everything else is changing, it makes sense that the way we bring new people into the

life insurance sales career also is changing. Some of the differences between the 20th and 21st

centuries you’ll need to consider in recruiting life insurance producers include: Most life insurance companies use a variety of distribution channels, giving consumers a wide

choice of how to buy life insurance, including whether to use an agent.

The Financial Services Modernization Act is, in effect, increasing competition from both inside

and outside the industry and increasing privacy and suitability concerns.

The Internet has become established as a force in consumers’ purchasing efforts, increasing

competition, making comparison shopping easy, and raising the visibility of price.

Many companies have dropped the term “life insurance” from their names, altering consumers’

perceptions of organizations and what they have to offer.

Many of the largest and best-known life insurance companies have changed from mutual to

stock ownership and are now very concerned with such short-term considerations as quarterly

market share, price/earnings ratios, price of their stock, and potential for increase in value.

The product emphasis is now on wealth creation and management and retirement planning,

making for easier, but less profitable, sales for both the company and the producer. Annuity

sales now account for 52 percent of total company premium income.14

Few people now entering their prime insurance-buying years remember a time without a

growing economy or a bull market, and that means they are much less risk-averse and more

investment-oriented than previous generations.

Fewer and fewer life insurance companies are recruiting agents, despite the fact that most

families are not being given the opportunity to make face-to-face life insurance purchases, even

though they indicate they would be open to them.

Smaller numbers of life policies are being sold at lower premiums per $1,000 but with larger

face amounts. The average career agent with at least five years of experience makes only

30 life sales per year for his or her primary company!15

WATCH WHAT YOU SAY

Some observers believe society has changed so much that even what managers say to

potential recruits has changed. For example, they suggest that today’s workforce can be

categorized into four distinct groups. The oldest group is the senior generation, those born before

1946. Their core values are traditionalism and self-reliance, and therefore the tenor of recruiting

message that appeals to them might be “Your experience will be invaluable” or “This is a career

that will let you cash in on your talents.”

The next category is the baby boom generation, born between 1946 and 1964, having core

values of individualism and self-determinism. Recruiting phrases that may appeal to them

include “This is a position with real prestige” and “You will be working with a very high-class

clientele.”

Following the baby boomers is generation X. They were born between 1964 and 1980 and

their core values are independence and informality. Recruiting messages for them might be

“You’ll be able to choose your clients and what markets to work in” or “You won’t get a lot of

supervision once you’ve been on board for a while.”

The last category, the echo boomers, includes those born after 1980. Their core values are

self-fulfillment and cooperation. Recruiters can appeal to them with such messages as “You’ll be

part of a great team” or “This is a great opportunity for growth.”

Of course, much of this is conjecture; many people would say basic human nature never

changes and an entire generation cannot have the same core values.

All this serves to illustrate how difficult recruiting is today. How can a manager, general

agent, or agency recruiter find good candidates for the life insurance sales career? To answer that

question, we went to LIMRA research to get the facts and to learn what really works when it

comes to recruiting.

THE BEST SOURCES OF HIGH-QUALITY AGENT CANDIDATES People who are looking for a career are advised to seek referrals. Invariably, books,

magazine articles, and Internet advice sites tell them to turn to family members, friends, clergy,

coaches, and people whom they respect and/or admire for advice, counsel, and recommendations.

In 1972 Richard Nelson Boyles wrote what is without doubt the best-read job hunting

manual, What Color Is Your Parachute? Here’s what he says about recruiting methods:

Sending out résumés doesn’t work. Neither does answering ads. Employment agencies? No way. What does work is figuring out what you like to do and what you do well — and then finding a place that needs people like you. Contact organizations that you’re interested in, even if they don’t have known vacancies. Pester friends and family members for leads. Once you get in the door of the employer of your dreams, show how you can solve its problems.16

IT’S PERSONAL

What is true for those looking for a career is just as true for those who have a career looking

for people. Today there are as many sources of new recruits for our industry as there are

recruiters. The success of these sources in bringing quality producers into the business ranges

from moderate to poor. The general rule is that the more personal the source, the more productive

it is.

Certain activities are far and away the best and most productive sources of quality agent

prospects. From day one, managers must be taught how to develop these sources of prospects and

learn that they must expend the time and energy necessary to develop leads from these sources.

One of these sources is personal observation. A lot has been written over the years about

personal observation as a prime source of recruits. Managers’ years of experience in recruiting

and observing successful agents have given them a sixth sense about who can be successful

selling life insurance. Managers and recruiters are taught from the beginning to look for a

candidate who has a success pattern, has lived in the area for five or more years, has sales or

management experience, is a college graduate, has been in leadership positions, is active in the

community, and can fit into the existing organization. The better the manager or recruiter knows

the candidates or has observed them in action, the better the recruiter can identify candidates who

fit the pattern.

That’s why other best sources of high-quality producers (who remain in the business and

prosper) are other producers, agency employees, or individuals who are well acquainted with the

agency, the staff, and the work the agency does. These individuals know what it takes to be

successful. They have a feel for the most effective personal traits.

The key to being an outstanding recruiter is to recognize this fact and to inspire your

personal supporters to bring you candidates on a consistent, almost automatic, basis.

THE PROOF

Since 1932 LIMRA and its predecessor organizations have been collecting data on people

who apply for the job of selling life insurance. During these 70 years, they also have been

collecting data on those applicants who were hired. That probably amounts to a couple million

individuals. In other words, LIMRA has been tracking insurance producers before and after they

were contracted. With that record, it’s probably safe to say that no one knows more than LIMRA

about what kind of individual it takes to sell life insurance — or where the most successful

producers come from.

RECRUITING SOURCES

Based on LIMRA statistics, in 2001 recruiters are using impersonal sources almost as much

as personal sources to recruit inexperienced candidates for ordinary life and health companies in

the United States (Table 2).

But in terms of sales representative production and survival, candidates from impersonal

sources are among the weakest (Tables 3 and 4). (LIMRA just began collecting data on Internet

recruiting this year, so we do not yet have survival and success rates on that source.)

Candidates recruited through personal sources, such as manager or sales representative

referrals, are clearly more likely to be successful. Why is that?

The top reason is probably that a manager, agent, or someone closely acquainted with the

agency and its work is keenly aware of the type of individual who can best perform an agent’s

tasks and who will succeed as an agent.

Another reason is that individuals recruited through personal sources are more likely to

have full-time jobs than are individuals recruited through impersonal sources, such as newspaper

ads. The latter are more likely to be unemployed or to be employed part-time. Current

employment status is a good predictor of survival and success in this industry — individuals who

indicate on LIMRA’s Career Profile® that they have full-time jobs experience higher 12-month

survival and success rates than any other group.

Candidates recruited through impersonal sources are also more likely to be “job-hoppers.”

That is, compared with candidates from personal recruiting sources, they are more likely to have

had three or more jobs in the past five years. Survival rates are consistently lower for people with

histories of job-hopping.

Candidates recruited from personal sources are also more likely to come from sales,

managerial, or small-business backgrounds than are candidates recruited from impersonal

sources. Consistently, this type of entrepreneurial background is associated with higher-than-

average success and survival rates.

Research comparing the recruiting practices of high-retention and low-retention companies

clearly shows that the high-retention companies use more personal recruiting sources, while the

low-retention companies use more impersonal recruiting sources.

The bottom line: Recruiting source is strongly related to the quality of the candidate. While

it may be easier to place an ad than to collect personal referrals, the extra effort is well worth the

investment of time and energy.

APPROACHES USED BY TODAY’S BEST RECRUITERS

So how do these personal recruiting statistics relate to real-life 21st-century recruiting?

To answer that question I went to the Research Agencies Group (RAG), an organization of

outstanding managers and general agents with which LIMRA is fortunate to be associated. This

study group was formed over 50 years ago to help LIMRA keep in touch with what is happening

in field management. The members meet twice a year at their own expense and present strategic

research papers on various topics important to field leaders. Many of these papers are published

in LIMRA’s MarketFacts Quarterly magazine, LIMRA Online, and other publications. We asked

these managers to share with us their thoughts on personal recruiting sources.

Unanimously, they endorse personal recruiting and characterize it as their best source of

recruits. Lee Harrison of Tallahassee notes that agent referral and personal observation are the

only regular recruiting sources he uses.

INCENTIVES

Although everyone provides specific incentives for referring agents, they tend to agree that

their agents do not refer candidates purely for the rewards. As David Schulman of Ft. Lauderdale

said, “We have found that although the agents like the cash and recognition, what really

motivates them to recruit is their desire to share in the responsibility of maintaining the culture

and image of the agency.”

Specific incentive rewards vary only slightly. Bob Savage of Toledo pays an agent $500

when a referred recruit is licensed and when the new recruit completes two more levels of

accomplishment, the referring agent earns another $1,000. Schulman says each of his agents can

also earn up to $1,500 per candidate, based on the candidate’s achievement. Rewards are

presented in cash at an annual banquet. In addition, the referring agent is treated to lunch every

time a referral turns into an interview. Bill Lohnes of Atlanta pays up to $2,000 to any person

who refers a successful candidate.

Harry Hoopis of Northfield, Illinois, has many incentives for his referring agents. A reward

is mailed to the agent’s home for every referral that results in an interview. These rewards range

from movie tickets to flowers to various gift certificates. If an agent meets with a recruit, he or

she earns a half-hour limousine certificate, which can be accumulated and saved for one long

limousine ride. If a referral actually contracts with the agency and stays at least 90 days, the

agent is rewarded with a custom-made suit. “These rewards are appreciated and desired by

agents,” Hoopis says, “especially the newer ones. They create high morale and continual

recruiting support.”

RECOGNITION

Harrison takes a slightly different approach: “We pay financial incentives to any associate

who nominates a new hire,” he says. “The incentive is a percentage of override for the new hire’s

first-year commissions. We have designated agents who agree to compensation for helping

recruit new agents and once they are contracted, work split cases with them. We use recruiting

specialists who are hired and trained to regularly solicit nominations from our associates.” As for

nonmonetary rewards, Schulman’s approach is typical: “Recognition is given to all agents who

participate in the recruiting effort in every monthly bulletin and at every weekly meeting.

Periodic recruiting reminders are placed in agent mailboxes and distributed with commission

statements.”

Soliciting nominations is a big part of all of the programs used by the RAG members.

Savage does it by dividing his staff into groups: “Last year, we hired a full-time recruiter for the

first time. We spent the year putting in processes that we think will result in adding 10 to 12

people a year. We are pleased with the progress we are making. The recruiter has looked at our

62 agents and divided them into three groups.

“Group A consists of those most likely to be in a position to help us find new recruits.

Group B are those who might be in a position to help us. Group C is everyone else. The recruiter

talks to the Group A people on a systematic basis and gives them different ideas of what we are

looking for. The main purpose of this meeting is to get them to put recruiting in the forefront of

their thinking. She meets with Group B on a much less frequent basis and Group C least of all.”

SETTING EXPECTATIONS

Hoopis, on the other hand, leads by example. Whether it is providing referrals, meeting

with candidates, or any other step in the recruiting process, he gets involved. He also says it is

essential for agency recruiters to share the goals and activities of the recruiting department with

the agency staff and associates.

Hoopis says, “From an activity standpoint, it is important to establish a set number of

expectations for those within the agency, especially those in management. Sales managers, for

example, are expected to make five referrals a week. Each ‘agent into management’ candidate is

expected to provide five referrals a month. For all other agents, the recruiting specialist and the

individual agents meet and agree upon a specific activity goal, which the specialist follows up on

regularly.”

Lou DiCerbo of New York City asks for four quality referred leads at every agent’s

quarterly review. To facilitate these requests, he distributes a form that the agents can use to

submit their referrals. The form includes a “desirable attributes” profile that includes these seven

qualities: likable, impressive, record of success, mature, skilled communicator, shows initiative,

and intelligent and ethical. The form provides a quick definition for each quality. For example,

“Likable = You enjoy spending time with the person.” He then provides space for agents to list

referrals — their names, phone numbers, and any appropriate comments. Interspersed among the

spaces for names are such comments as, “We have had good results with bankers who want to

become professional salespeople.” “Do you know anyone who has been caught up in corporate

downsizing?” “Do you know any clients, relatives, or sons or daughters of friends who might fit

our profile?” “Please check the business cards in your desk for candidates.”

DRAWING A PICTURE

All RAG members give their nominators a picture of the type of agent they are looking to

recruit. John Kerr of Waltham, Massachusetts, divides his target candidates into two groups:

“Basically, we are looking for two types of candidates. The first we call a Gold Candidate. This

individual has access to a market we are interested in and are experienced in serving. We are

looking for someone with the relevant knowledge and experience so we can develop a plan to get

the person off to a very fast start.

“The second type we call the Green Candidate. This is typically a younger, less experienced

individual we can team up with a seasoned veteran to work as a sales assistant while developing

his or her own market. As we have had success with both types, we promote this approach

heavily and have found that the more success we have, the more referrals we get.”

NOMINATORS

Most of the RAG members also use other forms of personal recruiting. Schulman uses

nominators, or centers of influence. He has found them to be a good source of high-quality

recruits. He develops nominators though personal knowledge as he networks with various

community, business, and charitable groups. Nominators receive mailings and/or gifts

throughout the year. Schulman also mentions another type of personal recruiting. “People who

have gone through all or part of our selection process but choose other careers are also good

contacts to maintain,” he says. “Some of them become nominators, while others may choose to

reconsider their decisions. Contact is maintained with the same system as used with nominators.”

Gregg A. Knudten, of Encinitas, California, who is with Lutheran Brotherhood, says

although his best nominations come from agents, he makes great use of Lutherans and pastors.

“We have nine individuals on our Leadership Team: five co-general agents, one assistant general

agent, and three agency resource managers. The agency resource managers spend most of their

time working with churches to set up educational workshops through relationship building with

the pastors, church staff, and church councils. They are able to obtain names that are then given

directly to one of our five recruiting specialists.”

Schulman also uses nominators whom he develops through personal knowledge and

networking with various community and business groups and charitable organizations.

Nominators receive quarterly mailings and gifts throughout the year to remind them to keep

referrals in mind.

In a nutshell, then, all of these highly successful managers and general agents use personal

recruiting as their prime — and sometimes exclusive — source of recruits.

ADDITIONAL PERSONAL SOURCES OF RECRUITS

In addition to the recruiting approaches described in the previous chapter, many other

sources use the personal approach. Here are the best approaches.

SONS AND DAUGHTERS

There are no greater prospects for our business than the sons, daughters, and other relatives

of successful agents or of your agency employees. They have been reared in the business and

they see the great financial and psychic rewards of being an agent. They have a great role model

to emulate. They also understand the great effort it takes to be successful right from the start.

Sons, daughters, and other relatives enter the business with a mentor who is vitally interested in

their career and their success. The great potential of this approach can be seen in the many, many

first- and second-generation members of the Million Dollar Round Table. An approach to

encourage sons and daughters to consider a life insurance sales career is to conduct a selection

interview with them as a matter of course. Also, providing sons and daughters of agents with

summer internships in the agency will give them an excellent appreciation for the agent’s job.

AGENTS’ BOOKS OF BUSINESS AND QUARTERLY BUSINESS REVIEWS WITH ESTABLISHED AGENTS

Agents have potential gold mines in their books of business, not only for cross-selling

purposes but also for possible new-agent recruits. Managers should schedule periodic reviews

with their established agents to identify potential candidates. Quarterly production reviews with

all established agents provide an excellent opportunity to ask for referrals of prospective new

recruits, as well as to continue to support the needs of an established organization. Bringing a

description of the market you are trying to penetrate and the type of individual you are looking

for will go a long way in drawing high-quality names from established agents. Try this approach:

“Bob, I’m trying to find more time to devote to my established agent development program and

the only way I can get that time is to ask my established agents to help me get my recruiting job

done.”

Building total support for the recruiting effort can make it a lot easier for a manager to build

a successful agency.

MENTOR AND SUCCESSOR AGENT PLANNING

The use of agent mentors and succession planning is a hot issue in today’s career

distribution world. What better way to double the size of an agency than by recruiting a successor

for each established agent in the office?

The benefits are obvious: The company has protection for policyholders should an agent die, become disabled, or retire.

The new agent has an established agent with whom to work, learn, and grow.

The mentor has an opportunity to split business and ultimately develop someone who might

take on business when he or she retires.

Clients are assured of never becoming orphans.

The manager doubles the office sales staff.

Not every agent will become an excellent mentor. Some agents are better suited for that role

than others and may be asked to mentor more than one individual.

Working with a select group of mentor agents in the recruiting, selection, screening, and

interview process can increase their involvement and the success of the mentoring relationship.

A well-thought-out succession plan for each established agent can provide a blueprint for

recruiting the next generation of successful agents and help build a vibrant agency.

TERRITORIAL ANALYSIS

Performing an analysis of where an agency’s customers live or work can go a long way in

helping to determine where to recruit agents. The presence of orphan policyholders throughout a

territory can create recruiting opportunities that are not readily understood without an analysis of

the total customer base.

Asking agents to review their client bases by looking for someone to fill a spot you have

open in a particular territory can be an easy way to get referrals from agents and to focus on why

you truly need to hire someone.

SOME LAST WORDS ON PERSONAL RECRUITING

By invoking the overwhelming evidence of the value of personal recruiting from LIMRA

research, sharing my own experiences as a recruiter, and recounting the practices of some of

America’s best managers, I have tried to convince you that the bulk of your recruiting must be

through your personal efforts and the efforts of your staff and centers of influence. If you’re still

not convinced, here are some additional points to consider.

PERSONAL RECRUITING WORKS EVERYWHERE

In 2000 the LIMRA Europe research office conducted a comprehensive study of European

recruiting practices. Although they do things a little differently than we do in North America,

here are four basic findings from their final report:17

1. The source of recruits with the highest turnover rate was external recruiting.

2. The source of recruits with the lowest turnover rate was internal recruiting.

3. The most cost-effective source of recruits was recommended or referred recruits.

4. The least cost-effective source of recruits were recruiting agencies and media advertisements.

THE IMPORTANCE OF RECRUITING IN DOLLARS AND CENTS

A LIMRA study that looked at the cost of new agents found that in companies with good

productivity and good retention, the average investment required to produce 40 surviving agents

after 36 months is $65,000 per agent.18 For companies with poor productivity and poor retention,

the average investment required to develop only 16 surviving agents is $215,000 per agent.

MAKING PERSONAL RECRUITING WORK

Before ending our discussion of the importance of personal recruiting, I want to make two

final points. Recruiting doesn’t happen in a vacuum. It is part of the total fabric of an

organization. Therefore, in implementing the mechanics of personal recruiting, two additional

pieces must be in place: a recognition and rewards program and a positive agency attitude.

Recognition and rewardsA formal recognition and rewards program for high-quality referrals and appointments is a

necessity. It gives agents and others who help you recruit an incentive to keep bringing in names

of high-quality candidates. Companies use numerous formal programs that produce substantial

income and incentives. They range from a percentage of the new recruit’s first-year commissions

to council or club credits for a new recruit’s production. Success without recognition is

meaningless.

The importance of recognizing recruiting support from established agents and staff cannot

be overstated. If managers do not recognize the support they receive, the support will not

continue.

AtmosphereThe most significant way to attract agent and staff referrals to an agency is to create an

atmosphere where people truly want to work. An atmosphere that is supercharged and electric

will make agents feel comfortable bringing in new recruits. An agency that looks professional

and is professional is the best environment to create a high level of agent support for recruiting.

The most significant responsibility of a leader is to communicate the vision that he or she

has for the agency and to gain the support of the established agents to achieve that vision. Agents

may not help managers recruit for money, rewards, or even recognition, but they will support

great leadership.

Making agents feel involved and part of the team is essential to a leader’s success. The key

to success in recruiting is to recognize that you cannot do it alone and that you need a team

around you to make it all happen.

APPENDIX 1STILL VALID: TRIED AND TRUE RECRUITING PRINCIPLES

RECRUITING IS STILL THE NUMBER-ONE JOB OF CAREER SALES MANAGEMENT

Selling and servicing life insurance and related products is, and will always be, a people

business. That means that any sales organization is only as good as its people. The quality of the

people hired will always determine the level of success of the organization. No matter how you

say it, recruiting is still the number-one job of career life insurance sales management.

RECRUITING AND SELECTION IS STILL A PROCESS

Recruiting is not just adding new bodies to an organization; it is acquiring and keeping new

quality agents. To be sure you are doing that, you must follow a structured five-step process in

recruiting:

1. Find individuals who fit your profile of who will be successful and will fit into your

organization.

2. Reject those who don’t meet your standards.

3. Select those individuals who fit into your organization, based on a thorough examination of

their qualifications, abilities, and work values.

4. Give candidates a complete, honest, and realistic description of the career.

5. Acquaint candidates with the career through job simulation activities before they are

contracted.

SET RECRUITING GOALS, POLICIES, AND TIMETABLES

“If you don’t know where you’re going, you’ll never get there.” That old adage is as true

today as it has been since time began. To set an objective, put down in specific terms the number

of new agents to be contracted and brought through to success. Expressing the objective merely

in terms of new agents is not enough, because appointments alone will not do the job. You need

to know how many agents you must recruit and at what rate you must recruit, the amount of

attrition that will take place, when it will take place, and at what rate. This includes attrition

through failures, resignations, terminations, retirements, deaths, disabilities, transfers, and

promotions. Recruiting records, of either the agency or the company, will make it possible to set

recruiting and attrition rate goals as well a recruiting objective.

As important as it is to set objectives, it is equally important to set up a timetable. To do

this, first determine how many names you need to appoint one agent and then set up a timetable

taking this number into account. Because the mechanics are definite, you know what you must

do to reach your objectives.

ESTABLISH A PICTURE IN YOUR MIND OF THE AGENT YOU WANT TO RECRUIT

The picture of the agent you want to recruit should not be an exact photograph but a general

silhouette. You don’t want to set up hard-and-fast rules that will hem you in but rather you

should have a flexible framework that can be modified to suit circumstances. Some of the

minimum qualifications might include: Has lived in the community at least five years

Has attended college

Demonstrates leadership qualities

Is active in the community

Possesses sales or management experience

Shows a pattern of stability and success in previous work situations

Has a record of reliability and integrity

Has a natural entrée into a market you want to operate in or the capacity to be trained to work

in that market

Demonstrates compatibility with your agency culture

FOLLOW SOLID RECRUITING GUIDELINES

Prospect for recruits constantly and never recruit under pressure to fill a position.

Obtain all the facts about a recruit before making a decision.

Do not take shortcuts in your established recruiting process.

Develop a sound, structured, and uniform procedure for evaluating facts about recruits.

Don’t recruit more candidates at one time than you can properly induct.

Continually evaluate your recruiting methods and procedures.

MAKE A GOOD FIRST IMPRESSION

Once you have the name of a prospective agent, the next step is to initiate some type of

contact with that person. Regardless of how this contact is made, it must be made in a

professional, first-class manner. First impressions are lasting impressions. Make sure that your

first contact with a prospective agent creates a positive impression, and remember that the object

of your first contact is to get the person into your office for a preliminary interview.

KEEP AND USE GOOD RECORDS

You cannot be an effective recruiter without carefully maintained and conscientiously

analyzed records. The record-keeping system you establish must follow these guidelines: It must be easy to understand, in logical sequence, and not time-consuming.

It must be automatic, so that important tasks and follow-ups happen.

It must be complete and include tests, interviews, reference checks, and job sampling.

It must be habit-forming.

It should include forms that track prospective agents, centers of influence, and a recruiting

calendar.

APPENDIX 2RICH’S 100 RULES FOR ROOKIE RECRUITERS

1. Always recruit.

2. Use personal sources of recruiting.

3. Build a recruiting team of established agents and other employees.

4. Create a recruiting and retention vision.

5. Set realistic and obtainable recruiting goals.

6. Determine the maximum number of recruits that you can develop in a given year.

7. Recruit to classes.

8. Recruit quality over quantity.

9. Trust the recruiting process.

10. Conduct all interviews fully.

11. Always conduct spousal career presentations.

12. Look for belief in the products the recruit will be selling.

13. Trust the results of assessment tools you use.

14. Have other members of your staff interview candidates and listen to their feedback.

15. Recruit successors for established agents.

16. Establish an incentive plan for new-recruit recommendations.

17. Establish a recognition plan for new-agent referrals.

18. Meet with established agents quarterly to gather names of prospective recruits.

19. Develop an internship program for sons and daughters of agents and agency employees.

20. Recruit to a market.

21. Build centers of influence in your community.

22. Get involved in the community. /Be a leader in your community.

23. Get your agents involved in the community.

24. Select from a large candidate pool.

25. Do something about recruiting every day.

26. Understand what your company expects from you in the recruiting area.

27. Set high standards.

28. Put your ideal candidate’s traits in writing and don’t deviate from them.

29. Recruit those you would be proud to introduce to your family.

30. Memorize your screening, selection interview, and career presentations.

31. Ask open-ended questions.

32. Listen carefully and don’t prompt answers.

33. Make effective use of silence to get complete answers to questions.

34. Use a structured interview process.

35. Trust your good judgment but listen to others’ opinions.

36. Look for success patterns.

37. Keep a steady flow of quality prospective recruits coming into the agency.

38. Create an environment conducive to quality recruiting.

39. Be professional.

40. Look the part.

41. Act the part.

42. Lead by example.

43. Believe in what you do.

44. Offer careers, not jobs.

45. Select, don’t sell, the career.

46. Always provide candidates with an honest description of the career, good and bad.

47. Use precontract training.

48. Use market surveys.

49. Keep great recruiting activity records.

50. Trust your numbers.

51. Believe in your company.

52. Believe in the products you sell.

53. Believe in the good the industry does.

54. Believe in the career opportunities you have to offer.

55. Trust in your first impressions but don’t hire based on this alone.

56. Learn from other successful recruiters.

57. Learn from your mistakes.

58. Always be prepared to replace your weakest link.

59. Know where your customer base resides. /Know your territory.

60. Understand your ethnic market opportunities.

61. Develop an office succession plan.

62. Develop a college internship program.

63. Use personal observation every day.

64. Avoid impersonal recruiting sources.

65. Recruit to management.

66. Recruit to replace yourself.

67. Recruit people who are better than you are.

68. Celebrate recruiting success.

69. Make recruiting job number one.

70. Don’t make promises to a new recruit that you can’t or won’t keep.

71. Be proud.

72. Be enthusiastic.

73. Be honest.

74. When you go to your office, focus on what you are doing.

75. Leave your personal problems on the office doorstep.

76. Take care of your senior agents and they will take care of you.

77. Treat your agents and office staff with respect.

78. Always act in a mature manner.

79. Take ownership of recruiting.

80. Treat recruiting like a business, not a pastime.

81. Treat prospective recruits the same way you want to be treated.

82. Have empathy, not sympathy.

83. Be firm but fair in what you expect.

84. Don’t live on exceptions.

85. Expect what you inspect.

86. Have high expectations. /Think big.

87. Pull, don’t push.

88. Dream big dreams.

89. Trust others and have faith in them.

90. Be the best recruiter you can be.

91. Have faith in your own ability.

92. Follow the formula for recruiting success: two Career Profiles® a week = 10 Career Profiles® per month = 120 Career Profiles® per year = six quality appointments per year.

93. Recruit individuals who fit into your agency’s culture.

94. Never recruit under pressure.

95. Continually evaluate your recruiting sources, methods, and approaches.

96. Keep your staff informed of recruiting goals and progress toward those goals.

97. Keep your producers informed of recruiting goals and progress toward those goals.

98. Look forward, not backward.

99. Build a great agency.

100. Recruit and Retain!

NOTES

1. Bringing Them Through: The Best Practices of High-Agent-Retention Companies, Strategic Issues Series 2000-3, I/R Code 55.00, LIMRA International. Accompanying PowerPoint presentation available.

2. U.S. Market Share by Distribution Channel, LIMRA International, 1998.

3. U.S. Agency-Building Recruiting Trends reports, (excluding multiple-line and home service agents) 1964-2000, LIMRA International.

4. Honan, Margaret S., A Forecast of Increased Recruiting, LIMRA International, 2000. This article postulates a connection between recruiting rates and birth rates — that projecting births (and a 20-year lag to allow new births to enter the workforce) indicates that there will be an increase in recruiting that will run from 1996 through 2010 and then decline again. It forecasts a 28 percent increase in recruiting between 2000 and 2010. The report claims, “An increase in recruiting seems hard to believe given that the full-time salesforce is getting smaller. Yet, with the demographic profile changing, the demand for insurance products increasing, and the age of the workforce getting younger, an increase in future recruiting is unavoidable.”

5. Terry, Karen R., and Sally A. Bryck, Trends in Life Insurance Ownership Among Americans, LIMRA International, 1999.

6. A View from the Top: CEO Perspectives on Company Challenges and Industry Issues, LIMRA International, 1999.

7. Customer Preferences for Buying Life Insurance Now and in the Future, LIMRA International, 1996.

8. Survey of Producer Opinion, LIMRA International, 2000.

9. U.S. Market Share by Distribution Channel, LIMRA International, 1998.

10. Johnson, Catherine, “A Smart, Brave, Strange New World,” Resource, November 1999, p. 19.

11. Ben Wattenberg, “America by the Numbers,” Wall Street Journal, January 3, 2001, p. A14.

12. Prichard, Price, New Work Habits for a Radically Changing World, Prichard and Associates, 1994, p. 44.

13. Service: The Differentiating Factor in the Brokerage Distribution Channel, LIMRA International, 2000.

14. Life Insurance Fact Book, American Council of Life Insurance, 2000, p. 88.

15. Agent Production and Survival: Agency Building Agents in the United States, Calendar Year 1999, LIMRA International, 2001.

16. Pink, Daniel H., “What Happened to Your Parachute?” Fast Company, September 1999.

17. Company Salesforce Recruitment Practices in Europe, LIMRA Europe, 2000.

18. Wilhelm, Robert S., Investing in New Agents: A Cost Blueprint, LIMRA International, 1999.