Monthly Archive: June 2017

Insurance Consultants for the Modern Times

In early August 2017, Holliswealth Insurance Agency Ltd. (which is currently owned by Scotiabank) will be transitioning to it’s new home at Industrial Alliance.

Currently, Investment Advisors (IA’s) that work under the Industrial Alliance umbrella of companies (FundEx, Investia, IA Securities, etc.) use National Financial Insurance Agency (NFIA) as their MGA.  Currently, NFIA does not have an Insurance Consultant (IC) team.  With the acquisition of Holliswealth Insurance Agency (HW), NFIA has inherited one of the strongest teams of insurance professionals in the Country.  But what does an Insurance Consultant do?

When I joined Holliswealth five years ago my goal was to meet with as many IA’s as possible and find out why so little insurance was issued to their clients each year.  One of the first things I learned is that IA’s are very uncomfortable speaking to their clients about death, disability and sickness.  IA’s often commented that they can’t “keep up” on the products (too busy managing investments). With those comments in mind, I asked why they chose to not work with IC’s on a regular basis.  Below are some of the main responses:

  1. Transaction based Selling: IA’s feel that IC’s are too transactional.  Traditionally, there was no needs analysis or any financial justification for life products.  Moreover, living benefit products (ie. long term disability, critical illness and long term care) were not being discussed with clients at all.
  2. Concept Selling: IC’s have a reputation for selling an idea or concept.  For example, “do you have any clients with over $200,000 of money in their non-registered account?  If so, let’s show them (insert insurance product)”.  IA’s want their clients to be taken care of, not sold an insurance idea.
  3. No Relationship: IA’s feel that the IC is not available for education, support or training.  When the IA calls an IC, the IA feels that they must commission split with the IC.
  4. Turnover: Given the sales-based approach, these ‘experts’ would be replaced every 2-3 years.
  5. Case Size: IC’s have a reputation of asking to sit with your ‘best clients’.  Too much emphasis on the large case, not the typical family

Times have changed!  What does an Insurance Consultant do?  Specifically, what does my firm do?  Below is a table listing all of the steps taken by my firm for each client.  Ask yourself, do you take the time to do this with your clients?

IC Chart

Naturally, I would expect an IA to ask me ‘how much does this cost”?  The answer is simple.  Insurance Consultants work on a split case basis.  When an insurance application is submitted, the IC and IA split 50/50 on the insurance application.  The IA’s compensation hits their own grid/corporation.  Also, the IA is also named the ongoing servicing agent of record (unless they opt out).

I’m actively introducing myself each day on LinkedIn (I may even call unexpectedly).  If you would like to learn more about the process, the team and how we integrate with your firm, I would love to hear from you.  Kindly email me at blaundry@blfinancial.ca.

*Important: Bill S-201 (Genetic Non-Discrimination Act.)

I know most of you rely on me to be more up-to-speed than you on insurance-based changes/issues. That said, there was much discussion about Bill S-201 that was largely overlooked because of the exempt test changes effective on January 1, 2017.

Here’s the scoop…..on May 4, 2017, the Federal Government passed the Genetic Non-Discrimination Act.

“This law makes it illegal to require someone to take a genetic test or disclose the results of a genetic test as a condition to obtain goods or services, or enter into a contract, such as insurance.”

So what exactly does that mean?  It means that individuals (you, me, clients) can have genetic testing completed and NOT DISCLOSE those results to the insurance company (it’s now illegal). If an insurance company uses/requests this information and it will be fined $1,000,000.

When I was in Ottawa at calu weeks ago, they are lobbying this issue to the supreme court, but as of today, this law is in effect.

The major unintended consequence of this new law is the creation of anti-selection for insurance purposes. What if a client had genetic tests that showed they were a carrier of the BCRA gene (ie. Angelina Jolie)? Currently, it is possible for a client to have a test showing they are a carrier of this gene, then immediately apply for critical illness insurance and not need to disclose this result.

This law will require the insurance insurance companies to (a) increase price heavily (up to 65%) and/or, (b) completely change the structure of critical illness insurance (or stop selling it entirely).

Since I knew that this change was happening, I literally just increased my own critical illness by $825,000 (I purchased a 20 year term with Manulife).  See my summary below:

Laundry CI

It’s important we talk more about critical illness insurance before products start to change. I also encourage each of you to consider adding some critical illness to your own insurance portfolio (if you haven’t already).