Price is the main consideration of broker/dealers in their selection of insurance and financial service carriers, according to a recent study. Service, speed in making underwriting decisions and back office efficiency are also major considerations.
The broker/dealer survey, and another on registered representatives, were commissioned by Prudential and conducted by Mathew Greenwald & Associates of Washington, D.C. They were released last month. The studies were conducted because Prudential is looking at what motivates broker/dealers and registered representatives to market financial products, said Edward J. Mills, vice president of Prudential Select Brokerage.
Thirty-four broker/dealers were interviewed over the telephone for the survey conducted in the spring. These included retail, wholesale and hybrid broker/dealers.
Half of the wholesale broker/dealers surveyed said they use independent agents or brokers as their primary distribution channel. Over 60 percent expect their sales to increase through independent agents or brokers in the next few years.
Some 82 percent of the broker/dealers indicated they currently use both independent agents, brokers and certified financial planners as distribution channels, the survey said.
Most broker/dealers have selling agreements with 20 to 60 life insurance carriers. Seventy-one percent favor selling the products of well-known companies and of companies that sell both variable life and variable annuity products.
The registered representative study, also conducted in the spring, was based on 228 telephone interviews with registered reps, who consist of three groups: independent life insurance agents, stock brokers and certified financial planners. The survey was conducted to determine what kind of services registered reps want from the broker/dealers with whom they deal, Mills said.
Prudential wanted to determine when registered reps leave a broker/dealer and go out on their own and what they want when they do leave the company that trained them, Mills said.
The study found that they primarily want product knowledge from a number of different sources. They prefer a wholesaler who is working with a few companies as a source to someone who is pushing just one product, Mills said.
Registered reps also tend to want to work with wholesalers, rather than contact an insurance or fund company directly, the survey said.
Variable annuities and term life insurance were the most commonly sold products among all respondents, the study said. Stockbrokers were less likely to sell life insurance products than agents or financial planners, while independent agents were slightly less likely to sell variable annuities than stockbrokers and financial planners.
Equity indexed annuities were the least frequently sold products.