With two years in the business to his name, employee benefits consultant at Alliance Income, Sam Pasternak represents part of the industry’s new breed. Having witnessed a number of colleagues fall by the wayside soon after starting, the recruitment problems in insurance sales are no secret to him, as he explains.
“A lot of younger people that try and get into the industry fail really early,” he says. “If you become a surgeon, lawyer, accountant, you go through years of school before you start practising. In this business you do a course to get a licence (LLQP), but you really learn by experience.”
Gaining the knowledge required to succeed represents a steep learning curve for young brokers. Unfortunately, and to the industry’s clear detriment, it’s an ascent that many choose not to complete.
“A lot of young brokers going through that learning period get discouraged, but the learning experience is when you get the skills for the job,” says Pasternak. “Often you have to fail to learn, but a lot of people don’t take it that way. The retention is not very high for this business.”
Insurance, while undoubtedly holding great intrinsic value, is not a product that is sold easy. Brokers soon realize that after starting in the business, which makes the first six months a critical development period. Pasternak was no different in this respect, but remembers this period as laying the foundations for him becoming a specialist in his position.
“I had the same experience that I see with a lot of other people, in that I had a lot of rejection,” he says. “I took that as a positive though because some of the mentors I’ve had taught me that rejection at the beginning is just building to success in the future. As the months went by I saw that hold true.”
Specializing in employee benefits for small and medium-sized companies of between two and 50 employees, he believes there is a lot of misinformation out there about the products he sells.
“I do a lot of door-to-door canvasing, which allows me to meet many different business owners with different situations,” says Pasternak. “One of the challenges I face with business owners and plan administrators is often they don’t properly understand how benefit plans actually work. They are too fixated on the bottom line. There is a lot more a benefit specialist will bring to the table than just a price.”
This expertise means being able to educate employers about benefit plans, which are becoming increasingly complex. As the work culture evolves with a lot more contract, part-time or self-employed Canadians, it means benefit plans are adapting too. This increases the need for a broker with advanced knowledge of the finer details of a plan.
“One of the liabilities that plan administrators or brokers might miss is covering sub-contractors on an employee benefits plan,” he says. “There are so many sub-contractors coming into the workforce because small businesses are looking to lower their expenses. If you put them on an employee benefit plan though, you are deeming them to be an employee.”
Aside from any administrative issues this may present, such oversights could have a significant impact financially, for employer and employee both. In Pasternak’s view, too many agents are more concerned with making a sale rather than adequately describing the ins and outs of a benefit plan to customers. This will ultimately affect the credibility of the brokerage business, he believes, so its practitioners need to understand that the role involves much more than simply pushing products.
“A lot of the agents that are selling group benefits are peddlers, not really advisors,” he says. “A lot of them are hungry for a sale, so they don’t properly investigate what an employer’s liability would be covering sub-contractors. That could cause problems if the owner had an audit and the CRA deems a sub-contractor as an employee – that sub-contractor could lose their right to write-off expenses, while the employer would have to pay EI and CPP.”
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The ability of the insurance brokerage business to add youth to its ranks is an ongoing concern. As more and more agents reach retirement age, there isn’t enough new blood coming through to compensate. As advisors are increasingly focusing much more on wealth management, it means life and health insurance is often being neglected – with penetration rates reflecting that.