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Where is the after sales from agents?

>> Sunday, September 27, 2009

When i ask clients of how is their relationship with their insurance agents, it is often complained that they have changed agents numerous times due to the agent leaving the industry or changing company. Moreover, the taking over agent is only concerned of selling them more products.

This is mainly due to the way the commission is structured in Singapore. Agents are only remunerated for the initial sales. Comparatively, if a fee-based structure with a reoccurring annual fee was charged, most would not be open to this service.

So are people demanding too much from these sales agents? They want free consultation, have a poor attitude towards treating sales agents and expect free perpetual commitment. Although I am not defending the actions of irresponsible sales agents, I wish to give a fresh perspective purely from a neutral mathematical viewpoint of an agent.

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Calculation:

Assumptions:

  • Each client provides an average of one time annual commission of $500.
  • Average minimum income required for an agent to survive is $2,500 per month.
Therefore, the agent has to close 5 new sales a month to make a bare minimum level of living, not with standing that he/she has to spend on marketing, prospecting, transport, treating clients and office administrative expenses like IT usage, postage, printing and photocopying.

After 5 years, he would have accumulated, 5 clients x 12 months a year x 5 years = 300 clients! How is he/she expected to continue to make the 5 new sales a month and at the same time meet up with the existing 300 clients for review and provide after sales service?

With only 365 days a year, how is one expected to carry on to maintain a bare minimum level of living in new sales while keeping up relationships with a clientele base of over 300.

Do note that this is based on conservative numbers. Many rely on high sales numbers when selecting their agents, looking for those with the coveted MDRT (Million Dollar Round Table) status. Consider this, with even higher sales volume, their clientele base would be in the thousands. Moreover, if they continue to qualify for the MDRT, they will only be focusing on new sales. With an ever growing number of clients, would you expect ANY after sales from such agents?
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Do not get me wrong, I do not condone agents that abandon their clients. However, I feel that MAS should revamp the industry and introduce a commission structure where the high initial sales commission is spread throughout the policy years. A commission that is not given on the onset only, but perpetually. In addition, the agent should even be entitled to small percentage of a successful claim to encourage them to service the claim promptly and take an interest in pulling the claim through with the insurer.

Clients can choose to switch if they feel their advisers are not performing up to their expectations. This will be a win-win situation for all. Clients will continue to hold the power of receiving the best service because the next adviser will also be willing to take over and service them as he will be entitled to the recurring commission. Advisers can also focus on their established clientele instead of continuously looking for new sales.

It will bring more confidence in the industry and make for a more professional service similar to doctors and lawyers. Clients will also enjoy a more in-depth understanding of their financial situation at each stage of their lives, as advisers will now review clients properly year after year even if they do not purchase any new policies or risk them switching to someone else who will.

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