Looking to expand its reach in the US life and mutual
fund markets, Hartford Financial Services has begun a programme to
recruit independent agents. Bob Primmer, the insurer’s head of
independent distribution, discusses the programme’s progress and
long-term strategic objectives with Charles Davis.
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Seeking to bolster its expansion
into new distribution channels, Hartford Financial Services Group
plans to concentrate on the rapidly growing independent financial
adviser channel, as a way to augment its big-bank channel, while
targeting the burgeoning registered investment adviser market with
its mutual fund line-up.
Bob Primmer, senior vice-president
of independent distribution at The Hartford, told LII the
insurer is recruiting independent insurance agents to sell fixed
life insurance products as part of a company-wide initiative called
the
‘Monarch programme’.
Agents in the programme which
commenced in early-2010 are paid through commissions, but will
continue to act as independent brokers and can offer products from
other insurance companies. Agents in the programme will only put
their fixed business through The Hartford. Any variable universal
life products would be cleared through the producers’ own
broker-dealer, Primmer said.
“Over the last 10 years or so, with
the market crash in 2000 and the flight away from variable
products, we had built a dominant market in banks and wirehouses
[electronic brokerages], but on the life side, that business isn’t
growing,” Primmer added.
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By GlobalData“Some 90% of life coverage is
written by people defined as independent producers, so we wanted to
attack that space as a balance to the bank and wirehouse space. We
did not want to leave that business, but we saw a real opportunity
on the independent side.”
Through the account executives, the
carrier will reach out directly to independent agents instead of
going through the brokerage general agency route. A brokerage
general agency manages contracts with life carriers and then
establishes contracts with agents who want to sell a particular
carrier’s product.
Off to a good
start
The Hartford is aiming to have as
many as 400 new brokers in the programme by the end of this year.
The strategy has begun paying dividends. Primmer said the company
added 140 brokers in January alone.
The Hartford is also stepping up
the efforts of its employee sales force, particularly its account
executives. Those individuals are based in different territories
and reach out to independent life agents seeking marketing support.
They also act as consultants to other financial services firms or
do point-of-sale work with advisers who aren’t familiar with
selling life insurance, Primmer explained.
The Hartford also plans to increase
sales through regional banks. To keep up with these initiatives,
Hartford plans to increase its wholesales force by 10% to 15%
annually for the next three to five years. It now has 200
wholesalers spread among 20 offices nationally.
Primmer said The Hartford is
focused on advisers with more than $1m of annual life insurance
production.
“Independent advisers typically
have a much shorter shelf of providers than a large financial
institution,” he said. “We are talking about two-to-three core
carriers. If we can get on the shelf, we are confident we can
gather significant share of assets.”
The Hartford also plans to revamp
its annuity line-up, targeting the registered investment adviser
space with its mutual fund business, said Keith Sloane, senior
vice-president of The Hartford Mutual Funds. The mutual fund
strategy has a two-pronged approach, Sloane said, targeting
independent financial advisers and registered investment
advisers.
“We have been moving toward the
independent representative channel for several years now and
continue to pay more attention to that space,” Sloane said.
“We are dedicating more resources
to refine the independent representative distribution channel. It
requires some different resources than traditional financial
advisers. From the top-down, platform level, we are working with
Schwab, Fidelity Ameritrade and Pershing. The bottom-up approach
sees us working through the advisers.”
Sloane said a key component is
maximising the relationship with relationship managers who work
with product providers.
“They are working with providers to
grow assets under management,” he said. “Getting our funds in front
of them is key.”
Mutual fund
opportunity
Sloane said that Hartford is well
positioned to grow its mutual funds business through registered
investment advisers.
“We have a really healthy mix,” he
said. “We exceed performance expectations, and we have a menu of
style-focused funds for people to build a matrix and we have
opportunistic funds for stock pickers, and we have multi-strategy
funds as well. That mix is important.”
The key, he said, is to develop the
registered investment adviser channel for the long term, with an
eye toward sustainable, systematic growth.
“This is a marathon, not a sprint,”
emphasised Sloane.
Hartford recently unveiled a
corporate strategy that aims to expand its assets under management
by better aligning its two companies, Hartford Life, and Hartford
Property and Casualty. It said it would change its dual-silo
structure so that Hartford acts as one company with three consumer
divisions: commercial markets, consumer markets and wealth
management.
In wealth management, Hartford has
about $200bn of assets under management globally, but to expand, it
needed to improve and update its annuities. The new annuity line-up
includes Hartford Personal Retirement Manager, which was rolled out
in autumn 2009. It combines a traditional variable annuity and an
income annuity into a single contract.
Sloane said the reorganisation
underscores The Hartford’s commitment to the mutual fund
business.
“The mutual funds stay within the wealth business, but the
strategy certainly reinforces the commitment to the mutual fund
business,” he said.
