The missing links: it's always been a challenge, but recruiting young people has become urgent for independent agencies.

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Industry veteran Chris Amrhein recalls talking a few years ago with a young property/casualty insurance agent employed by an independent agency. "Was there like a war or something?" the 24-year-old inquired after noting that the next youngest person in his agency was in his 40s.

According to industry sources, the scarcity of young agents at agencies is not unusual. "Somewhere along the way, we either lost a generation, ran them off, or we never got them," said Amrhein, who has authored a booklet, Beyond the Boomers, for the Independent Insurance Agents and Brokers of America. The booklet offers advice on how to market to and hire people from the post-boomer generations.

The problem is widely recognized, both in property/casualty and life insurance agencies. The IIABA, for example, runs InVEST, a program to teach about insurance and recruit students in high schools and colleges. It helps run field trips and form internships. The National Association of Professional Insurance Agents offers a Young Insurance Professionals program that operates primarily on the state level. The group held its first national event this spring. And the National Association of Insurance and Financial Advisors runs a Young Advisors Team program designed to help ensure that Naifa members age 40 and under receive the tools, resources and networks they need to succeed.

These programs are in the vanguard of large-scale efforts to find solutions, but the actual hiring and training still takes place at the agency level. Agency principals today are typically in their 50s.Their producers, staff members and even their clientele often have reached middle age as well, and they don't have much new blood coming in, Amrhein said. Without an infusion of young agents, agencies are planning their own obsolescence, he said.

Technology's Two Sides

Younger employees may offer what older ones may find difficult to provide, such as a familiarity with new ways to use information technology.

"The world is changing rapidly, and you, as an agency owner, might not be the one who can figure it out anymore," said Amrhein. "The technology is running past us. We just aren't into it in the same way as these 25- and 30-year-olds are, and if we just brought them in and got out of their way, it might be really good."

Amrhein said the young generation is "living in a world I can't even conceive of" with their embrace of instant communications through wired and wireless devices, cell phones, texting and videos of themselves. "We need to appreciate and realize that they're living in it, not us, and the future is them, so let's go after them," he said.

Younger agents also attract younger customers, thanks to the natural connection among people of the same age. Most customers of independent agencies are about the same age as an agency owner--about 55, said Peter van Aartrijk, chief executive officer and managing director of The van Aartrijk Group, a branding advisory firm.

Amrhein summed up what he sees as the vital importance of bringing young, career-minded agents into independent agencies: "If I don't have younger people here, eventually my entire book of business retires and dies with me, so there is no future in this agency."

A 'Tough' Choice

Aside from generational differences, the fact that being an agent is a tough, demanding job also hinders recruitment. In the life insurance industry in 2006, only 15% of new agents remained in the business after four years, up from 11% in 2003, according to market research firm Limra International (see table on page 93).

That improvement may be evidence that industry recruiting efforts are starting to work. Three years ago, Naifa created its Young Advisors Team as a way not only to retain young agents, but also recruit them, said Elizabeth Blackburn, a veteran of 14 years as an agent and wholesaling director and currently a member of Naifa's YAT committee.

Blackburn said Naifa formed the team to address two trends: Its membership was declining, and its average member's age was increasing. YAT conducts programs at the local, state and national levels, and focuses on the benefits of networking, how to find clients and how to manage one's business.

Before YAT, Naifa's programs catered to experienced agents interested in more sophisticated subjects. "We recognized we needed to make it a separate program, give it its own name, and get young people successful in the business to chair the local programs," said Blackburn. "We also saw a need to recognize successful young people as a way of showing other young advisers how an agent became successful."

The team also has been working on developing member-benefit programs to be offered over the Internet. "Young people learn differently." Blackburn said. "In the past, we delivered programs face to face, but young people are much more Internet savvy and like to have things available on demand."

The Value of Networking

Donna Pile, outgoing national president of the PIA, said she suspects the four-year survival rate for new property/casualty agents is better than for life agents. Property/casualty agents have recurring commissions on business they keep on the books, and they may have an easier time getting referrals, she said. Life agents usually get significant commissions only from new business. That said, property/casualty agents face similar entrepreneurial pressures as their life counterparts, and independent agencies shoulder expenses while recruits are learning.

Pile, owner of the A.G. Perry Insurance Agency in Lexington, Ky., learned the business from her father and two uncles. Her son, Sam, has joined her, selling life insurance, disability policies and other financial services. Pile said Sam has shown an interest in succeeding her as owner.

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Like Naifa's YAT, PIA's Young Insurance Professionals program is three years old and provides networking opportunities for young agents. Two years ago, it created an award recognizing the National Young Insurance Professional of the Year. This past Match, YIP held its first national networking reception.

InVEST, the IIABA's long-running program, was started in the 1970s in California high schools. It's been revamped in the past couple of years, said Bill Pierson, who heads the program. High schoolers today enjoy learning about auto insurance because it is something they soon will need, he said. "If you only teach about this one line of insurance to a group of high-school kids, you'll have a hit," said Pierson.

The program has expanded into community colleges, where students can earn insurance designations, such as Accredited Adviser in Insurance. This kind of study often leads to customer-service representative jobs at agencies, and those with an aptitude for sales can move up to the producer ranks, Pierson said. CSRs usually handle and process policy applications, he said.

The industry is actually in a war for talent against many financial services competitors, Pierson said. Banking and jobs related to the stock market have always seemed more alluring, while insurance has been seen stereotypically as a dry, unexciting industry, he said.

Eyes Wide Open 

Smart agency owners are always on the lookout for bright, energetic, motivated young people, whether they find them at a local bank, country club, restaurant, or even a car wash, said van Aartrijk. They're attracted by flexible work schedules and "seamless, outsourced telephone and Internet connections for part-time CSRs and stay-at-home or return-to-work moms," he said. "The best brands have happy employees, and happy employees attract more happy employees."

Van Aartrijk predicted a "renaissance of young talent" at independent agencies.

"It's just too good of a secret to keep from the younger population," he said. "What independent agents and their service staffs do every day is fascinating and highly valuable for families and businesses. Helping people protect what is important to them crosses generations as well as diverse cultures. Agency owners should paint a picture to young recruits about a career path around helping people, not peddling products."

* The Trend: The insurance industry is becoming more proactive in helping new agents succeed.

* The Significance: Populated by baby boomers, independent agencies have failed to recruit younger generations and face business challenges.

* What Needs to Happen: To continue in business, agencies must recruit young employees who can reach young customers.

My Generation

Seniors

Born: Before 1946

Life Experience: Respect for hierarchy

Information Technology: 26% go online for limited tasks

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Boomers

Born: 1946 to 1964

Wealth: Own 70% of U.S. household financial assets 

Life Experience: Paid their dues to gain power

Information Technology: Vast majority use Internet

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Generation X

Born: 1964 to 1978

Life Experience:

* Latchkey children

* Saw parents live to work

* Multiple parents, homes and siblings 

* No guarantees; look out for themselves

* Financially conservative

* Marrying later in life

Information Technology: Avid users

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Generation Y

Born: 1978 to 2000

Life Experience:

* Outnumber two previous generations

* Passion for community service

* Seek to improve society

* Will check information online

Information Technology:

* Own and use the latest tools

* Very well-connected through IT with friends

* Will use IT to find and research products

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Source: IIABA's Beyond the Boomers guidebook

Why Gen Xers and Gen Yers Aren't Insurance Agents

* The vast majority of independent agencies are small and aren't that good at hiring or screening, "If they brought young people in, they tended to be their own kids because that was their comfort level," said Chris Amrhein, author of Beyond the Boomers. "And to the extent those kids either didn't work out or weren't interested, they really had no fallback."

* Many young people that come into the business leave and nobody really tries to hang on to them. That may have been due to a lack of good training anal management skills. "A lot of people who ran agencies were producers, not managers," Amrhein said.

* Young people gravitate to seemingly more attractive opportunities in other financial services or Internet-related companies. "My problem is that all the people who went outside thinking they were going to get rich anal who have now had their wake-up call are really ripe to come back, but no one is going after them," said Amrhein.

* Many agencies don't look modern or inviting to young people. "A lot may seem cosmetic, but it's all huge from a brand standpoint," said Peter van Aartrijk, chief executive officer and managing director of The van Aartrijk Group. "It is important to invest, or reinvest, in fast computers and Internet connections, updated agency management software, a Web presence that looks like something from this century, and modern furniture, lighting, carpeting, paint and wall designs. Many agencies don't look all that inviting."

Life Sales Stoppers 

New life insurance agents face numerous challenges, some that were legislated and others that evolved.

* Do-not-call lists. Cold-calling was a primary way for new agents to find clients. Today's restrictions on the practice have hurt both new agents and agencies in their ability to recruit. Having to buy prequalified leads has added to expenses. To avoid extra costs, some insurers will recruit only experienced agents.

* Commission-based pay. Do-not-call rules exacerbate the industry's difficulty with recruiting for jobs that pay only on commission. "If I'm a college graduate and want to be in the financial world, I might go to a bank, which would start me out on a base salary," said Elizabeth Blackburn, a veteran of 14 years as an agent and wholesaling director. "Potential income is greater with an insurer, but there's no base salary."

* Tougher licensing tests. People entering the insurance business must study on their own rime to pass tests and become licensed. Blackburn passed hers in 1995, but said about 30% of candidates fail the life and health test on their first try because the licensing requirements have become more stringent and the tests have become more difficult.

* Burdensome rules. Agents can spend as much as 50% of their time on administrative work generated by more stringent requirements.

* The "sexy" factor. In the past, when recruiters said "insurance," candidates moaned. "It was not as sexy as being a stockbroker," Blackburn said. "But with the breadth and depth of products a lot of insurers have now, there is much more access to being a financial planner, adviser or a registered representative selling variable products and mutual funds," she said.

* Selling to people in their 20s. If agents relate better to prospects in their own age group, then young agents face a problem. Those prospects, burdened with college loans and in entry-level jobs, may not have much disposable income. "Companies recognize that and try to train agents to be more comfortable selling to the senior market, but it's a definite challenge to have a young person without much experience trying to meet with a 55-year-old business owner," said Blackburn.

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New-Agent Success Rates

The proportion of new life insurance
agents still in the business
after four years is low, but it has
improved.

Year        Retention Rate

2002                    11
2003                    11
2004                    13
2005                    14
2006                    15

Source: Limra International