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Channel Check by Kevin Amrhein A Touch of Grey

With 25% of working-age Americans retired in two years, now is the time to begin training younger wholesalers.

By  Kevin Amrhein

Wholesalers have long been the silver lining for retail agents with difficult-to-place risks, but “every silver lining’s got a touch of grey.”

Beyond cynical, this line from the Grateful Dead’s “Touch of Grey” (released in 1987 and surprisingly, the only top 10 in the group’s storied history) serves as an ode to the impending depletion of talent facing the industry over the coming decade. According to the Bureau of Labor Statistics, more than 25% of the working population will reach retirement age by 2010. The expertise these folks will take with them into their golden years is undeniable and, as retailers may fear, irreplaceable. 

Retail agents depend on the expertise of wholesale brokers to provide the best products in the galaxy. Over time, relationships develop, causing business to flourish while creating lifelong friendships within the industry. But time can also play another part, that of an undeniable enemy that catches up with us all.

“Wholesalers sell expertise and experience to retail agents. That’s our niche,” says Neil Kessler, assistant vice president and director of business development for Colemont Insurance Brokers. “Transition of this brand over the next three to seven years is unavoidable. During this time, we must be prepared for the retirement of an entire class of brokers—those people who made what we do significant.”

Neal Abernathy, president and CEO of Swett & Crawford, agrees that continuing the expertise available to retail agents is a priority. “Myself and other members of the wholesale community are getting into colleges, doing everything possible to teach those at the front end of the age spectrum of the significance of both sides [retail and wholesale] of this business.”

Overseas partners are also feeling the strain. 

At a November conference, Richard Ward, chief executive of Lloyd’s of London, discussed talent depletion alongside issues including climate change, terrorism and political violence as “serious concerns” for our industry in the years forthcoming. Frightening company.

Besides attrition issues, Ward believes “serious image concerns” are to blame. “Nearly 90% of graduates won’t consider a role in insurance, and 75% of recruiters in the industry struggle to attract quality talent. The collective brainpower of our marketplace generates its wealth yet is much more difficult to identify, develop and measure than its physical assets,” he says. “This has certainly been used as an excuse in the past to neglect it. This can no longer happen. Talent, knowledge and how our people are managed are at the heart of our future success.”

Kessler understands the stakes. He and others at Colemont have created a program to recruit and retain top talent. Modeled after carrier training programs popular in the ’70s and ’80s, Colemont’s training requires new hires to spend up to three years on a brokerage team, mastering underwriting and marketing skills expected from the wholesale giant’s retail partners.

“They work closely with our senior brokers on all aspects of the relationship. We want them to understand that these are the people we want them to become,” he says.

In addition, trainees must attend a national sales program in Dallas, home of Colemont’s corporate headquarters. “Young wholesale brokers need to understand the sales culture to understand what retail agents face.”

Brokers from NAPCO frequent risk management programs at colleges around the country with the goal of recruiting top talent. David Pagoumian, NAPCO’s president and COO, says the New Jersey-based brokerage has identified another source for recruiting top talent: people leaving the military. “Many of these folks have developed superior management skills and experience and are looking to showcase their abilities in the private sector. We feel such experience is a tremendous benefit to our operation.”

New hires enter the “Five-Year NAPCO Plan,” during which they work in teams with veteran brokers and train through shared experiences, creating the team mentality essential in placing more complex risks.

At Swett & Crawford, new hires benefit from the way the wholesaler organizes the service function into practice groups. Working in teams, Abernathy says, helps alleviate fears for both junior brokers and their retail partners, who know there is always an experienced broker involved.

Time is not always an enemy. There is a glimmer of hope that a new generation will further wholesalers’ efforts to identify with a greater segment of the retail community. Abernathy hopes young agents and brokers will bring to the industry a new outlook on the wholesaler segment—one that does not view wholesalers as a market of last resort. “We write business because we believe we can get the best deal for the retail agent and the insured,” he says.

Efforts such as these should relieve retailers’ concerns that the absence of an individual will jeopardize the relationship that it’s taken both sides time to build. Indeed, there are wholesalers who choose instead to focus on a different line from that same great song “Touch of Grey”: We will get by.

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