The speakers on the tape I was listening to said, 'When you complete the process of rearing your children, you want to be certain to maintain a reasonably good relationship with them. You see, your children will make two decisions that will significantly affect your life: what nursing home to select and when to pull the plug.' Sobering thought? You bet.
I was listening to this tape in the middle years of parenting my two children, when I didn't feel it was working out the way I thought it should. I was trying to live up to the whitewashed concept of having children: cute babies, 'good night sugar,' refrigerator pictures, dance recitals, and home runs in little league-as opposed to the reality of dirty diapers, the terrible twos, temper tantrums, homework, defiance, and so forth.
The same reality check is currently being demanded of those involved in the insurance industry.
Now that banks can sell insurance, many agencies and their trade associations have had to change their position from 'We'll never let it happen' to 'If you can't beat 'em, join 'em.' The problem is that traditional banks and agencies will soon discover the massive chasm between concept and reality. To succeed in these new ventures, both will have to reinvent themselves.
If only someone had told me about the reality of having children; I still would have had and loved mine, but I would have been much better at it!
So let me take the liberty of sharing some of the realities about banks and insurance with you. Not to discourage you from pursuing a significant opportunity, but to make you better at it.
RISK. Risk is the reason agencies exist. You're paid to manage risk, but banks have succeeded by avoiding it. You are an entrepreneur. Every day you 'roll the dice'; it's what makes your heart beat fast. Banks are institutions that manage risk with collateral; unsecured risk causes them panic.
You'll bring them your best clients as bank prospects. They'll reject some of them, and you won't understand why. They'll bring you bank customers and wonder why you can't give everyone of them your best deal.
REGULATION. Banking and insurance are both regulated. You recognize regulation as licensing, continuing education, and occasionally having to answer to an inquiry from the Department of Insurance. You don't defy regulators; you tolerate them.
Bankers hold their regulators in awe. Regulations and the auditors that watchdog them have shaped banking and its products and processes. Auditors visit often and have their way with bankers. When an auditor says 'Jump', the banker asks 'How high?' To agents, auditors are curious interruptions. When they say 'Jump', the agents say, 'We'll discuss this when I get a chance.' Only the client tells the agent when and how high to jump!
COMMISSION. It's why agents do what they do! It's how they keep score. The agency system was built on performance-based compensation. In traditional banking, 'commission' is a dirty word. Banks are built on security, position, and attendance-based compensation. Time in service and rank are the key determinants of compensation-not production.
Great production and the accompanying compensation might not ingratiate you to the banks' leadership. It might actually create problems for you, if good performance results in your income surpassing their seniority-based entitlement income.
DECISION-MAKING. Get the facts-and in a second, you'll decide. You make decisions quickly, based on your innate comprehension and intuition. You may commiserate with others after the fact, but you decide and accept the consequences of that decision.
Bankers decide in committee. Rarely is the individual responsible for his or her decisions. Even when an answer is given instantaneously, it's probably determined from procedures written by a committee.
PACE. Agents are hares; bankers tend to resemble tortoises. Agents tend to run with their ears back and full speed ahead. They believe that with speed, some direction, and a little luck, they'll prevail.
Bankers move much more slowly. To them, moving means sticking their neck out of their shell, and they aren't always willing to do that. They're more cautious, and at their slower pace, there's much less chance that they'll go off course.
FOCUS. The Agency System has matured in a buyers market. Banking developed in a seller's world. In banking, strict regulation limited competition and resulted in this seller's world. This basic difference in evolution has created the massive chasm between the cultures of banking and insurance.
The foci of banking are products, process, and people-in that order. Insurance, on the other hand, addresses people first, then products, and finally process.
Agents will be acquired by, merge, joint-venture with, or somehow 'marry' bankers. All should be successful, but only some will. Products, process, and technology won't determine success or failure. Only those who address cultural differences, focus on customers and their needs, and commit to creating a new better world of financial service delivery will end up winners.
This process requires leadership. As Max DePree stated, 'The first role of the leader is to define reality.' Remember, the reality of this tremendous opportunity is not completely a matter of dirty diapers-nor wholly a scenario of 'good night sugar.' It's a balance of both. So change the diapers and enjoy the good night sugar.