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Life Insurers Embrace Shift to Wealth Management


Kathleen E. Krozel, LLIF, FLMI, ARP
Research Director, Distribution Research

June 2024

For the past 20 years, the business mix of life insurers with agency-building sales forces1 has been changing, with an increasing share of sales being generated by investment products. In recent years, that trend has accelerated. Life insurers are not only embracing, but actively growing the wealth management portion of their business. This article examines the trajectory of this trend, explores key drivers and considers the impact on the channel.

A Growing Trend

The productivity of financial professionals (FPs) in agency-building distribution can be measured in several ways, one of which is “first-year” commissions (FYCs). In LIMRA’s FP (Agent) Production and Retention study, FYCs are reported for broad product categories such as life insurance, annuities and investment products.

From that research, we saw a gradual shift in product mix in the 2000s, during which the share of FYCs coming from life and health products decreased from 65 percent to 54 percent, while investment products and annuities garnered a growing portion. Over the next decade, that trend accelerated; by 2021, the life insurance share of an FP’s FYCs had declined to 35 percent, while investment products ballooned from 19 percent to 50 percent.

Figure 1. Trend in the Distribution of FP Commissions by Product Line

Filter the data in this chart by clicking on a color bar in the chart legend.

One might be tempted to conclude that several large insurers drove this change, but that is not necessarily the case. Of the 14 companies reporting production data for both 2011 and 2021, 10 had investment product sales. Each of these had a growing share of FYCs coming from investment products, with increases ranging from 13 to 37 percentage points. Clearly, the trend toward selling more wealth management products has taken a firm hold in the agency-building channel.


What is driving this trend to wealth management? One of the key drivers is the need to attract and retain FPs. Promoting the career of a “life insurance agent” became difficult in the 1990s and beyond. As a result, the industry moved away from the term “agent” when recruiting new FPs and began using “financial advisor” or some variant. With college graduates being enticed with high starting salaries in other industries, pressure mounted to get new FPs off to a fast start and keep them engaged. Investment product sales provided an easier path to that goal than insurance products alone.

Another driver is consumer needs and preferences. The burgeoning retirement market, combined with the rise of defined contribution pension plans, created a growing number of consumers seeking advice on what to do with the large sums of money in their 401(k) plans. Life agents sought securities licenses in order to advise those clients, and today, two-thirds of companies with agency-building distribution require FPs to have some type of securities license either prior to or after contracting as a full-time agent, according to research from LIMRA (Career FP Recruiting, Did You Know? Recruiting Snapshot, LIMRA).


As concern over the stagnation of life insurance sales in the U.S. grows, along with an increasing percentage of uninsured and underinsured adults, some wonder if the industry needs to refocus on the sale of risk products.

We have established that, on average, life insurance FYCs have become a smaller portion of an FP’s total FYC. Ratios have two components: so, is the change due to the numerator (life sales) getting smaller or the denominator (total FYCs) getting larger? It is the latter.

Life insurance sales in agency-building distribution have been relatively stable over the past two decades. While the number of life policies sold per FP per year decreased slightly (30 to 26) from 2001 to 2021, FYC income from those sales increased. This raises the question: if FPs did not have investment products to enhance their overall earning power, would they double down on life sales to increase their income, or would they simply move to a different industry segment?

Figure 2. Trend in Life Insurance Productivity Per FP

From a consumer perspective, net promoter scores (NPSs) are a key metric in today’s highly competitive landscape. According to a recent LIMRA consumer survey, FPs who take a holistic approach to their practice, as opposed to a “sales approach,” have a key competitive advantage in that consumers are much more likely to recommend FPs who take a holistic approach.  While the term “holistic” encapsulates a range of ideas, one aspect includes the ability to offer advice on a range of insurance and investment products.


When it comes to business mix, no one strategy is suitable for every carrier. Products, markets and distribution strategy all factor into the equation. It is clear, however, that wealth management has become a significant source of income for FPs in an industry segment once known for its emphasis on life insurance.

Those focused primarily on the wealth management space will face increased competition from peers and those in the broader financial services landscape. Affiliated channels must stay abreast of the market forces that influence those sales, including the attention successful wealth practices might attract as buyout targets.

On the other hand, for those primarily focused on risk products, the fact that consumers are expecting financial advisors to take a more holistic approach to their practices could mean that FPs unable or unwilling to sell investment products will find themselves at a competitive disadvantage.

A balanced approach that focuses on serving all a client’s financial services needs has the greatest potential for success.

1 An affiliated distribution channel in which financial professionals represent one company primarily for the sale of individual life, health, annuities and investment products. Inexperienced recruits receive significant training, mentoring and sales support in their first few years in the business.

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