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WINDSOR, Conn., October 22, 2018LIMRA-EY Service Offierings – A new LIMRA and EY study finds significant growth of advisory services in financial professionals’ business mix across multiple types of advisor channels. The largest growth of fee-based advisory services comes from full-service broker-dealer advisors, which grew nearly five times, from 10 percent in 2008 to 48 percent in 2018.

“As competition grows, consumers now expect their financial advisor to offer a broad range of products and services to meet their individual financial needs,” said Laura Murach, LIMRA associate research director for distribution. “As a result, we are seeing similarities across all practice models in terms of their service and product offerings. And by offering a wider array of services, advisors can deepen their relationships with clients.” (chart)

This increased emphasis on providing advisory services (as well as other products) has affected the sale of life insurance by career insurance professionals. Once the dominant product line for these financial professionals, today it accounts for less than half of their business. Other LIMRA research confirms that career insurance agents now receive less than half of first-year commissions from the sale of life insurance. Annuities, investments and other products and services now make up a larger percentage of the business mix for career insurance professionals.

In 2008, independent broker-dealer (IBDs) advisors were primarily investment-product focused (53 percent) with advisory services representing just 14 percent of their business. Today, IBD advisors report their business is almost equally divided among investment products (31 percent), insurance products (31 percent) and advisory services (37 percent).  Advisory services have almost tripled in this channel over the past decade.

Advisors Report Income Growth Over Past 2 years

The LIMRA-EY study finds 8 of 10 advisors surveyed report significant gains in gross income over the last few years. Income growth rates exceeded double-digits across all types of practice models over the two-year period.

While many advisors benefited from market gains that increased the value of their book of business and the volume of assets they manage, half of the survey respondents reported that the increase in their income was due to growth in the number of clients. As a whole, survey respondents reported 22 percent growth in their client base over the two-year period. 

“Not surprisingly, almost all advisors (99 percent) rely on referrals to expand their client base and it is considered the most effective way to get new clients,” said Murach. “Interestingly, advisors’ websites and social media accounts are considered the next most valuable tools to market to new clients, which were rarely used 10 years ago.”

The 2018 results were based on an online quantitative survey of nearly 1,500 financial advisors, insurance and investment professionals by LIMRA and EY. The data from 2008 were based on a joint survey of 1,200 sales professionals and financial advisors from July 2008 to November 2008 by LIMRA and McKinsey & Company.



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