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Sales Capacity Forecasting Model Reveals the Impact of Recruiting

Sales Capacity Forecasting Model Reveals the Impact of Recruiting


Margaret S. Honan, ACS
Assistant Research Director, Distribution Research

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

November 2023

From 2010 to 2021, the number of financial professionals (FPs) in agency-building distribution fell 33 percent from 95,300 to 63,600. According to LIMRA research, several factors contributed to the decline in the number of FPs, including companies exiting the agency-building distribution channel, which dropped from 61 companies to 49. Additionally, there was a significant reduction in recruiting, particularly after 2016. The number of FPs hired declined each year from 2017 to 2022 for a constant group of 21 companies.

Agency-Building Recruiting Trend*

*A constant group of 21 companies

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A number of factors contributed to the slowdown in recruiting. A robust economy in the years leading up to 2020 heated up the demand for talent. In addition, many companies expanded product portfolios beyond traditional insurance products to include wealth management. This naturally required that FPs attain securities licenses either before or shortly after hire, raising the bar for entry into the business. The pandemic also contributed to the decline, bringing with it a host of new hurdles, including the temporary closing of licensing centers.

On a positive note, retention rates improved slightly during the period, which helped some companies maintain their overall sales force size, but, according to LIMRA research, those with average to poor retention frequently failed to recruit enough new FPs to grow the channel. Some companies hired greater numbers of experienced FPs to provide an immediate boost to sales and to foster a team model approach to address client needs. However, that could become an uncertain proposition in the long term, putting more and more bargaining power in the hands of a shrinking and aging field force and causing the industry to feed off itself or to “recycle” FPs. Running a business with fewer and fewer people is not a formula for long-term success.

Sales Capacity Forecast

What will happen to the size of the agency-building sales force if these trends continue unabated? LIMRA explored this question using a forecasting model. Key assumptions include the number of recruits, retention rates and the mix of inexperienced and experienced recruits. The model assumed 2023 recruiting levels will rise, based on a 20 percent increase in recruiting in the first half of the year and the fact that, historically, recruiting in the second half is usually better than the first half. Four scenarios are considered, and model outputs are provided for one-, five-, and 10-year intervals.

Forecast Scenarios: Growth in the Number of FPs

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Scenario 1: Level Recruiting

In the first scenario, recruiting stays at the projected 2023 level of 18,690, and retention rates remain as they were in 2021. In this case, sales capacity would remain static for several years, then begin to drop.

Scenario 2: Modest Recruiting Growth

The next scenario assumes an increase in recruiting, while retention remains at today’s levels. Even a modest recruiting increase — 2 percent each year — results in an expansion of the channel over a 10-year period, from approximately 62,000 FPs to 68,000.

Scenario 3: Modest Recruiting Growth and Improved Retention

If retention rates improve (the model assumes a one percentage point increase in four-year retention) in addition to modest recruiting growth, the sales force would grow even more, resulting in nearly 70,500 FPs by 2033.

Scenario 4: Robust Recruiting Growth

A 5 percent increase in recruiting each year would dramatically increase the size of the sales force, swelling the ranks of FPs to almost 81,000 by 2033.


The success of the agency-building channel depends on what happens next. While increased recruiting in the first half of 2023 is a promising sign, we will need to wait to see if this increase is sustainable. Will recruiting and retention levels improve enough to grow this channel?

If not, and the overall size of the field force continues to shrink, will there be enough sales professionals to meet the increasing demand for financial advice in the U.S.? If we don’t meet this need, who will? The mission of our industry has always been to serve our consumers and help ensure they have the financial security they need. The time for action is now — under our watch, not to be deferred to future generations of leaders.

Erica Michaud, senior actuarial consultant, and Faye Williamson, member relations director, from LIMRA and LOMA contributed to the article.

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