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Advanced Sales Department: Forging a Solid Framework

Author

Karen R. Terry, FLMI
Assistant Vice President, Insurance Product Research
LIMRA and LOMA
kterry@limra.com

October 2024

Advanced sales units serve as a solid framework for financial services organizations. They provide instrumental support to advisors for some of the industry’s most affluent customers and businesses. The products and sales concepts they support are some of the most complex — from case design in the estate planning arena to business succession and tax planning. How these departments are organized and staffed determines how easy or difficult it is for the legal and technical professionals who staff these units to successfully provide support to their constituents. LIMRA follows these organizations and recently updated a survey conducted in 2019.

Much has changed since we last conducted this study. Besides the interceding COVID-19 pandemic’s impact on our industry, the advanced sales industry was focused on the impacts of the recently passed Tax Cuts and Jobs Act, debating whether staff should be allowed to work remotely and managing the impact of staffing cuts on their workload. Today, companies are contemplating the impact of the sunset of some of those Tax Cuts and Jobs Act provisions. While the regulatory environment has changed, and the pandemic changed our industry in many ways — evident in advanced sales unit operations as well — much has stayed the same over the past five years.

Service Focus

Advanced sales units focus on wealthy clients and small businesses. On average, three-quarters of clients fall into the affluent market or above, with at least $500,000 in assets, and the highest share in the high net worth market between $1 million and $5 million in assets.

Figure 1. Client Affluence

Based on Investable Assets


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


These advanced sales units provide a variety of services from advisor case design support to training, marketing material creation and, in some units, monitoring for fraud. While there have been some shifts, services remain heavily advisor focused, with case consultation and support and advisor training being the most prevalent services.

Figure 2. Case Type


One shift we have seen is an increase in the number of units working with registered investment advisors (RIAs). In 2019, many advanced sales units identified this as a goal, and although some progress has been made, the amount of time units spend servicing this channel remains low, suggesting that sales interactions continue to be minimal.

In 2019, the Tax Cuts and Jobs Act had just gone into effect, and, as a result, there was a higher focus on buy–sell and other business planning related to the changes in corporate taxation. The estate tax minimum was increased, as well, at that time.

In 2024, units are spending more time on estate tax and retirement planning cases than business issues. Provisions of the Tax Cuts and Jobs Act, set to expire at the end of 2025, include the deductions for pass-through entities, which is impacting business-related sales strategies. The estate tax exemption level is also set to return to prior levels.

Communications

While the pandemic accelerated virtual and electronic communications for many areas of the insurance industry, this was an area where advanced sales units were ahead of the game. Pre-pandemic, advanced sales units were already frequently using email, phone and virtual meeting formats for field communications. Utilization has not shifted much over the past five years — although a few more units are producing podcasts and blogs. On the other hand, instant messaging use has tripled in frequency. Email has replaced the phone as the most important communication method — reflecting larger societal trends

Budget and Staffing

Advanced sales unit budgets are in a much more positive situation in 2024. Budgets were under pressure in 2019 with the majority of unit budgets either flat or down. This year, unit budgets are on the upswing with over half being higher than five years ago. Despite the shift to virtual meetings/work in many industries, travel budgets are up for many units as well. Staffing levels are partially behind the budget increases. Five years ago, staffing levels were either holding steady or in decline for most units. That trend has reversed as of 2024, with over a third of units showing an increase and over half expecting an increase in the next three years. This is a good sign for advanced sales units as the majority feel that current staffing is not enough to meet demand.

While retention has been a major issue both within the industry and in the country overall since the pandemic, advanced sales unit staffing gaps are not primarily the result of turnover. In fact, advanced sales unit turnover is down slightly from five years ago. Attorneys have a higher turnover rate than other professional staff, with most leaving for a position with a competitor. Technical staffing has been impacted by the aging population as these positions experienced higher losses due to retirements.

Conclusion

Advanced sales departments are an important support system for financial services organizations. Given the opportunity, they can play a crucial role in driving sales and revenue growth by identifying business opportunities, creating tailored solutions for complex cases and limiting legal and tax ramifications. The composition and design of these units can greatly affect their impact for success. Although there is no one-size-fits-all solution, the key is identifying and creating a group that has the expertise and bandwidth to develop and tailor solutions to support your organization and your customer mix.

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