One of the biggest challenges – some would say crisis – facing the insurance industry is employment recruitment and retention. The industry has a record number of unfilled jobs, with total employment down 85,000 from 1.56 million just two years ago. A recent study showed the layoff rate is at a 10-year low and the number of people leaving jobs is at a 10-year high.
Moreover, talent consultants say, the industry is “aging,” with large numbers of workers facing retirements known as the “great retirement.” And recruiting new talent is a challenge because insurance is not at the top of the list of employment opportunities for young people or college graduates. The US Bureau of Labor Statistics said in the first quarter of this year that the insurance sector gained 386,000 jobs in technology, actuarial, analytics, claims and underwriting. An annual insurance industry labor market survey by Jacobson Group this year found that hiring difficulties remain high, with companies saying nearly all positions are still difficult to fill.
In total, 25% of companies said the ability to recruit and hire talent has become more difficult than in the previous year. About 29% of life/health companies feel it has gotten worse compared to 23% of P&C companies. Large companies had the most difficulty, with 27% answering that it was more challenging, compared to 21% and 20% for small and medium-sized companies, respectively. Total industry turnover, voluntary and involuntary, was around 15% for the previous 12 months.
Hiring advisors citing financial performance
In light of this, a line in Northwestern Mutual’s annual financial results in February jumped off the page. The company attributed its record financial performance in part to investments in new advisor hiring and development, “which ended the year with approximately 7,500 full-time financial professionals, the largest and most diverse group in the company’s history.”
Asked if Northwestern Mutual was an outlier compared to its industry peers when it came to recruiting and retention, officials there agreed that it probably was, but agreed that the recruiting challenge is a tough one.
“The industry just doesn’t have the capacity to meet the needs and wants of society in this country,” said Northwestern Mutual Vice President of Field Talent and Performance John Roberts. “There are fewer financial advisors than 15 years ago and the average age of our financial advisors is increasing every year. We are not replacing that talent with new talent.”
But Roberts believes Northwestern Mutual has an advantage over its peers when it comes to recruiting and retention. The company has consistently increased the number of financial advisors every year since 2011.
“One of the things we pride ourselves on at Northwestern is that 99% of the new advisors we license and register each year are organic,” he said. “So, it’s new talent for the industry that we’re training, developing and setting on a path to be able to build a financial planning career and impact their community.”
Employee retention is a struggle
Still, it’s a low-yield strategy, Roberts said, when it comes to employee retention. The company hires 2,500 to 2,700 new full-time advisors each year, and within five years only 300 to 350 are still with the company in a full-time capacity. This sounds low but is probably a high ratio compared to the industry as a whole.
“When you look at Northwest with the industry we’re different because most of the industry is focused on finding talent that might be a better fit for their model than somebody else’s model, and that’s kind of broker dealer trading talent or an RA or something. An insurance carrier,” he said, “There are some who are growing organically, but we are committed to bringing more advisors into the industry. We think it’s easier to wire people from the beginning than to try and unwire them from where they were. So, I think we’re a little different on that.”
Still, Roberts said, recruiting is “extremely difficult” in the current environment.
“Being a mutual company, we have the slight advantage of not having to meet quarterly earnings requirements, we can make investments that have a really long tail,” he said. “I think for a company that has a more short-term approach, it’s really challenging. But it’s really hard, both ways. The insurance space is certainly not attractive to Gen Z or new job seekers.
Roberts said the key to improving hiring in the insurance industry is diversifying the ranks and having a workforce that reflects the market it serves.
“About half of our new advisor hires are women or people of color,” she said. “It’s been a major source of growth for us over the last five or six years. In fact, if you only look at our white male advisors, we have very little growth. So, I think it’s number one if we’re going to grow, and we’re going to attract new talent, we have to continue to diversify.”
Doug Bailey is a journalist and freelance writer based out of Boston. He can be reached [email protected].
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