Three Questions to Find a Good Insurance Agent

Benjamin Franklin once wrote that "Nothing is certain except death and taxes." Had he lived today, he'd throw "insurance" onto his list of life's certainties: "Nothing is certain except death, taxes, and insurance." When faced with certainties like death, taxes, and insurance we seek out guidance.

At death, we speak with a religious leader. During tax season, we need our accountant. To guide us through the kafkaesque maze that is insurance, our nephew calls us up for the "ask!" Most dread the "ask" – Would you mind sitting down with me to discuss your insurance policy? It's not annoying in-itself. It's the question begged by the "ask" – Is he scamming me?

Why would we even wonder if an insurance agent is scamming us? I believe that it's the "salesyness" of insurance at the micro level, evidence of limited quality control at the macro. Limited quality control on agents can be traced to a low barrier to entry. Most pass the insurance exam within a month. Accountants must complete their bachelor's, and only then can they test; two weeks versus four years.

Additionally, almost anyone can pass the insurance exam since 60%, a D- is passing. The low barrier to entry means that most who pass are under-qualified to transact insurance; just look at the 90% attrition rate for first-year agents! The varying quality is what makes the "ask" so frustrating.

My firm's mission is to transition insurance into a profession, akin to medicine or law. We must expect that level of expertise from insurance agencies. Out of nearly a thousand applicants, my firm took eight. Others take hundreds to see who swims.

Theoretically, continuing education for all agents is mandatory, but again, quality varies. I've been blessed to find continual education at my firm and everyday communication with leadership. This model is the future of insurance: boutique services that look at every client as a holistic person with a unique situation.

To see if an agency will treat you as a holistic person with a unique situation, ask 3 questions:

1) How does the agency treat its employees? This is the blueprint for how you'll be treated.

2) Does the advisor or agent explain him/herself in layman's terms? You must know what's actually being said.

3) Does your agent have a securities license? A securities license is more difficult to earn; think of it as quality control. It also disincentivizes your advisor from selling against your needs.

Out of 25 interviews, only my managing partner answered all 3 questions: he used layman's terms to explain the pay structure; it took 8 minutes and 5 slides showing me that he respected my time and therefore our clients'. He also stated that he expected me to earn the securities license. The interview was so concise, we even had time to discuss theater and Sartre! One industry titan made me watch a two hour long pre-recorded zoom regarding their pay – I still can't tell you how they pay people!

Answer those questions and you'll know who you're dealing with. Increasingly, we are headed to this individualized, service-based model. Mass production is out, boutique, tailored-made plans are in!

The next time you get a call from that annoying nephew, ask him these questions, see what he says. A personal or even familial relationship with your advisor could be great. Who better to manage your money than someone you trust with a stake in your success? We all need insurance; that's as certain as death and taxes. But when you trust your advisor, insurance doesn't have to cause existential dread like death and taxes.