1967 - SOA - New Company Problems, Society of Actuaries - 38p

  • 1967 - SOA - New-Company Problems, Society of Actuaries - 38p
  • (p-1) - C. David Stilletto: It could be said that there are two basic ways to acquire a sales force...
    • ... one is to build your own
    • ... and the other is to buy trained manpower.
  • (p-2) - C. David Stilletto: The other approach to building your own sales force, in contrast to this full-scale approach, would be the specialized approach.
    • This could be specializing either by product line or by geographical area.
      • By product line, we mean basically what we all have called "special policies."
      • Here you can teach the newly recruited man a simple sales presentation that he can learn quickly and give him a product that he can master and go out and sell; hopefully it will be a product that generates enough commission dollars for him to make a living rather quickly.
    • This is an area in which coupon policies were used in many instances in the past.
      • We all know that there were abuses at times with these, but I think that we should also be aware that there are many companies now of substantial size which at one point in their growth used this approach.
  • (p7) - John S. Fry: The situation with the most potential and the best success to date is that in which the fund and the life company are associated.
    • A fund may have moved into life insurance or an insurer acquired a fund.
      • One motivator for the fund is the SEC opposition to "front-end loads."  With a no load fund sold with insurance the salesman's commission would come only from life insurance.
    • Life companies, on the other hand, have found that an affiliation with a fund is valuable in recruiting life insurance salesmen. 
  • (p10) - Claude Y. Pauquin: My remarks are not directed to new-company problems very specifically, but there is one remark that John Fry, the speaker from the Continental, made that led me to make this remark.
    • He said that there was some attractiveness currently for mutual funds to ally with life insurance companies, especially in view of the fact that the front-end load has been attacked through the SEC investigation on mutual funds marketing.
    • It seems to me that, if the mutual funds were to become no-load funds and were sold in conjunction with life insurance, the commission under life insurance might have to rise above its current level since more is sold than just life insurance.
  • (10) - Claude Y. Pauquin: Another thought that I had on the front-end load is that "what is good for the goose is good for the gander.
    • If the SEC successfully attacks the principle of front-end load in mutual funds, it might also destroy the marketing approach of the life insurance business, especially if federal controls of the life insurance business are forthcoming, since the federal insurance regulators might be expected to adopt a philosophy not too different from that of the securities regulators.
  • (p11) - Alan Richards:  Maybe I can make a very brief comment here. There may be some misunderstanding as to the intent of the SEC-sponsored legislation on front-end loads. The front-end load in the strict sense relates only to a contractual plan.
    • The plan is purchased for a fixed period, perhaps ten or fifteen years, and as much as 50 per cent of the first year's payment goes into load.
    • This is the thing that the SEC is really seeking to outlaw.