If you don't offer continuing education, this is your wake-up call. Today's producers want education. They're not just insurance salespeople anymore; they're financial planners who are expected to advise clients with up-to-date information on estate planning, tax-free growth, and a host of other topics.
“This is a time when producers are looking to grow their businesses and stay current with new or pending legislation,” says Jaimee Niles, assistant vice president of meetings and professional relations for the Life Insurance Division of Pacific Life Insurance Company in Newport Beach, Calif. (As this issue went to press, Niles had left Pacific Life to join MetLife Investors in Newport Beach as vice president, events.) “They want to know about everything from how to help clients build a diverse investment portfolio to potential opportunities in a world without inheritance taxes.”
Coinciding with producers' desire for education is the fact that by the end of this year, all 50 states and the District of Columbia will mandate CE for insurance agents. The last holdouts were Hawaii, which implemented its requirements in January, and Vermont, which is expected to come on board any day now. Many states require an average of 12 hours annually or 24 hours biennially, but this — as with every other aspect of CE accreditation — varies with each state. More about that later.
Education as Incentive
At Pacific Life, both the Life Insurance Division and the Annuities Division use continuing education as a marketing tool, keeping the company name front and center. They do this in two ways: by offering courses directly to producers at company conferences and by training their wholesaler reps as CE instructors who teach courses to the broker-dealers at financial services firms.
In fact, the Life Insurance Division invites producers to attend a three-day Educational Symposium at the Newport Beach Marriott in lieu of a traditional incentive trip. And it's a huge success. At first, “producers were not terribly happy,” Niles says. “They viewed it as a cost-cutting measure. But I created a planning team with reps from our distribution systems and key home office executives to discuss the issues and opportunities that would make a difference in the producers' business. We bring in the best minds [journalist Sam Donaldson and wealth-guru William Danko are among this year's speakers], give attendees time to network, and offer up to nine CE credits. We've been filled to capacity, which is about 500. This year, we have a waiting list.”
The CE-approved content is an extra enticement for producers to attend, says Niles. The one- and two-hour workshops at the April symposium will generate about 5,000 CE certificates, she says — that's in addition to roughly 9,600 certificates generated at the division's 60-odd smaller meetings and wholesaler rep presentations. “Today, there's an expectation for CE,” Niles says. “If someone is going to take the time to go to a presentation, they want the value of CE credits. We look at every speaker for every presentation for every conference and ask if it could be a CE course.”
The volume of CE courses offered by the Life Insurance Division has increased about 20 percent a year, to the point that last year Niles hired a third-party administrator, Insurance Education Institute in Durham, N.C., to help her and full-time CE coordinator Nadine Levin with the process of speaker and course approval. “We got a lot of value out of developing relationships with state insurance folks, but the volume became unmanageable,” Niles says. “Every state wants things in a certain way.” The third party also has a convenient status page on its Web site that lists details of the division's approved and pending courses, plus state regulation updates and timetables for mailing certificates to attendees.
Meanwhile, over at Pacific Life's Annuities Division, offering CE courses to the broker-dealers who sell Pacific Life annuity products is a service that's taken off like wildfire, says Liz Conti, the division's conference coordinator. Conti's department works with Edcor, a third-party administrator based in Pontiac, Mich., on the course creation and approval process. (See “So You Want to Offer CE?” on page 28.)
Each of the division's 80 wholesalers (all employees) has the option of becoming a state-approved instructor for 10 courses — up from five courses just a few years ago. Hot topics include Tax-Sheltered Annuities, Women and Retirement, and Inherited IRAs. “We added more options for boomers planning for retirement,” says Conti. “They have money to spend and want to know where to spend it.”
In 2000, Annuities Division wholesalers taught 400 to 450 CE classes. And Linda Rayner, director of conference planning, predicts that the overall number of classes taught will grow 10 to 20 percent in 2001.
“More and more broker-dealers like Salomon Smith Barney and PaineWebber are inviting our wholesalers to give CE courses at their conferences,” says Rayner. “We used to have one or two requests a year. Now we have 10 or 15.
“It's an indication that these companies want more education for their reps. And it's a great marketing opportunity for us because it gets our wholesalers in front of the people we want to sell our products.”
In general, course material has to be industry-specific and not include any sales, marketing, or product information. “Instructors can sometimes give a 5- or 10-minute commercial at the end of a presentation, but it cannot be part of the actual class,” says Conti.
But state regulations are idiosyncratic; each has different course requirements and filing procedures. “It is very difficult to keep up with 50 state insurance departments and ever-changing regulations,” Conti says. “We've found it much more efficient to have a third party handle this.”
Third-party experts can make sure course material is pedagogically sound for each state, but they can't accelerate the process of getting a new course approved. “You need at least six months' lead time to get approval from all the states,” notes Rayner. “We sometimes take heat about slow approval time. But if you harass a state insurance department to hurry up, they'll slow down.”
Finding Courses That Qualify
Meeting state requirements is an ongoing challenge; they change often. Here's just a sampling of the variations nationwide at press time: One state requires a course outline broken out into 10-minute segments; another requires a paragraph description for each hour of teaching time. One state requires a certificate of completion, another requires a formal sign-in sheet, and another requires both. Instructor forms must be submitted to 20 states.
Producers, most of whom are licensed in multiple states, need to fulfill different time requirements for each state. Connecticut requires 24 hours biennially, with at least six hours in product lines for which the license is held and three hours in Connecticut insurance law or ethics. California requires 25 hours annually for producers who have been licensed one to four years and 30 hours biennially for producers licensed five or more years. And that's just the tip of the iceberg. “Figuring out the state requirements is mind-boggling,” says Jennifer Cook Johnson, director of meetings and communications, Association for Advanced Life Underwriting (AALU) in Washington, D.C. “It takes an expert. And we need an expert, because if there are any glitches, the attendees won't get credit.”
Those experts are the third-party administrators, who raise a red flag if they see course content or course instructors they know to be unacceptable to the states; advise planners about what information to send attendees prior to the class and how to set up and monitor the class; take care of all the pre- and post-course filing; and issue certificates to attendees.
Third-party representatives also attend their client conferences, to work with the on-site planning team and make sure everything is kosher with the CE offerings.
“The state has the right to arbitrarily send a representative, and you won't get advance notice,” says Marshall Lipson, CLU, assistant vice president of corporate services and professional development for the Society of Financial Service Professionals, the third-party administrator used by AALU. State regulators often suspect insurance companies of trying to use CE to tout their products, he notes, which is why they're so strict about forbidding sales or marketing information in the course curricula.
“Sometimes we can do something the company can't, because the state regulators trust us more,” Lipson says. But even the most well-connected third party can't hurry the process. “You have to get started early,” advises Johnson, who begins communicating regularly with her third-party contact seven months in advance of AALU's annual meeting, which she calls “the big educational opportunity for our members.”
Flaw in the System
Every year, Johnson “starts from scratch” developing course content. She assembles a committee made up of board members and general members who suggest topics and presenters, then solicits potential instructors to submit outlines. The committee selects the best outlines, but, inevitably, several of these won't be acceptable for CE.
“There is always some information important to membership that doesn't qualify for CE,” Johnson notes. In addition to the forbidden territory of sales and marketing, CE courses “sometimes have to cover basic groundwork that is too elementary for our attendees. In these cases, we run into trouble because they need more advanced information. It's a flaw in the system.”
Indeed, consider the case of John O'Brien, a 40-year veteran of the insurance industry and president of Marketing & Opportunities in Chesterfield, Mo., a company that provides indemnity and other policies to insurance agencies.
To maintain his Missouri license, O'Brien is required to take 10 hours of CE biennially in the product lines for which his license is held. “Some of the courses out there are way too basic. They would only help people just starting out in the business,” he says.
O'Brien receives at least one notice every few months about the availability of CE courses, but he has found those offered by insurance companies to be the most helpful. “The quality of what's offered is more current and at a more advanced level than what I've experienced at for-profit courses,” he says. “I think it's difficult for an independent company to give that kind of depth to a CE course.”
But insurance companies are bound by the same regulations as everyone else. That's why conferences like Pacific Life's Educational Symposium offer a mix of credit and noncredit courses.
Those Who Can, Teach
Planners have several choices when it comes to who teaches continuing education courses. Nothing beats the relationship-building benefits of putting your own company representatives in front of producers. In fact, wholesaler reps at Pacific Life's Life Insurance Division are required to conduct one CE course a month, Jaimee Niles notes. A marketing support department creates the initial course material, then the content goes through the compliance mill and is eventually streamlined into off-the-shelf programs for the wholesalers to use.
Of course, wanting a company employee to be a CE instructor does not make it so. Currently, 20 states require instructor approval. The most common qualifications: three years of experience in the field, a degree from an accredited institution in the subject matter to be taught, and professional designation from a recognized industry association.
Planners often use outside speakers for conference workshops; they have to comply with the state regulations too. “We usually bring in the speakers when we work with insurance companies,” says Lipson of SFSP. “Other times, we'll bring in a technical expert, like an attorney who is well known in the field, to co-teach the course with a company agent. But both employees and outside speakers have to respond to us as their boss so we can make sure the course is CE-worthy.”
The Cost of Education
Providing CE requires a significant ongoing investment. (See sidebar, this page.)
Is it worth it? Absolutely, says Jaimee Niles, whose division at Pacific Life now spends about $120,000 a year (not including staff salaries) to provide CE. “In our industry today, companies are expected to provide training resources and new information in a timely manner to the field force,” she says. “As far as CE is concerned, we gain a lot, and it also helps the producer. They can say: ‘I'm working with a really reputable company that helps me to be compliant.’”
The Self-Study Quandary: Should You Let Producers Go It Alone?
In this digital millennium, online self-study might seem like the way to go for agent education. It's a key part of the Million Dollar Round Table Center for Productivity's strategic plan, says Bruce Holmes, publisher and managing director. Two years ago, the center launched a “Virtual University” of online CE courses. (Check it out at www.mdrtcfp.org by clicking on “educational services.”)
“The goal is to make CE fast, easy, and productive for people in the financial services industry,” says Holmes, who is in the process of expanding the courses from mainly life insurance and banking into other financial services areas like health, property/casualty, and securities. Courses cost $80 each and are available to both members and nonmembers.
But there's a catch. Self-study and/or online courses are not accepted by some states, including Florida, Maryland, Minnesota, New Jersey, and North Carolina. Twelve other states require an affidavit stipulating that a monitor was present, and each of those has a different requirement for acceptability. For example, in Ohio, monitors cannot be a relative, work supervisor, or immediate employee of the student, and they must be approved in advance. In Massachusetts, monitors must be a disinterested third party and the exam cannot be submitted online. The no-size-fits-all state regulations sometimes make it easier for a producer to attend a class than to take a self-study course.
And for an insurance company, a self-study CE course doesn't offer the relationship-building benefits of classroom training. “We get a lot of calls asking about self-study, but it's not where we want to spend our time and resources,” says Jaimee Niles, assistant vice president, meetings and professional relations, for the Life Insurance Division of Pacific Life Insurance in Newport Beach, Calif. Still, the division's Web site has links to companies that offer it, because the company recognizes that self-study can be a convenient option for producers.
Pacific Life's Annuities Division doesn't create its own self-study courses either, but purchases them from self-study providers and puts the Pacific Life logo on them.. “We play the middleman,” explains Liz Conti, conference coordinator, “so that our wholesaler reps can provide a service when they get requests for self-study courses from the broker-dealers.”
In recent years, there has been an influx of third-party CE administrators and self-study providers. Their Web sites are good sources for background information on financial services CE. Here are some of the biggest, plus a site that links directly to state insurance departments.
Society of Financial Service Professionals, www.financialpro.org
Insurance Education Institute, www.iei-insurance.com
Bisys Education Services, www.bisys-education.com
IBT Financial, www.ibtfinancial.com
MDRT Center for Productivity, www.mdrtcfp.org
National Underwriter, www.nuco.com
State Insurance Departments
Here Are Your Hoops
To qualify for CE credit, attendees at Pacific Life's Educational Symposium have to fill out and return a form several weeks prior to the conference (in addition to their conference and workshop registration) that asks for state license numbers and social security numbers. They can also indicate whether they want to receive other credits, such as PACE (professional achievement in continuing education) or CFP (certified financial planner), all available when they successfully complete the CE workshop.
Conference materials include a seven-page document listing each state's insurance CE requirements, and important warnings about session attendance. Certain states, including Illinois and New Jersey, require a minimum of three consecutive hours of course work. And state insurance agencies are united about one thing: People must attend the entire session to get credit. Show up 5 minutes late or leave 10 minutes early and you won't qualify.
Each workshop has a door monitor who hands out a three-ply Request for Certificate of Completion form for attendees to fill out and return at the end of the workshop. Attendees must be vigilant about dotting all the i's and crossing all the t's or they will be denied a certificate. If they leave the room during the session, the form must be given to the monitor, who documents the time spent outside of the classroom. If they forget to hand over the form when leaving for a bathroom break or at the end of class, it's all over.
So You Want to Offer CE?
Here's a simplified version of the process the Annuities Division of Pacific Life Insurance Company, Newport Beach, Calif., goes through with Edcor, its Pontiac, Mich.-based third-party administrator, in order to provide CE courses for its wholesalers to offer to the broker-dealers that sell Pacific Life products:
The conference planning department identifies a hot topic and taps an in-house expert to help create course content. Courses are either one or two hours long.
Conference planning assembles a “presentation binder” for the course that includes an outline, a PowerPoint presentation on CD, and a videotape of someone teaching the course so potential instructors can see it presented. The packet is sent to Edcor to file for state approval and to the wholesaler reps.
When the wholesaler decides (or is asked) to teach a class, he submits a request form to the conference planning department that includes the class date, time, location, and expected number of attendees from each state.
Conference planning submits the wholesaler's request form via the Internet to Edcor and adds the course to its master calendar.
One week before the class, conference planning mails copies of the presentation and marketing materials to the class site, and Edcor mails sign-in sheets to the class site.
The instructor teaches the course and has all attendees fill in the sign-in sheets.
The instructor mails completed sign-in sheets to Edcor.
Edcor mails certificates of course completion to the attendees. This takes about a week to 10 days from receipt of the sign-in sheets.
Edcor mails the sign-in sheets and any other required material to state insurance departments and follows up to make sure all qualified attendees get credit.
CE: What'll It Cost Me?
The costs of offering CE vary wildly. “For a turn-key corporate program of 1.5 days, including speakers, our fee starts at about $25,000,” says Marshall Lipson, CLU, assistant vice president of corporate services and professional development for the Society of Financial Service Professionals. “For the most basic assistance, fees range from $3,000 to $8,000 for a 12-workshop conference.”
Pacific Life's Annuities Division is billed monthly by its third-party administrator. This includes about $20 for each class participant who submits a sign-in sheet, all state fees, mailing costs, and a toll-free phone number set up for producer inquiries. The fee to submit a new course to all of the states is $5,000. “Each month the bill can be drastically different, depending on the number of classes and participants,” says Conti. Recent monthly bills ranged from $14,803 to nearly $30,000.
Prior to hiring a third party about seven months ago, Pacific Life's Life Insurance Division spent an average of $30,000 to $40,000 a year for CE (not including staff salaries). With the third-party administrator, the division will spend at least $120,000 annually. Some economies of scale are achieved by offering existing, pre-approved courses when appropriate. This involves time-frame deadlines and renewal fees, but those fees are lower than filing for the approval of a new course.