When Tim Geithner came knocking with TARP bucks, New York Life said: "Thanks, but no thanks."
The company, the largest U.S. insurer owned by policyholders, had a financial footprint as big as any Wall Street shop, dealing in everything from mutual funds to mortgages to private-equity financing. But New York Life wasn't levered to the hilt and its core business was old-fashioned life insurance. With almost 12,000 agents and managers in 120 offices, that is still very much the case.
FINS sat down with Mark Pfaff, an executive vice president in charge of the firm's U.S. life and agency operations, to discuss where he will find 3,000 new hires this year, why the company doesn't pay signing bonuses and the renaissance of survivor's benefits.
Kyle Stock: It seems that the company came through the crisis relatively well, is there a sense of momentum?
Mark Pfaff: We don't feel like this is a surprise. For 10 years what we've been telling our field force and our clients is that every insurance company looks good when the weather's good. The difference is how those companies look when things are not so good. And that's what we saw recently.
We did have a great year last year, when the industry was down 15% in overall premiums. Right now, we're having a phenomenal year. What we're saying to our agents and our clients is 'This is what we're built for.'
KS: I've read that life insurance, generally, has had a bit of a renaissance. Is that accurate?
MP: I think that's probably right. This is going to sound hokey, but it's true: If you're going to buy life insurance, you buy it because you love someone. It's not a greed product; it's more of an emotional purchase. When times are challenging, that emotion comes more to the front.
KS: What do you expect on the hiring front in 2010?
MP: Our expectation is that we'll recruit over 3,000 agents during the course of the year. There's a three-year, very formal and very structured training program. And, as we always say, it is very much an opportunity to go into business for themselves, but not by themselves.
KS: How does that compare to recent years?
MP: We've added 400 proactive agents across the country in each of the last four years, which for us, is pretty steady growth.
KS: Will the 3,000 hires this year result in a similar net growth -- 400 people?
MP: Probably right around there. At the other end of the spectrum, we have people who die, retire, become disabled or not make it in the business.
KS: What percentage of people don't make it?
MP: Over a four-year period, for people who walk in the door to become an active agent, our retention rate is 20%. That's about as good as you'll see in the industry. We're focusing on doing the things that we can to really drive that up and we're seeing some marked improvement in that. For us, that meant a little more job-sampling, some aptitude testing and helping them build stronger marketing plans before they came aboard. The class that we hired in 2009 was the most productive class we've ever hired in terms of overall commissions paid out. The class of 2008 was pretty close behind them.
There are two things in our industry that make us different. Our managers don't do personal production -- don't sell and do their own sales.
And in every one of our offices, we have at least one full-time trainer on staff -- and they don't sell and they don't recruit.
KS: What's the compensation structure?
MP: It's a commission-based program, but we pay a training allowance subsidy in addition to the commissions for the first three years. There is the ability to earn unlimited income.
KS: Can you give me a ballpark of compensation for someone who has made it through that fourth year?
MP: Roughly $100,000. We've got quite a few people who are well into the seven-figure incomes, but that's not what we're marketing. What I would say to anybody is, you're going to earn a good income here. If somebody can't see themselves in the early years earning $50,000 or $100,000 a year, it's not the right business for them to come into.
KS: What percent of your hires already have experience?
MP: We do hire experienced agents. That probably accounts for about 30% of our hires, but they have to have been at a level of success.
KS: Do you pay signing bonuses?
MP: We don't. Our view is that if you're as good as you say you are, your pay-off will likely be higher over time. We don't think signing bonuses translate into a long-term relationship. We think they translate into jumping off, which is not in the interest of our clients.
KS: How and where do you find your inexperienced candidates?
MP: At the end of the day, we're looking for someone who's entrepreneurial, really good communication skills -- and when I say that I mean they listen more than they talk. They're good at taking complicated concepts and breaking them down on the highlights. We need people that have very good self-discipline. As structured as our program is, we're not calling people and saying 'I thought you'd be here at 9.'
Our No. 1 source is recommendations from our agents. They know what it takes to be successful. Sometimes it's a person who worked for a family business, but they're not part of the family. Real-estate agents and mortgage brokers have done very well here. Social workers. Engineers, which I always find interesting.
KS: Do you do campus recruiting?
MP: We'll do campus recruiting, but again we're looking for certain things. I wouldn't go on a campus and say: 'I want to talk to all your business majors.' I would rather go on campus and say: 'Give me the list of people who were leaders of their clubs, managers of their student groups and captains of their sports teams.'
KS: Do your agents just sell insurance?
MP: Most of them are licensed across the board.
KS: You mentioned three years of training, but is there a full-time, boot-camp type program up front?
MP: Not to that degree. If I'm a manager hiring, what I really like to see is someone who's employed when they come to look at us, because we are going to go through a licensing process, set up the marketing plan, teach them some basic products, teach them the approach so that when they transition over from what they were, they are ready to go.
KS: What advice would you have for a career switcher looking to get in the business?
MP: I think the first thing would be to say to them, 'Be open-minded.' My perception of an insurance salesman 20-some years ago was that they had striped pants and a plaid jacket and patted everyone on the back. When I came here, what struck me was the professionalism.
KS: Is there anything, in particular, that you like to see on a resume?
MP: I'd say a pattern of success, some form of leadership and I'd probably say people-skills. A person who took on other projects; got involved in the community; coached their son's Little League team.
KS: Are you seeing more resumes from Wall street?
We certainly have. It depends upon the location of the office. But it's not an immediate transfer-over. I think it can be if that person is disciplined, talented on the phone and can develop relationships. They certainly understand financial vehicles.
KS: How would you describe the culture there?
This is going to sound hokey to you: The phrase that gets used here a lot is people bleeding NYLIC (New York Life Insurance Company) blue, which refers to our logo. There's just a high sense of what we do here. We keep families together. We keep kids in school. We keep widows on their front porch.
KS: So it's more Main Street than Wall Street?
Write to Kyle Stock
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