By: Luke Jones, Published on September 29, 2017 08:43 AM, Last Update on September 29, 2017 05:45 AM
The broker compensation model will be flipped on commercial lines, although consumers still “value the trusted advisor model”. Industry experts said on Wednesday the compensation model on commercial lines will be flipped so brokers will earn more money from consulting services.
“The value of the transaction, while it’s important, and it’s expected that we do it well, that’s not how we are going to get compensated” in the near future, suggested Brian Parsons, president and chief executive officer of Willis Towers Watson Canada, of commercial brokers. “We are going to get compensated not because of the transaction – that would be table stakes – it’s because of the consultative process of getting to the transaction.”
Parsons was speaking on the CEO Plenary Panel at the RIMS Canada Conference, which held its final day on Wednesday. The event was hosted in the Metro Toronto Convention Centre from Sept. 24 through 27.
“Right now, we will talk to clients and prospects and do lots of consultative work, in a way, to get the transaction because that right now is where a broker is making money for the most part,” Parsons said. “What I see changing as the millennials – and let’s not forget the Z generation that is just graduating from university now – they will say, ‘You know what? We will pay you for the consultative services but the transaction is not worth a lot.’”
The roles of underwrites and brokers “will largely change because of the devaluation of the transaction,” Parsons added. “That compensation model for brokers – I see flipping as time evolves, to making money on the consultative services, and the analytics and the transaction is just going to be thrown in.”
Heather Masterson, president and CEO of Travelers Canada, was also involved in the Plenary Panel, who said consumers still trust the advisor model:
“One of the common themes that has come through – today and in the recent past – Canadian consumers really value the trusted advisor model,” Masterson said. “That’s not to say that millennials won’t disrupt that but we do have some time – not a ton of time but we have some time.”
“It’s uncommon for us to hop on the web on a daily basis, perhaps buy something online, download music – these are common practices and those common practices are already in financial services,” Masterson told RIMS Canada conference attendees.