1) Tied Agencies - Consultants that solely represent one insurance company. They are managed internally and tied to the company.
2) Bancassurance - It is the sales of Insurance Products via a bank by advisors on a salaried basis. Insurance Companies are able to expand their sales via this channel and banks are able to provide a wider financial services to their clients.
3) Independent Financial Advisers - They are consultants who offer unbiased advice on financial matters to their clients and recommend suitable financial products from the market. They operate their own office and earn their revenue through Advisory Fee or brokerage.
To-date, Tied agencies and Bancassurance are still the major distribution channels with around 85% market share. How different is it between the 3? Let me share...
* This Distribution Channel is generally Sales Driven. They will not be paid if nothing is sold.
* They will not be paid to review if their customers are on track to achieving their goals.
* The process becomes "Transactional" and advisors have to close more sales for a Living.
2) Bancassurance or Direct Business model
* Customers come to the branch and they buy insurance as a one-stop service
* The bank consultants get a salary + incentive.
* They are also Sales Oriented because of their monthly quotas and competitive environment.
* The plans they carry are normally limited.
* The turnover of advisers are expected to be high
3) Independent Financial Advisers
* An IFA can select an Insurance or Investment plan from a larger pool
* They can adopt a fee based or a brokerage model
* They are also compensated for ensuring the customer's investment portfolio is doing well through a wrap fee.
* An unethical IFA will select a plan with highest commission and churn investment for customer regularly.
FN: There are good and bad advisers under all distribution channels. Its for you to decide which channel you prefer.