ALLSTATE’S HANDS WANT FOOT IN PLANNING DOOR: SOME 800 AGENTS WOULD SELL FINANCIAL ADVICE

In a bid to jump-start variable annuity and life insurance sales, Allstate Corp. is launching a campaign to license its 800 life agents to sell financial planning advice.

The move coincides with a joint venture announced last week in which the Northbrook, Ill., insurer and Boston’s Putnam Investments Inc. — a unit of Marsh & McLennan Cos. — will market a new line of variable annuities managed by Putnam and underwritten by Allstate.

Allstate’s move to recast its life insurance agents as financial advisers follows similar efforts by a host of other insurers — from Prudential Insurance Co. of America and Lincoln National Corp. to John Hancock Mutual Life Insurance Co. and Fortis Inc.

All are hoping to realign their transaction-driven agent forces so that the sale of investments — from insurance and annuities to mutual funds — becomes a byproduct of financial planning and estate planning services.

“The world is going to move to a platform of understanding consumer financial needs in depth and providing advice and counsel as to what products are the best solutions,” says Louis Lower II, chairman and chief executive of the company’s recently combined Allstate Life and Savings unit.

“We want to build relationships early on so that as individuals go through their life cycle we have a relationship and can take them through the financial planning stage,” he says.

Though Mr. Lower adds that Allstate is still developing its model for offering financial planning advice, the effort will target “mid-market and upper mid-market” individuals who already have home or auto insurance policies with the company.

So rather than offering individual customized plans, Allstate is building software that will allow agents to make an automated financial needs analysis and produce standardized asset-allocation recommendations and savings and retirement models. The company’s agent-planners will also offer trust services through Allstate’s new federal savings bank.

The insurer is launching a pilot training program in Florida and a yet to be identified second state next month. It will pick up a portion of what it costs life agents to obtain Series 6 licenses, which enable them to sell annuities, variable life policies and mutual funds. In addition, Allstate is developing an internal financial planning certification program.

Mr. Lower says that nearly 30% of the insurer’s life agents have sold such products and thus, some could be hawking annuities and dispensing planning advice by May.

Allstate wouldn’t say whether it will charge a separate fee for the financial planning service or price it into sales commissions.

The insurer also hopes to attract agents from competitors by offering access to its huge property and casualty customer base of 14 million households and an expanded product menu that will include mutual funds and variable annuities.

In addition, Allstate may seek to train and license some of its 15,000 property and casualty agents to sell investment products.

To be sure, Mr. Lower’s financial advice plan is hardly unique.

Prudential’s two-year-old “financial planning specialists” program has attracted some 800 individuals who are licensed to prepare education and retirement savings programs and estate plans for a sliding fee of $350 to $5,000.

The Newark, N.J.-based insurer aims to expand its planner force to 1,500 in two years, says senior vice president Christopher Shipp. At the same time, Prudential is extending its training program for new agents from 10 weeks to two years under a new “financial service associates” program that begins in July.

The new agents will offer less-sophisticated planning and advice, with the costs being built into commissions on insurance, mutual fund and annuity sales.

The Putnam-Allstate alliance follows Putnam’s failure to negotiate a major overhaul of its 12-year-old Putnam Hartford Capital Manager annuity line with Hartford Life Inc. — the U.S. leader in annuity sales.

Disappointing fund performance and outdated product features have made the line less competitive, cutting Capital Manager’s share of annual sales nearly in half to 3.6% over the last three years. Annual sales have slipped from $5.3 billion in 1996 to less than $3.6 billion last year, according to the Variable Annuity Research and Data Service in Roswell, Ga.

Though Putnam and Hartford will continue to market the Capital Manager annuity line — which remains the fourth-biggest seller and has more than $30 billion under management — both companies are developing new products on their own. While Putnam focuses on the May launch of its Putnam-Allstate annuity line, Hartford is developing a new annuity offering multiple asset managers.