The ability to successfully recruit talent is one of the biggest challenges facing any company in the financial services field, whether it’s a large carrier or a small independent advisory firm.

In 2002, a LIMRA International study revealed that newly recruited insurance producers have only an 11-percent retention rate after the first four years. The rate has been slowly increasing over the years; in 2005, the LIMRA study showed a 13-percent retention rate, 15-percent in 2006 and 16-percent in 2007. While increasing retention rates are a great sign, the 2007 statistics still show that well over 80 percent of recruited agents will leave the industry within four years of being hired.

The cost of selecting, recruiting and training new employees, along with salary and benefits over four years for a non-producing agent, is absolutely prohibitive, running up to hundreds of thousands of dollars in wasted capital. The capital spent on unsuccessful agents is especially devastating for small companies that lack the same resources as their larger counterparts.

To stay competitive in a continuously changing environment, all companies must find ways to eliminate this drain on productivity and profitability.  The key to successful recruiting is to create and embrace a rigorous selection process that will generate candidates that have the best chance of success. While this might seem logical, most companies aren’t as successful as they would like in the recruiting and selection process. Finding enough potential recruits is hard enough without stringent selection criteria. Sometimes, it’s all too easy to be less selective when a position needs to be filled as soon as possible.

In order to avoid the temptation to recruit a candidate who does not fit the election criteria, the criteria must be clearly articulated. With today’s changing market, companies need to have a more in-depth understanding of what constitutes an ideal candidate profile before the recruiting process even begins.

One way to do this is to look at the personality types, skill sets and experiences of the most successful agents already within your company. These criteria then need to be closely examined, written down and communicated throughout the organization, especially to any recruiters or current producers who refer potential candidates.

The criteria will vary from company to company, but there are several factors common to the search efforts of all financial services companies. Consider these four tips to successful recruiting.

1. Is the candidate a quick study?

Our industry is constantly changing. Most carriers are now offering hundreds of different products, and our clients are getting more sophisticated and demanding. Successful agents need the adaptability to understand new products and have the ability to discuss their benefits with clients. If a candidate cannot do this, he or she will not be financially successful. An agent that is not financially successful cannot afford to stay.

2. Does the candidate have a means to support him/herself while in training?

The development cycle is much longer now than in years past. It sometimes takes more than nine months to determine if an individual is going to succeed. Trainees need to have other means of financial support during this period. It is no longer enough to offer a future career. A recruit has to eat now and over the next nine months. If the trainee has pressing, immediate expenses, he or she will most likely leave.

3. Does the candidate have prospecting skills?

One of the major reasons an agent fails within the first four years is the inability to prospect. The agent has to be able to add new clients to his or her existing client base in order to be successful. Prospecting skills can either come from a high-powered course or personal experience in the field, but the recruit must have these skills in order to succeed in the financial services industry.

4. Is this a successful business for the new agent to join?

I know that sounds counter-intuitive, but if a candidate comes into a company that is obviously successful, he or she will be more likely to try to strive for that same success.

Here’s an example of how success begets greater success: As the Professor of Leadership at The American College, I am responsible for our annual Field Management Seminar (FMS) that is part of our Chartered Leadership Fellow (CLF) designation program. In that role, I see that effective managers are able to recruit the best people, thereby making him or her even more effective. The goal of management is to steer the company in this upward spiral, growing the company’s profitability and success year after year. Effective recruiting is a major building block at our disposal to help us achieve this goal.

*Originally printed in Wealth and Retirement Planner magazine.