Direct Sales Forces
Direct sales forces (now referred to as single tie or multi tie) have been declining in number, with many life offices closing this distribution system in favor of the independent financial adviser (IFA) route. There are no statistics to indicate the number of persons working in direct sales forces or which companies have the largest sales teams.
Insurance companies have also reduced their sales forces as a result of the development of partnerships with banks, giving them the opportunity to sell their insurance products through bank branches. The insurance company may make use of the employees in a bank branch to help communicate the availability of insurance products to customers, while for the bank there is an advantage from selling the products of the insurance provider together with the bank's own financial products, for example offering a life insurance product when discussing the terms of a mortgage loan..
Training and compliance regulations for direct sales forces are similar to those for IFAs, although direct sales forces are the responsibility of the life insurance company for which they work. Any authorized sales person is required to pass financial planning (FP) examinations before being permitted to conduct business with a member of the public. These are usually FP1, FP2 and FP3, held under the auspices of the Chartered Insurance Institute. The first two are the minimum required for a direct sales person, whereas FP3 must also be passed by an IFA. Other qualifications are needed for anybody advising on pension transfer or income drawdown business.
Although the perception is that direct sales forces are paid only or mainly by commission, many have always received a substantial salary element and relatively small performance bonus. Those life companies that remunerated mainly by commission have changed the emphasis to salary, to counteract criticism following the endowment and pension miss-selling problems, which may have been caused largely by commission-hungry sales people.