Voice of the Advisor Executive Summary
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The document summarizes the findings of a survey of 300 financial advisors in North America. It identifies six key factors putting pressure on life insurers to change how they conduct business: 1) a disconnect between client/advisor demand for digital tools and what insurers provide, 2) clients are better informed and want more transparency, 3) advisors are shifting to holistic advice models, 4) performance management, customer retention and digital tools drive advisor satisfaction, 5) $210 billion in assets are at risk of being lost through lack of heir planning, 6) women advisors are younger and more client-focused. It recommends insurers focus on financial planning, digital tools, performance management, heir retention strategies, and supporting women
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Voice of the Advisor Executive Summary
- 1. Voice of the Advisor Executive Summary: Growing life insurance through the fusion of advice-based selling models and digital
- 2. 2 A growing number of consumers are adopting online channels to purchase or service their life insurance or retirement products. However, given the personal and advice-based nature of these products, the advisor model remains a critical component for insurers’ sales and distribution plans—and will continue to play a significant role in a digitally enabled future. That said, the ground is shifting beneath life insurers’ feet. In a survey of 300 financial advisors in North America, Accenture uncovered foundational changes to what customers— and advisors—expect from their insurers. In particular, the Accenture North American Insurance Financial Advisors Study identified six factors that are pressuring insurers to make material changes to how they conduct business. 1. Digital is essential to advice—and insurers are not providing sufficient digital support for advisors Accenture research reveals a disconnect between strong demand for digital—from both clients and advisors—and the tools that insurers provide to their advisors. When asked which types of digital tools, platforms or channels that are requested by clients but not offered by their firm, four capabilities came out on top: • Financial planning, such as portfolio monitoring, asset accumulation or goals- based investing tools (52 percent) • Portfolio management, such as asset allocation and 360-degree account views (51 percent) • Personal financial management, such as budgeting tools and calculators (48 percent) • Scenario analysis and testing, especially retirement planning tools (45 percent) We believe that robo-advice or digital advice- based models will also become part of the ecosystem of solutions that insurers need to provide. This could take the shape of a hybrid advice platform that combines digital and advisor relationships, which can better support evolving client expectations about how they learn about and buy financial products. 2. Clients are better informed, more involved in decision-making and seek more transparency Ninety percent of survey respondents believe clients are better informed today than they were in the past. In addition, 43 percent of less-tenured advisors (less than 10 years of experience) and 52 percent of more-tenured advisors (10 or more years’ experience) reported an increase in demand for financial advice. Advisors agree that this demand for financial advice is due to a pull from the customer, rather than a push from the industry. This demand crossed demographic segments. It’s not only the growing number of boomer retirees, but also millennials with a strong interest in savings and protection as they saw and felt the uncertainties of the economic crisis from 2008 to 2010. There is a clear opportunity for insurers to offer an advisor-led experience that not only engages customers but also satisfies their desire for more transparency and enhanced knowledge. 3. Insurance agents are increasingly moving to a holistic advice model—and those with an equal focus on insurance and investment products report higher Assets Under Management (AUM) Accenture research found that 58 percent of advisors consider themselves planning- and advice-focused. Importantly, advisors that adopt a holistic approach—focusing on both insurance and investment products—report the highest levels of AUM. Additionally, demand for advice is highest within the mass market and mass affluent market, with greater demand for insurance products as client wealth increases. 4. Performance management, customer retention and digital tools are the primary drivers of advisor satisfaction and loyalty Advisors are generally satisfied with their current careers and positions, but there is significant disparity within and across firms—in some cases, the gap was as large as 39 percentage points. In particular, five key measures drive loyalty and satisfaction:
- 3. 3 • Effective performance measurement Providing clear and accurate performance metrics has the greatest impact on advisors’ loyalty and satisfaction • Performance-based incentives While incentives matter, they must be accompanied by clear and effective metrics • Provision of digital tools Every time the right tool is provided, employee satisfaction increases • Providing competitive technology and tools Having a competitive advantage promotes worker satisfaction • Supporting heir retention efforts Firms that focus on heir retention have higher AUM, less customer churn, and a more loyal and satisfied financial advisor workforce 5. Over $210 billion in AUM could be at risk of leaving the industry through wealth transfer The growing ranks of the baby boomers means there are significant assets in play in the retirement space. However, many insurers have not invested in a broader relationship with their clients’ households or families. If status quo persists, the industry stands to lose its clients’ heirs—approximately 79 percent of their client relationship value, and an estimated $210 billion in AUM. 6. Women advisors are younger, more connected with clients and reflect the industry’s changing dynamics Women are increasingly involved in influencing their family’s retirement and savings decisions, and are also changing the dynamics of the advisor workforce. Women advisors tend to be younger—77 percent are under the age of 46, compared with 19 percent of men advisors. They may also be better connected to their clients’ needs, with 96 percent reporting their clients are more engaged in their investments, compared with 87 percent of men. They also place significantly greater importance on the support and training provided by the insurer when evaluating their likelihood of staying with a firm. Recommendations To help insurers adjust to the shifting landscape, Accenture recommends focusing on five strategic priorities. • Develop a financial planning-focused advisory channel—one that takes a holistic approach to helping clients meet their investment and insurance needs, and empowers advisors to deliver a solution-based client experience • Provide more sophisticated planning and monitoring digital tools for advisors and clients • Deliver clear performance management and robust customer retention programs, and leverage digital tools to drive advisor satisfaction and loyalty • Establish go-to-market strategies to capture heirs now, such as tools for self-directed investors, providing advisors for heirs and enabling family estate planning at scale • Enable women financial advisors to focus on client development, and provide appropriate training, support and teaming structures to help them succeed An industry in transition The Accenture North American Insurance Financial Advisors Study confirms what many have suspected: the life insurance industry is in transition, and evolving to become more focused on advice and planning. Many insurers will find it advantageous to partner with digital advisors to acquire or integrate new capabilities, which can attract younger investors and smaller accounts, as well as help advisors better connect with clients’ children to foster heir retention. Above all, a shift toward a holistic, advice-led model is critical— and advisors and insurers who do not make the shift are leaving money on the table.
- 4. Copyright © 2016 Accenture. All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative. Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. Patrick Lyons is a Managing Director with Accenture’s Insurance Client Services Group, and leads Accenture’s North America Life Insurance Transformation Practice. He has more than 25 years of experience advising global insurers in developing and implementing comprehensive business and technology strategies. Contact him at patrick.m.lyons@accenture.com About Accenture About the Author