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Ignore, innovate or die: A new era for financial services firms and advisors

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Ignore, innovate or die: A new era for financial services firms and advisors

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At the recent LIMRA Annual conference, innovation and opportunity took center stage. The theme of this year’s conference was “The Leadership Challenge: Connecting in a Distracted World,” highlighting for executive-level conference attendees the importance of evolving their firms to grow their business in today’s digital era.

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Left to right: Joe Monk (State Farm), Rand Harbert (State Farm), Bob Kerzner (LIMRA), Clara Shih (Hearsay Social), Michael Lock (Hearsay Social), Scott Davison (OneAmerica), Rino D’Onofrio (RBC Insurance), and Kenny Massey (Modern Woodmen).

Presenting at the conference were industry speakers and moderators including Scott Davison (President and CEO, OneAmerica), Joe Monk (chief administrative officer, State Farm Life), Bob Kerzner (President and CEO, LIMRA, LOMA and LL Global, Inc.), Kenny Massey (President and CEO, Modern Woodmen of America), Deanna Mulligan (President and CEO, The Guardian Life Insurance Company of America), William Wheeler (President, Americas, MetLife), and Larry Zimpleman (Chairman, President, and CEO, Principal Financial Group), as well as external speakers including Lou Gerstner (former Chairman and CEO, IBM Corporation), Clara Shih (Founder and CEO, Hearsay Social), David Plouffe (SVP for Policy and Strategy, Uber), Don Yaeger (President, Greatness), and Jason Dorsey (The Gen Y Guy, The Center for Generational Kinetics).

Speakers focused on a few key consistent themes throughout the conference:

Adapting to changing demographics

One trend that fueled the topic of change was Millennials. According to LIMRA studies, 37% of Gen Y are unemployed, marrying later, and less likely to trust firms and individuals. In spite of all that, Millennials are more likely to buy life insurance than any other generation. They represent 80 million individuals spending $1 trillion in the US alone, 70% of whom want to learn more about financial education.

Conference speakers such as Bob Kurzner, David Ploufe and Jason Dorsey recognized that this segment of consumers represents a huge opportunity for financial services firms – especially their advisors, but that Millennials are going to buy differently than Boomers.

Adapting to the new buyer journey

Reaching Millennials will require very different methods than past tactics of “smiling and dialing.” For example, Millennials will decide to refer individuals and professionals they trust based on their Facebook and LinkedIn profiles. In addition, Millennials consider phone calls an invasion of privacy, preferring engagement via text, email (only reading the subject line, of course), and social media.

Millennial buying drivers also differ, requiring financial education about different topics than their parents. According to Deanna Mulligan of Guardian Life, Millennials seek a secure platform for paying off loans and/or taking care of parents as opposed to buying a home and saving for the college education of their kids – more traditional priorities from the past.

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Left to right: Bob Kerzner (LIMRA), Deanna Mulligan (Guardian Life), William Wheeler (MetLife), and Larry Zimpleman (Principal Financial Group).

The implication is that advisors need to adapt to consumer changes – both in how they engage and where they engage.

Adapting to technology

With the rapid emergence of cloud technology, mobile devices, and social media over the past several years, consumers – and not just Millennials – now expect different things from businesses. The conference highlighted key technologies that require advisors to adapt to stay relevant in the digital era:

Social media, mobile, & big data

Kicking off the conference, Bob Kerzner highlighted how industry firms need to enable agents to be authentic and engage as individuals, not as brands, especially since the financial services industry is among the least trusted industry (per a recent Gallup survey). Deanna Mulligan also said that social media is required to be where clients are and that social media is key to engaging with clients. Larry Zimpleman agreed and offered that, for the middle and upper income clients, there are primarily two locations to reach potential retail clients: in the workplace and on social media.

The good news is that, based on a LIMRA study earlier this year, 93% of life insurance companies now have social media programs in place vs. 55% in 2010. 70% of surveyed life insurance firms now have a social business program for their advisors.

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Clara with Kenny Massey (Modern Woodmen) on the main stage at LIMRA Annual.

Clara Shih, in her presentation, “The Future of Distribution and Marketing – Staying Relevant in the Digital Era”, discussed how today’s consumers and customers have vastly different client expectations than those from the past. This has primarily been driven over the past five years by rapid growth of technology acceptance, from the Internet to mobile devices to social media. This expectation isn’t driven by competitors in the financial services industry, but rather by the likes of Amazon, Starbucks and Uber.

Clara also highlighted for the audience how social media addresses three key challenges that the Life Insurance industry faces today, including (1) changing client expectations, (2) an aging agent force coupled with the generational gap between agent and new clients, and (3) an outdated distribution model that needs to increase productivity at scale.

Finally, Clara challenged the leadership in the room to innovate beyond social within their firms, revealing the opportunity to enable a true omni-channel experience for clients as well as the opportunity to leverage technology for information discovery, data mining, and informed interactions to simplify the customer experience from signing up to underwriting to customer service.

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Clara with Kenny Massey (Modern Woodmen) on the main stage at LIMRA Annual.

With today’s big data & predictive analytics technology being more business-friendly along with the right models and data specialists, the industry has the opportunity to apply behavioral economics and data mining to better understand their clients.

In closing, Shih offered three final actions that leaders can take to lead their organizations for success in the digital age:

  1. Commit as management
  2. Incorporate into business process – training, prospecting, etc.
  3. Let early adopters do the talking

Like other industries, the financial services and insurance industry has three choices: ignore these trends and opportunities, innovate, or die. Clearly, the sentiment during and after the conference was that life insurance companies must embrace technology, adapt and integrate this into their training and internal processes, and enable their advisors to engage their clients at scale through technology, strong leadership, and innovation partners.

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