Attendees at the MDRT annual meeting were asked: Are robo advisors friend or foe to life insurance agents and advisors? Why?
“Anything that gets people to buy life insurance is a friend. In general, the people taking life insurance advice from a robo would not be clients of professional insurance agents. This would be the case even if the robo provides education on insurance in a medium that some people would enjoy. This is assuming that the robos provide some level of education along with the advice. That would depend on what services the robos perform for their customers. If a client tells the agent that a robo has said the client should get life insurance, that’s not bad at all.”
–Mark Friese, president, Friese Financial Advocates, Libertyville, Ill.
“I see them neither as a problem nor as a solution. My business is about my clients, not formulas or performance. If a client comes into the office with information from a robo, the client will need to decide whether to rely on that information or on the advice that I provide. This hasn’t happened, but I could see it happening someday. However, my clients tend to prefer direct, eyeball-to-eyeball, face-to-face contact. But what I haven’t done yet is to look at the robos to see if I could integrate their service into my practice, and if that would enable me to serve my clients better. I view the services as a tool. What they do on their websites is to present questionnaires that ask about a person’s financial circumstances, risk tolerance, tax bracket and similar details, so at the front end, that’s similar to what I do when fact finding. But one difference is, I look at my client’s life insurance policies, annuities and other insurance contracts. I actually read the contracts, checking for clauses and features. Another difference is that I have an ongoing relationship with my clients rather than a questionnaire relationship. I ask about the children, grandchildren, desires and other matters so it’s an ongoing guided discussion with follow-up. I also help motivate them to take steps they need to take. On the positive side, for consumers on the lower end of the economic ladder, the robos might help get some of them going on saving and planning. When their needs become more advanced, however, that’s when they migrate to the services of a personal advisor.”
–Cliff Ryan, personal financial advisor and principal, Elder Planning Advisors of Maine, South Portland, Maine
“In general, the robo advisors are very positive for life insurance agents and advisors. However, that depends to some extent on the demographics of the buyers. If the buyers are younger, it’s positive. That’s because, if the online advisor service says the person should get life insurance, seeing the word ‘insurance’ in the recommendation will help the younger person associate insurance with financial planning. Also, younger people tend to use technology to make purchases more often than older people, so this is more likely to happen with them than with older people. That will help increase awareness of life insurance. Another demographic that can benefit from robo advisors are people who don’t use (human) advisors for financial planning. They tend to get their financial information in snippets here and there. Some of them may use a robo advisor, however. If so, this will help contribute to more people working to create a secure, long-term financial strategy.”
- Kim Rosenberg, financial planning and investment advisor, Rosenbaum Financial, Portland, Ore.