Humans Can Still Win The Advisor Wars

OXON HILL, Md. -- If the future of human insurance advisors in the robo-advisor world were a movie, it might look more like Robocop than 2001: A Space Odyssey.

In 2001, Hal, the computer-gone-rogue, had little use for humans and killed the crew of the space ship he was controlling. In Robocop, a seriously injured police officer was outfitted with mechanical parts to become superhuman.

Many advisors cast an anxious eye at that first example as the probable outcome for advisors, but LIMRA’s CEO Robert Kerzner would argue that the augmented agent is the more likely model.

That is one of the visions of the future that Kerzner is planning to illustrate when he opens the LIMRA Annual Meeting for more than 700 attendees on Monday at the Gaylord National Harbor in Maryland.

In an interview before the conference, Kerzner advised companies and distributors against looking at the future as dystopian and also not to bet on being the victorious disruptor.

“Do you really invest your money in looking for this new disruptive model? That you're going to be the one to disrupt the industry?” Kerzner figuratively asked the insurance company members of his association.  “Or are you going to say, ‘Look, here's our fundamental business model: we work through advisors’?”

Insurance and financial companies are finding that when they build a field of robo-investment advisors, people might come but they don’t necessarily stick around.

Kerzner pointed out several instances where the disconnect became obvious. One example was Nationwide’s experience  with a direct-to-consumer annuity the company started marketing in Arizona this year.

Although consumers could buy an annuity from start to sold online, they were bailing before finalizing the purchase. It turns out they wanted to speak with someone before committing.

“Every model that we've looked at that went direct-only ended up with high abandonment rates and ultimately had to provide a way to get additional information,” Kerzner said.

But the experiment also showed something else – if advisors want those cases to be handed off to them, they will need to stay up late. “Sixty percent of their sales are coming at off hours,” Kerzner said. “So, what I’m suggesting is, ‘Guys, are you paying attention? Millennials don't live their lives like we do. All of us kid that that they're buying at 2 in the morning. But you don't make it easy to buy life insurance at 2 in the morning.”

If anyone thought that the financial world figured out how to exclude human advisors completely, Betterment proved that obituary somewhat premature. Betterment debuted in 2008 as an online, algorithm-driven investment service. But this year, it added the option to text or talk to human advisors.

Kerzner said he understands consumer frustration from his own experience. He had the opportunity to complain directly to his financial/insurance company because he was addressing a group from the insurer, which is a LIMRA member.

First he asked how many of the home office staffers in the audience had accounts with the company. About 90 percent raised a hand. Then Kerzner asked, "Do you hate authenticating into your system as much I do?’ They started laughing.”

Kerzner said tech should be considered a tool to help consumers serve themselves information, but it should work well – and it should have the option to lead to an advisor.

“If I can create more leads through some of those other approaches and get those to my producers and help them become 30 percent more efficient,” Kerzner said, “that's improving my fundamental business model.”

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents' association. Steve can be reached at [email protected]. Follow him on Twitter @INNSteveM.

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