Engage Retirement Income Clients Or Risk Failure

By Linda Koco
Having perfect products with all the latest bells and whistles is not enough to ensure strong sales in the retirement income marketplace, according to Paul Henry. “You need engaged and educated clients too.”

When advisors fail in this market, it is often because of their strengths, Henry said in an interview in advance of his presentation at a workshop today at the 2014 LIMRA annual conference here in New York.

That assessment may sound incongruous, but the managing director of the LIMRA LOMA Secure Retirement Institute (SRI) said that what advisors excel at often gets in the way of their developing more effective approaches to building business.

The issue

Advisors are often very good at helping clients accumulate assets, grow portfolios, and use asset allocation and other investment tools, for example. But advisors — especially registered representatives — are often not familiar with retirement income products or how to apply income generating concepts to individuals, Henry said.

More importantly, reps don’t often engage customers in ways that help broaden customer understanding of their own retirement goals, needs and concerns, he said.

Even insurance agents and advisors have trouble with engaging clients. What SRI researchers are seeing is that these advisors have a lot of skills and knowledge about retirement products and strategies. However, many tend to focus on risk mitigation and not the bigger retirement picture.

As a result, both reps and agents often fail to spend much time engaging clients in discussion about what’s most important to the client. These things might include what to do in retirement, where to live, or how to manage health and mobility (as opposed to the product or service the advisor wants to discuss).

How to cover expenses during retirement and what products to use for income purposes are important topics for consumers too, but that is often secondary to their actual retirement issues. Some advisors miss that distinction.

Many advisors also don’t look for ways to arrange their business practices to be “consumer centric,” said Henry, who explained that this means focusing on what the customers want. Advisors who do build their practices around what matters to their target retirement customers have greater success in engaging those customers and moving them to make retirement income decisions, he said.

Target customers

By “target customers,” he said he means the customers whom the agent or advisor wants to reach. 

In many cases, the target customers for retirement income planning will be mass affluent individuals or households, he said. These are people who will need to use their savings to generate their retirement income.

LIMRA defines mass affluent as households with assets in the range of $250,000 to $449,999.

“Because these are not high net worth households, the customers in these homes can’t afford not to meet basic expenses of retirement,” he said. “They will be receptive to using guaranteed income products to mitigate the risk of not having enough money to do that.”

But the advisors still must do some work uncovering the needs of these customers and demonstrating that the recommended solution will help meet those needs, Henry stressed. That’s where engagement comes in.

As Henry put it, “engagement is precursor to education, and education is precursor to action.”

Said another way, the research shows that advisors who want to grow their practices need to combine their product expertise with client engagement and education.

How to engage

To engage consumers, advisors can use online tools, such as LIMRA’s Ready-2-Retire, that help walk clients through various retirement areas such as lifestyle, goals, and when and where to retire.  These tools help clients emotionally engage with the subject by building up understanding, Henry said. “It’s not just a matter of, here’s my account balance.”

When the advisor sees how clients answered questions on the tool, the advisor then knows where to start the conversation, he said. “The advisor will see the client’s perceived financial needs…and often, the customer is ready to take action.”

Advisors have told SRI that this approach also makes them more efficient, Henry said.

In the case of couples, using engagement tools can raise awareness to the point that, by time they talk with their advisor, the spouses have come to an agreement on what is most important to them. With LIMRA’s tool, for example, Henry said both spouses often fill out the questionnaire separately, discuss various points, and then complete the tool a third time, this time together. They give the combined results to the advisor.

Another way to engage clients is to use social media such as LinkedIn and Facebook to stay abreast of clients’ professional and personal lives, Henry said. Some of the personal information that clients enter on their social media pages can point to retirement topics to discuss.

Hot topic

“Becoming consumer centric is a hot topic in every organization that I visit,” Henry said. Some insurance companies, mutual fund companies and record-keepers are not only putting resources in place; some are also applying accountability measures, and changing their corporate structures from product silos to client service centers that serve specific consumer segments. 

Others are creating new “roadmaps” for customers to interact with their brands.

That’s not always easy to do, but Henry said “it’s a customer-driven marketplace today. If we don’t do it, we will be less competitive….Products can be replicated but customer experience is uniquely yours.”

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda may be reached at linda.koco@innfeedback.com.

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Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.