Time For Financial Advisors To Face Online Facts

By Cyril Tuohy

InsuranceNewsNet

For financial advisors, it’s time to face facts. Sales strategies developed around face-to-face interactions with older, higher-net-worth customers may not translate well to changes taking place in the consumer landscape and among contemporary families, according to a new report.

Agents, in many ways, find themselves facing a double whammy: They are trained to value face-to-face meetings with prospects to sell a product or service designed for a bygone era. Fast forward to 2013 and advisors are up against a consumer who prefers – indeed expects – that every financial service can be purchased online.

Many financial advisors already know this, of course. Still, the question for the distribution chain remains how to sell more life coverage and annuities to a consumer who is leaving behind even the desktop PC in favor of a mobile hand-held.

“One consideration in reaching potential insurance consumers is to go where they are,” wrote Conning & Co. analyst Mary Pat Campbell, author of the report: “Life-Annuity Consumer Markets.”

“Where these consumers are, increasingly, is online, and no longer tethered to a landline connection,” Campbell wrote. “Even at older ages, more than half of the U.S. is online. At the youngest ages, online usage is near 100 percent.”

Digital gaps between ethnic and racial groups have narrowed or disappeared entirely, and usage is “fairly equal” between men and women,” Campbell also wrote. Conclusion: just about everyone is online.

This is, in fact, good news for financial advisors for it is a clear signal that they, too, need to be online in some shape or form if they are going to reach consumers, even if it’s only to monitor insurance-related chatter over social media sites.

Financial advisors still have a key role to play with regard to life and annuities, said Scott Hawkins, vice president of insurance research and consulting at Conning, particularly when helping consumers through the complexity of annuities and guiding them in a purchasing decision.

“It is this product complexity that is making direct sales of annuities difficult,” Hawkins said, in an e-mail response to questions from InsuranceNewsNet. “In terms of life, simple products such as term can be sold without the involvement of a financial advisor. However, more complex sales, for example, estate and or tax planning, often require more complex life products. In these cases, the financial advisor plays a key role.”

Hawkins also said that spurring more sales requires “moving beyond recycling existing business.”

“That may mean moving down-market to reach younger savers or working with older savers with fewer assets,” he said. “That presents a challenge for financial advisors and other advisers who need to generate substantial commission levels.  At the same time, less-wealthy consumers create a challenge in being able to afford fee-based planners. This suggests that annuity insurers and distributors need to find ways to economically reach these consumers.”

That is exactly why financial advisors are well advised to exploit the online channel. Many, in fact, have already done so and adopted an online presence, according to a separate study by Accenture titled: “Closing the Gap: How Tech-Savvy Advisors Can Regain Investor Trust.”

The survey found that nearly one in two (48 percent) of the 400 U.S. financial advisors are interacting daily with clients through social media channels.

“The use of social media to interact with clients is a differentiator for advisors today, but it will be mere table stakes in the not-too-distant future,” said Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services, in a statement.

Building relationships is “becoming increasingly critical” as investors look online for resources to better under understand investments, he said, and those relationships – or at least part of the relationship – with younger buyers often begin and are likely to flourish online.

Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at  [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].