Remote work has been a challenge for advisors trying to serve clients during the COVID-19 pandemic, a recent study revealed. More specifically, nine out of 10 advisors said that not being able to meet with clients in person has had the biggest impact while social distancing measures are in effect.
Market factors including low interest rates and increased market volatility have also been disruptive to advisors’ practices, the study revealed.
This study, “COVID-19 Social Distance and Distribution: Advisor Survey Summary of Results,” was conducted by LIMRA, the Insured Retirement Institute, Oliver Wyman and the National Association of Insurance and Financial Advisors. In May 2020, more than 400 financial professionals in distribution selling insurance, annuities and investment products were surveyed to determine the biggest challenges they face while adhering to social distancing guidelines during this pandemic.
“For many advisors the human connection is a critical part of developing a trusted relationship with clients. According to our research, nearly two-thirds of advisors are now working from home creating new challenges in the advisor-client relationship,” said David Levenson, president and chief executive officer, LIMRA, LOMA and LL Global. “Our study shows carriers and the industry have helped advisors continue to drive successful client outcomes through customized training and digital tools designed to help them operate optimally in this virtual environment.”
The survey also found:
- Revenue, profitability, and bringing on new staff are the most challenging business aspects advisors face in the current environment. Despite those challenges, advisors have a positive outlook on maintaining operations and their existing clients and staff. They also remain somewhat positive towards prospecting and bringing on new clients.
- Across most products, advisors are expecting a 1%-10% decline in sales in the second quarter compared to what they forecast for the second quarter prior to COVID-19. Advisors believe that working from home makes them less effective at selling products. However, advisors remain optimistic that they will hit their pre-COVID sales volumes for life insurance products.
- Meeting with clients in person is the biggest disruption to their practice. Advisors current work environments are evenly split among working from home full time, working from home part time, and continuing to work from their offices. The study respondents view prospecting new clients, initial planning meeting with clients and product sales meetings to be a moderate challenge in times of social distancing. Advisors have been able to navigate changes to products and virtual meetings with staff and wholesalers with minimal disruption.
- Advisors are looking for support in reducing or changing compliance requirements and switching to digital fulfillment. More than 90% of advisors said they have support for changing or reducing compliance requirements. Nearly all (97%) said they had support in switching from paper to digital fulfillment. Almost all (98%) said they wanted support from their wholesalers, and 94% said they wanted webinars on investment and insurance concepts.
- Stock market volatility is the top client concern, followed by low interest rates and questions about policy coverage related to COVID-19.
Clients Worried About The Economy
As the pandemic spread and social distancing measures were implemented, 7 in 10 advisors increased their communications with their clients. They said their clients’ top two concerns were stock market volatility (74%) and low interest rates (45%). Other things on clients’ minds include job and income security, current and future income stability, and life insurance coverage issues — including whether their policies will cover COVID-19.
“Even under normal conditions, consumers worry about making the right financial decisions,” said Wayne Chopus, IRI president and chief executive officer. “These are extraordinary times and consumers need the support and guidance of their financial advisors to help them make sound choices about their investments and take steps to protect their families. As advisors communicate more with clients, they can help alleviate anxiety by reinforcing the benefits of a comprehensive financial plan that includes products providing guaranteed lifetime income and financial protection.”
How The Pandemic Shifted Business Activity
Eight in 10 advisors say they are selling more to their existing clients, with a quarter selling exclusively to their existing clients. Less than 1 in 4 have reported selling more financial solutions to new clients. Most advisors say social distancing has made it more challenging to find new clients and conduct initial planning activities with them. Advisors surveyed said they would value more help with virtual prospecting and lead generation.
“It is not surprising that social distancing measures have impeded advisors’ ability to gain new clients,” said Scott Campion, partner, Oliver Wyman. “Especially since we don’t know when or how business will return to normal, the industry needs to identify ways to help advisors virtually connect with consumers who need the solutions to achieve their financial goals.”
Despite the challenges, the study reveals 8 in 10 advisors are optimistic about their ability to maintain their practices and serve existing clients. While many expect investment and annuity sales to fall less than 10% in the second quarter (compared with pre-COVID-19 expectations/forecasts), advisors expect sales of life insurance to remain level.
“The pandemic has disrupted business practices across all industries, driving companies to seek innovative solutions to connect with their customers. Our industry is no different,” said Kevin Mayeux, chief executive officer, NAIFA. “While traditionally, our industry has relied on the face-to-face model to help Americans address their financial concerns, the silver lining in all this is we are seeing advisors adapting and leveraging digital platforms to stay engaged with their clients.”