In my last post I looked at two of the aspects life insurers need to consider when planning their strategy for becoming more relevant to customers: simplicity and innovation. Today I’d like to talk about a key issue: advice at scale.
The Internet has dramatically changed the availability of advice, as well as people’s attitudes toward it. You can find advice on any topic under the sun, including retirement planning. While most consumers will admit that what’s good advice for one person isn’t necessarily the best for them, they generally trust “the wisdom of the crowd” as being sincere and unbiased, and they like the fact that it’s free.
They place a lower value than before on face-to-face interaction, and have become less tolerant of sales pitches masquerading as advice. To succeed in the future, advisors will have to be seen to offer impartial recommendations. And if they are to command a fee, they will need to broaden their expertise and become more like life coaches. This entails understanding the lifestyles customers aspire to, and advising them on the financial and other decisions they should take to achieve them.
They should also be able to provide access to an ecosystem of related providers who can contribute to the desired lifestyle by meeting more of the customer’s higher-order needs. This may require a redefinition of the advisor’s role, and a change in how and where money is earned.
At a time when the credibility and value of advisors are under scrutiny, a number of new Internet-based firms are offering free or low-cost advice. Some provide links to a wide range of retirement advisory services, while others use technology to generate automated yet personalized investment advice.
All of this is putting the traditional model under strain. While affluent customers may always be willing to pay for personalized advice, the mass market will not. Life carriers will have to find some way of delivering advice at scale, or else develop products that can be easily sold with minimal or no advice.
You can read about some of the new online retirement advice services here, and find the earlier posts in this series here. Watch out for my next post, where I’ll talk about the impact of big data on insurers’ strategies.