Other parts of this series:
To ensure their advisors succeed in an increasingly digital economy, insurers and brokers need to change the support and incentives they provide.
The growing importance of trusted and credible advice in the sale of insurance products and services will require insurers and brokers to change the skills and incentives of their representatives.
Big up-front sales commissions and large rewards for signing-up new customers will have to be changed. The Retail Distribution Review, drafted by the Financial Services Board (FSB), will further support this shift. Instead, advisors will require remuneration scales that encourage strong long-term customer relations and recognize the importance of informed, personalized guidance and advice that adheres to the requirements of the FSB’s Treating Customers Fairly (TCF) regulations.
The rapid spread of digital technology, as I mentioned in an earlier blog post, has dramatically empowered insurance customers. They now crave reliable and trustworthy information that will help them select the most suitable insurance providers and solutions. Credible, personalized advice has become an important ingredient in successful long-term relationships between the representatives of insurance providers and their customers.
Many traditional insurers, as well as some insurtech start-ups, are looking to launch intelligent digital “robo-advisors” to meet the growing demand from consumers for quick, convenient and trustworthy advice. However, insurance advisors, with a good knowledge of insurance and other financial services as well as the ability to understand customer requirements, still have an important role. They can forge relationships with customers, built on performance, trust and empathy that automated services can’t match.
To enable their advisors to thrive in an increasingly digital economy, insurers and brokers need to provide their representatives with the correct support and incentives. Our research highlighted five key measures that build loyalty and satisfaction among financial advisors.
- Effective performance measurement. Clear and accurate performance metrics are essential.
- Performance-based incentives. Incentives are important but they must be combined with good performance measurement.
- Digital tools. Access to digital tools that enhance efficiency and effectiveness is becoming increasingly important.
- Competitive technology. Sophisticated digital technology that gives advisors an edge over competitors builds loyalty and job satisfaction.
- Long-term sales support. Companies that help advisors build long-term ties with customers, as well as with other key decision-makers in their families, tend to have a more stable and higher-performing workforce.
A further important insight uncovered by our research was the crucial role of women advisors in the financial services industry. Women advisors tend to be younger than their male counterparts – 77 percent of those surveyed were under 46 years of age compared with only 19 percent of the male advisors – and hold higher professional qualifications. They often understand their clients’ needs better than men and also place greater importance on support and training.
By encouraging women advisors to focus on customer development and providing them with the appropriate training and support, insurers and brokers can strengthen their long-term sales and improve the stability of their workforces.
For further information about the future role of insurance advisors take a look at these links. I think you’ll find them useful.