Obstacles to buying financial protection

Damien Green once co-sponsored a study that found that 19 in 20 working age people did no see protecting their financial future as a priority. This is a form of ‘cognitive dissonance’, people know that they should do something but not. Green advances three reasons for this form of behaviour:

  • Applying a high discount rate to distant future events
  • Lack of trust
  • Belief that the state will provide

To counter these, Green suggests focusing on customer experience, intermediary educators and instigators, engaging in public affairs, and developing trust. Click here to read more. All those look like intensive and engaging ways to work with the market at large, and individual customers in particular. It is a continual process, relentlessly working against a number of easy choices to defer, deny, or delegate responsibility. Lots of work. 


Senior citizens are designing their own coffins in preparation for their death

Coffin Clubs have become a thing in a number of towns around New Zealand for senior citizens. They use it as a way to make friends all while making their own coffins. Partners Life sponsors this content on Vice, but it is written by staff. It is a good example of the content strategy for online engagement being used by brands that have complex purchase processes - almost the exact opposite of the immediate response approach demanded by many direct-to-consumer brands.  Although the elderly are not the target market for most insurers, it isn't the target market for Vice either - the readership of this kind of article is likely to be diverse. 

Click here to read more.


Adviser Businesses: Opportunity is Among the Uncertainty and Change

Changing requirements for adviser businesses put pressure on everyone, but these changes could create winners and losers in the advice world in particular, as well as the wider insurance sector in general. Some advisers will identify opportunities while others will find the pressure overwhelms them – and so they will make a decision to leave.

I am concerned that rushed change, often poorly designed, could damage the market. That worry applies not just to legal and regulatory change – such as a Supplementary Order Paper running to well over 100 pages – but also to industry reaction to the new law. I am particularly worried about reducing the supply of advice to clients and pushing some out of the advice sector.

But you may also find great opportunity in change. Could that be you?

The advice business that is more likely to succeed will have one or more of the following characteristics:
• A strongly defined advice service with clear value to the customer
• Strength (or scale) in a particular territory
• Well-organised marketing processes, and some experience of marketing automation
• Compliance assurance processes that provide evidence to managers of good adherence to advice standards
• Good governance processes, with effective oversight of how advice is given, how insurance providers are selected, and how clients are served
• Access to capital
• Most of all: an optimistic frame of mind about the opportunities that may emerge
Of course, even the best advice businesses usually need to work on one or more of these, and most need to do some work in each area.

Transplanting investment-focused advice processes to an insurance or mortgage advice business can fail – because the importance of the emotional connection to the client, their need for cover, and knowledge of insurance products is lacking.

Forcing your advice into a process designed by a technology provider can fail too – because systems design isn’t the same as service design. The problems of failing to focus on the customer and their journey through the process of purchasing advice is often lacking.

Taking time to work on these areas of your business is vital, however, because:
• If you know you have strong advice processes, a good compliance assurance plan, and good governance, you will have nothing to fear from the new compliance regime
• If you have good systems, scale, and operational efficiency then you can cope better with any changes, and also look for growth opportunities
…and there will be opportunities to grow – if you understand your balance sheet and have access to capital, you may be surprised at the opportunities available over the coming years.


A fierce argument about accessibility

The article below sparked a fierce argument about the extent to which companies should work to make their products accessible to people.

Domino's Pizza had legal action taken against them after a blind man in the United States was unable to use their website and app. 'This, he argued, put the company in breach of the Americans With Disabilities Act of 1990, which says it is unlawful for businesses to deny individuals with disabilities access to their goods and services unless the effort involved places them under an "undue burden"'

Click here to read more.

Without repeating the details of the argument - or who was arguing for or against greater access, the issues can be summarised:

Big companies tend to design access for the many, not the few. This is obvious. Market segments of few, or one, tend only to be served by specialists. The skills of one company are unlike the skills of the other, historically.

While it is true that customers with special needs (disability, lack of knowledge or experience, poverty, language barriers, or different requirements from the mass) can often access our products, they also often face barriers to doing so. In overcoming these, they face higher transaction costs. When transaction costs rise, fewer transactions are made.

While there is a public policy debate to be had about whether companies should be forced to provide access, and the extent of cost that they should have to bear in order to do so, we don't have to wait for that to happen: if you are wondering how to increase your market share, you might look to tackle some of those segments that are underserved. If you can find an innovative way to break down the barriers, you can own a segment for years. Success stories are usually built on this. Early Amazon was.


Does social media actually work for financial advisers?

Tony Vidler has this excellent video on the answer to the question. Link. You have to be better at promoting what you do than doing what you do. You can argue with that all you like, but if you never want to do any marketing, you'd probably better just get a job in someone else's business. I guess the thing I like about this social media comment from Tony is the strong link to marketing automation at the end - how you turn those 'suspects' or 'tyre-kickers' online into real prospects, and better yet, how you automate the first few stages of that process so you can do that much more efficiently, saving your precious fact-to-face time for clients.


The first 1,000 are the most difficult

According to Seth Godin in this blog post writing the first 1,000 blog post is the most difficult part. But the are such a learning experience. Many mistakes, some I blush to think about. But learning without failure just doesn't really happen. For all those that have contributed, especially those brave enough to criticise, and kind enough to do that well, I continue to be grateful. So if you want to give blogging a go, feel free to call and we can catch up and talk about it. If you have a group of advisers that wants to learn about content creation, I would be delighted to run a workshop on the subject - free of charge in either Auckland, Wellington, or Christchurch.


NZ’s Healthiest Schools Challenge kicks off for 2018

AIA and Sovereign are behind the Challenge which first started back in 2016. The Healthiest Schools Challenge aims to give school-aged children around the country tasks and tips on how to build and maintain a healthy lifestyle. Some of the topics included are physical activity, health eating, sun safety and limiting screen time. 

AIA and Sovereign's CEO Nick Stanhope says "AIA and Sovereign have a shared vision of making New Zealand one of the healthiest and best-protected nations in the world. Therefore the Healthiest Schools Challenge is a perfect fit for our two organisations - which joined forces in July − to be supporting," Nick Stanhope says.

Click here to read more. 


How sales incentives can distort the advice of insurance companies

I don't like this headline, but the trick with this kind of information is to try and figure out why it was written, rather than spend ages grumbling about how wrong it is. In fact, this is the headline for a long-form essay on conduct issues in life insurance. While I do not agree with some of the things in the article, it is overall a good introduction to the subject and covers it well. You should take a look. Click here to read it.

Now back to our challenge - that for many people insurer and adviser are synonymous. Read this quote and absorb it again:

'Life insurance providers are under pressure to disclose sales incentives, which can affect their advice and are banned in some countries. But the industry is resisting.'

I added the emphasis on the word 'their' myself. Plainly the insurer is seen as being responsible for the advice that an adviser may give. For some, they are, for others, of course they are not. This is a significant issue for insurers and advisers that wish to provide excellent experiences for their clients. Being clear about the service you provide, and what you are (or are not) responsible for, is essential to managing your advice and conduct compliance obligations.


LifeDirect uses sloth’s death to remind Kiwis to get insurance

LifeDirect's latest advert shows the death of Simon the sloth in order to raise awareness of the need for life insurance cover. Click here to read more.

It is a little known fact that I was part of the discussions that heralded the arrival of the sloth. Although I claim no particular creative input. I am sorry to see this character go - but... its media, so who knows? Meanwhile, you can check out the death of the sloth video below.