Are sales always inconsistent with good customer outcomes?

Of course, my personal answer is 'no'. In fact, I quite like buying things. When I meet an excellent sales-person, who helps me through the process, I am usually very happy. Equally, most people don't like the idea of very pushy salespeople, or those that use very obvious 'sales' approaches. None of us want a world in which it is okay to use power imbalance, coercion, lies and other manipulative or unfair techniques to get people to buy things. But those last things are rare, and almost unheard of in large, conservative, organisations that must maintain a good reputation over decades. They actively try to find and get rid of dangerous people and practices. I think there has been some news about that recently. 

Reading about a union organiser, complaining that banks are relying on branch and call centre employees to follow a script to sell products like KiwiSaver, insurance, mortgage top-ups, credit cards, overdrafts and personal loans, I got the feeling that the only acceptable outcome was zero sales. Click here to read more in Rob Stock's article on Stuff.co.nz

Of course scripts and empathy statements are cheesy if used badly, and awful if used inappropriately. But don't kill sales because somebody needs a sticker on their monitor to remember to offer additional services. Given that most New Zealanders could do with saving a bit more, and having a bit more financial protection in case of a loss of income, I am happy to see more effective selling on those things. Even products that are not normally associated with good financial outcomes can be a force for good. A credit card or overdraft is cheaper and better than a payday lender - and I would rather it was sold responsibly by a well-regulated organisation than not. Even this misses a wider benefit to society. When there is a dynamic and competitive market-place for credit products the consumer wins. So, less sales activity means less competition and poorer products for all of us.

 


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. 


Fidelity Life Business Development Strategy

Fidelity Life has set plans to expand the number of business managers and support staff. They have begun the expansion process by appointing new Business Managers and Business Account Manager. The expansion plan is a follow up of a new sales and support model Fidelity introduced in December last year to ensure advisers achieve better business goals and ensure better customer outcomes. The new model resulted in the development of Business Manager and Business Account Manager roles. The role of business manager has been filled by Jenn Quinn and Fidelity is expected to shortly announce the names of the other Business Manager and the Business Account Manager.

 


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.


What insurance advisers can tell you about entrenched views

People with strongly entrenched views love them, and are willing to suffer a lot to keep them, even in the face of the evidence.That curious mental 'stickiness' shows up in sales processes all the time.  That is why insurance advisers, who have the hard job of helping people plan for their death, illness, or disablement, have some of the finest practical experience with the phenomena of all. Ask them about it some time. Some of the things they tell you are supported by recent science on the subject. According to this article from The Economist many of us will pay money to avoid points of view that differ from our own. Click here to read more. There are many strategies for working around entrenched views, some of the best are based on guided discovery and the exploration of shared values. They all require a bit of work, but they are worth it, I think. After all - aren't we all struggling to learn new things, get over our own entrenched views, and persuade people?


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.


Key person risk is alive and well

The Economist reports that with the share price impact of the arrest of Carlos Ghosn, CEO of Renault, the market provides strong evidence that key person risk is alive and well. Link. Although neither you, nor your clients, may run a global alliance of three major vehicle manufacturing brands, your value to your business may be greater. Renault, Nissan, and Mitsubishi will doubtless figure out their challenges in time. If you were knocked out of your business - would it survive? What about your clients? Insurance is part of the answer, so is growth - because scale does count in making a business more resilient.


Conduct and competence

Competence to enter into a contract is an under-explored area of conduct risk. This news is an exemplar of why, although Australian, I have no doubt that similar problems occur here. I recall one case in the news about an elderly person who was sold funeral cover over the phone. After reading the article I had to doubt the competence of the person, and therefore the care exercised by the call centre sales-person. Of course, this is not a problem isolated to call centres, or financial services. Elderly people are often warned against answering the door to salespeople due to the risk of pressure sales tactics being applied. Which is why, possibly the only thing I object to about the Herald article is the title. Maybe, rather than 'bombshell' it should say 'yet again...'


Money Week - 3 September

Money Week commences on the 3rd of September and this years theme is 'Weather Life's Storm'. Financial Advice New Zealand have created materials for its members - which include access to a range of banners, blogs, videos and more. You can add your own branding, use the content in client and other communications, post videos and more. If you are a Financial Advice NZ member click here to register for the marketing and content pack.Although weathering life's storms has a distinctly savings-focused theme for most money week participants, it doesn't have to. In fact, before you have capital, the simplest way to weather many of life's storms is to first, take care, and second, have insurance.