Category Archives: Investment

Why is it so hard to sell retirement income products to financial advisors?

Every week, I’m engaged in conversations with insurance and investment product companies asking me this question: why is it so hard to sell retirement income products/solutions to financial advisors?  Last week I posted this very question on RIIA’s (Retirement Income Industry Association) Linkedin Discussion group which is now 1,250 members strong just to gather insights from a cross-section of financial professionals http://www.linkedin.com/groupItem?view=&gid=35362&type=member&item=52226123&qid=4d16db78-9b12-41e7-b6bb-162d7355cc2d&goback=%2Egmp_35362.  The answer is, of course, it depends on how you’re selling it and to which audience.

Despite the growing share of transition and retired households in most advisor practices, adding retirement income planning and products to their accumulation-centric routines and tool box is a big challenge.   Why?  Well first, the retirement income business model is different from the accumulation business model.  The best solution for the transitioning or retired client  may not be perceived as the most profitable solution for the advisor.  Second, many advisors are uncomfortable suggesting a new approach to their clients.  Why?  For many rational and emotional reasons, including: fear their clients will ask if this means their approach in the past was wrong; because the advisors haven’t yet mastered the retirement income story for client consumption; because many retirement income products are new, complex, and require more wholesaler support e.g. annuities; because advisors like products with long, proven track records; and because manyexisting advisor tools and processes don’t accomodate the integration of many new retirement income products.

So what’s a retirement income provider to do to break through to the advisors and power more growth?  Is there an opportunity to add some pull to the push of retiement income products?

To be successful with advisors, segmenting the large advisor and agent universe and developing the right messaging platform – value proposition, proof points, sales tracks –  is crucial.  Complementing these strategic marketing elements with best-in-class training and support is essential.  Remember, advisors will ultimately do what’s in the interest of their practice – matching your product with their tangible goals e.g. client retention, gathering new client assets (household view), acquiring new clients, making things easy, will make you a winner.  And if the retirement income providers could collectively help the consumer understand the questions they should be asking their advisors about transitioning from accumulation to retirement income….

Retirement and The Catchers in The Rye

Leaders of the retirement industry met this week at Morningstar Corporate Headquarters in Chicago to exchange thoughts on the future of retirement income solutions.  The more than 150 industry leaders who attended share a common vision: connecting the silos of the retirement industry to facilitate the delivery of more robust solutions for households transitioning into or in the retired life-stage.   Their interest is in part driven by the increasing attractiveness of the 50+ segment, which, for  example, controls more than 50% of 401k assets under management.   As these assets are converted to streams of retirement income, opportunities and risks will increasingly emerge.

There are many barriers  today that prevent the industry from delivering optimal retirement solutions to households – both in the workplace and outside the work  place.  Some of these are legal, some are economic, some are cultural, and some are behavioral.

Despite all of these challenges, the retirement ecosystem is evolving quickly.  This evolution  is  being driven by changes in consumer behavior and attitudes and the high indebtedness of all sectors of the US economy.  As a result, an  increasing number of intermediaries and distributors are modifying their approaches to serving  households, plan sponsors, and participants.  The pure AUM model is going to be challenged and product selling is  being replaced by more process-centric, solution oritened approaches.   An increaing number of channels hold insurance and securities licenses and therefore consider insurance and investment products to design a retirement income solution.

Manufacturers that want to preserve market share and sustain growth will need to adapt to these changes, particularly in the area of product development and relationship management with channels.

Those that adapt quickly and support this evolution will win the loyalty of their channels.  Adapting means speaking your channels evolving language, helping your channels understand how your products fit into their financial planning processes and for which client types your product is appropriate, giving the advisor comfort when presenting your products to end-clients, and becoming the “go to” retirement income expert.   Most advisors become comfortable with a limited number of providers, so time is of the essence as financial advisors modify their practice to serve the increasingly large transition and retired life-stage segment.  And selecting and investing in the right channels to work with is critical.

Now is the time for providers of retirement income products to “lock-in” their channel relationships.  This will require thoughful marketing and sales.  Distinguishing between early adopters, novices, and laggards is critical and allocating your investments in the right market segments is essential.

And for those who are curious about the title of this post and what rye has to do with retirement:

“Anyway, I keep picturing all these little kids playing some game in this big field of rye and all.  Thousands of little kids, and nobody’s around – nobody big, I mean – except me.  And I’m standing on the edge of some crazy cliff.  What I have to do, I have to catch everybody if they start to go over the cliff – I mean if they’re running and they don’t look where they’re going I have to come out from somewhere and catch them.  That’s all I do all day.  I’d just be the catcher in the rye and all.  I know it’s crazy, but that’s the only thing I’d really like to be.”  ~J.D. Salinger, The Catcher in the Rye, Chapter 22, spoken by the character Holden Caulfield

Let’s rename social media

Social media is misnamed. Media are channels advertisers use to communicate one-way messages to target audiences. The real power of social networks is in the creation of the virtual community and the sharing and messaging it enables. Brands that use social networks simply as a media outlet are missing the point, and will alienate prospects and customers rather than engaging them.