Advisor Survey Suggests Areas of Opportunity with Gen Y Investors

Recently, Principal Financial Group released results of their study, the Principal Financial Well-Being Index: Advisors, in which they surveyed a variety of advisors across the country about the state of their practices, the industry, and client trends. Among the key takeaways:

  • 22% of the advisors’ clients live beyond their means, 15% don’t save enough and 11% do not start to save early enough in their careers.
  • Over half (52%) of the respondents said that only 25% of their clients start saving early enough to achieve the recommended level of retirement savings.
  • Only 18% of the advisors surveyed target Gen Y clients.

This suggests a very real opportunity for product providers and distributors to help advisors facilitate meaningful relationships with pre-affluent millennials during their most formative years.

Product providers, particularly those in the defined contribution world, should work with plan sponsors to help educate employees and encourage saving. Product providers can:

  • Create and distribute educational, client-ready content that sponsors can share with newer employees.
  • Develop tools for sponsors – such as a one-page reference guide, brochure or video – that will assist them in using the client-ready content to start conversations with new employees about their saving options and the benefits of the plan.

Initiatives like these can help providers build long-term trust and brand equity with their clients and their clients’ employees. They will also help the company gets the most out of the plan, which can further enhance brand/product loyalty. Finally, there’s a secondary benefit for product providers: Getting plan participants on the path to financial security means they will be better positioned to consider a broader set of investment and retirement solutions later in life (e.g., life insurance, annuities).

Product distributors relying on large advisor networks should provide tools to help advisors connect with existing clients’ next of kin. Studies show that more than 95% of heirs change advisors after they inherit assets. Distributors should arm advisors with:

  • Educational, client-ready content they can share with their clients as appropriate
  • A one-page guide for advisors on how to use the content effectively

In addition, distributors should be working to educate advisors on the business case for pursuing Gen Y and how reducing that generational turnover. By creating a low-cost, scalable solution that has a low impact on advisors’ time but a high impact for long-term relationship-building, distributors can increase mindshare and build loyalty in the intermediary channel.

LIMRA Marketing & Research Conference Wrap-Up

EMI recently attended the LIMRA Marketing & Research Conference at Disney World. Our take-away from the conference: No business today can achieve sustainable growth and gain market share without being customer-centric. Easy to say, but less easy to implement.

As an exhibitor, we had dozens of conversations on companies reassessing and refining their client-centered strategies. The challenge of operating with a consumer marketing lens, versus the traditional product-centric lens, which so many companies have done, was well expressed in a recent McKinsey report* on U.S. retirement readiness:

[Providers] “have a unique, largely untapped opportunity…But to capture it, firms must stop driving product innovation based on actuarial models and instead lead with a strong consumer marketing lens…financial institutions must take a much stronger consumer view as they create new product prototypes.”

These challenges relate to how companies engage with their channel partners to enable customer-centric throughput. For example, one mutual fund leader at the Conference addressed investment language and how “financial security” resonates far more than “financial freedom.” An insurance leader explained the need to help agents establish an online social presence and keep diverse customers engaged through social media.

The LIMRA event helped us to crystalize several fundamental questions:

  • “Am I using customer-centricity to achieve competitive advantage with my channels and end-customers?”
  • “Is my organization unified in this approach, even if product, sales and research are in silos?”
  • “Am I extending my consumer-centric expertise and assets (e.g., research, collateral to advisor and agent channels) that arms advisors and agents with educational and motivational client tools?”
  • “Am I adapting core messaging to engage different generations, particularly as they age and their needs evolve, across relevant traditional and digital communications?”
  • “Am I preparing for what my distribution channels will need in the next two years based on what my research, marketing analysis and industry trends are reporting now?”

These questions speak to the need for strategies and tactics to help financial service institutions to grow share with their captive and third party distribution channels. EMI examined many of these questions at our recent webinar Four Strategies to Win the Hearts and Minds of Your Advisor Channel – and Grow Share which shows you the need for customer-centric throughput and the importance of building better advisor relationships that can be adapted to sales channels and ultimately end customers. This is a topical concern of research and marketing experts at investment and insurance firms alike as we clearly recognized at the LIMRA event.

 

* McKinsey & Company, “Why Are We Not There Yet? An Update on U.S. Retirement Readiness,” May 2013.

The Challenge of Improving Wholesaler Performance

Suffice it to say, sales leaders in the asset management, insurance, and retirement industries are under un-relenting pressure to enhance wholesaler performance.  Brands that want to win the trust of their channels and be perceived as a valuable, priority relationship, must deploy effective Intermediary Relationship Marketing (IRM).  Today, many brands deploy a version of IRM, most of which neither generate trust or add value to their relationship with their important intermediary partners.

What is Effective IRM?

In the context of the asset management, retirement, and insurance industry, IRM creates leverage and scale for distribution platforms targeting intermediaries and distributors. An IRM initiative augments the productivity of internal and external wholesalers through a pragmatically developed plan of systematic and integrated marketing activities. These activities:

  • Create a compelling, consistent and coherent narrative with target channels
  • Generate new qualified leads
  • Keep target channels engaged with your brand and products
  • Pave the way for more effective wholesaler interactions.

Instead of focusing on a single campaign, or a series of disconnected interactions, effective IRM initiatives plan and deploy integrated inbound and outbound communication streams — guided by the stage of your brand’s relationship with the channel, individual level data (e.g., behavioral, self-reported, firmographic), and your brand’s narrative. These communication streams increase the probability that your products and brand are selected by your target intermediaries and distributors. IRM builds mindshare, reinforces the value of the relationship with your brand, fosters trust, and provides your wholesalers with richer and timelier intelligence. IRM must also integrate seamlessly with existing sales force automation and CRM tools.