Category Archives: Uncategorized

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….

Cheese, Financial Advisors, and Tipping Points

Professionals today in the Retirement Industry operate in a market characterized by seismic change and turmoil.   With global stock markets almost back to pre-recession levels and moderately re-surgent developed-market economies (albeit through life-support stimuli from central banks and treasury departments), some Retirement Industry professionals may think their cheese has come back to where it was pre-2007.

In a recent Retirement Intelligence Report, Campbell Edlund and I make a case that someone has indeed moved the industry’s cheese…and it’s not coming back.   Job insecurity (blue and white collar) driven by accelerated global competition(e.g. India, China, Brazil, South Korea, Singapore)  and Americans’ un-sustainably poor savings behavior,  have collided with long-term trends in rising dependency ratios (ratio of working to non-working population) and longevity, and the gradual decline of the defined benefit system that ensures continued income for many households when their work activity declines and eventually stops (retirement).

These macro-trends are now magnified and perhaps hard-coded in the consumer’s  and the advisor’s psyche by the recent Great Recession.  The current financial crisis is un- precedented and represents a traumatic experience for the baby boom generation.  And after exposure to this and the dot-com bust, many financial advisors and consumers who survived the last ten years may have a mild case of post-traumatic stress disorder – a state that will influence  future advisor  behavior with clients and the behavior of their clients.  And this is the key point.  The dynamics of the market that financial advisors serve – the end-consumer – have changed.  Some of these changes are emotional in nature, and some mirror long-term demographic trends that create “tipping points”.  But make no mistake – we do not believe these changes are cyclical in nature.

To defend and grow market share in the future, manufacturers of insurance,  investment and retirement products must align their product and marketing strategies with the changes their distribution and intermediary channel are witnessing from the end-consumer.  The good news: advisors, Plan Sponsors, and consumers want your help in demystifying the path foward.  They want a trusted source that can solve what is in most cases a retirement income problem.

For more on marketing  best practices for adapting to these changes and capturing your share of this $5 Trillion opportunity, send me an email at dehrenthal@emiboston.com and request a copy of our just published Intelligence Report on helping retirement professionals capture $5 trillion in motion.

JPMorgan Chase commits to the branch network

About a year ago, Bank of America announced that it would close up to 10% of its branches in the next few years.  Some industry commentators interpreted this as signalling the demise of the bank branch.  In a previous blog, EMI argued that this was not the case, but that the role of the branch is changing, with other channels handling a majority of day-to-day transactions, and with branches increasingly used for complex transactions that require face-to-face interaction.

Banks’ continued commitment to the branch channel was highlighted in JPMorgan Chase’s Investor Day presentations this week.  Some branch-related takeaways from these presentations:

  • JPMorgan Chase opened 154 new branches in 2010, expects to open 225 new branches in 2011, and plans to add up to 2,000 new branches in the next five years (more that half of which are planned for its key growth markets of California and Florida)
  • Branches accounted for 35% of new credit card account production in 2010, up from 11% in 2006.  Branches are now Chase’s largest credit card acquisition channel

In addition, JPMorgan Chase has adapted to the changing role of the branch by hiring more sales specialists.  According to its latest quarterly financials,  Chase personal bankers rose 21% y/y to more than 21,700 in 4Q10.  Sales specialists grew 22% to almost 7,200.

As banks recommit to fostering long-term relationships with their customers, they see branches are playing an integral role.  From a sales and marketing perspective, key challenges include:

  • Ensuring that the customer experience is consistent across all service channels (branch, call center, online, mobile, etc.)
  • Changing branch layouts
  • Training and providing support tools to new and established branch personnel to adapt to the new role of the branch
  • Communicating the wide range of services available in branches to customers and prospects