“Prediction is very difficult, especially of the future,” said Niels Bohr, the Danish-born nuclear scientist and Nobel Prize winner. Hard as it may be, let’s not let that difficulty detract us from trying to do just that—looking into our crystal ball to glimpse what’s around the corner.
We might take comfort in this quest by remembering the thoughts of Simone Weil, a French anarchist, factory worker, labor organizer, school teacher, resistance fighter, philosopher and the daughter of an affluent close-knit Jewish family. She suggested “The future is made of the same stuff as the present.” If she was right, then by better understanding the present, we might better anticipate the future.
There are four major trends that influence how people currently view the world—speed, flexibility, security and privacy. They seem to be more than transitory, and are having a significant impact on how we do business. So, an understanding of these trends can help us serve the financial needs of our customers into the future. Let’s examine each briefly.
The client’s mantra: When I decide to buy from you, I want it now. When I ask for help, I want you to give me an answer now. I do not want to wait.
We see this everywhere. It’s the wand readers in Wal-Mart so we don’t have to wait in line any longer than necessary. It’s the bookstore that advertises that it’s faster than anyone in getting special orders to you. It’s my son sending me an email saying he left his essay on the laptop I took to work. Would I please email it to him so he can email it to his English teacher?
Right after World War II, the lead time for design concept to market for automobiles was six to seven years. Now it’s less than three years. In 1979, the lead time for the computer hardware industry was 12 to 18 months. Now it’s six to nine months. Fred Smith created a brand new industry with his idea for FedEx. Now overnight delivery is commonplace and expected.
We also have credit decision in 24 hours. No, before you hang up. No, we’ll give you approval in 30 seconds when you go to our website. In its list of “10 things Google has found to be true,” the Internet search site says: “[F]ast is better than slow.” It goes on to say the company believes in “instant gratification.” Faster, faster, faster. Time is the gold of the 21st century. And increasingly, people want and expect fast service and delivery.
Much of the change we’ve seen to date happened because of faster communication, particularly with the Internet. Everyone, including your competitors, can take advantage of that element of speed. To differentiate yourself, you need to do more. You need to change the way you do business.
Just because it’s always been done a certain way doesn’t mean it can’t be done differently. Perhaps an approval process can be streamlined or even eliminated. Maybe you can have processes happen simultaneously instead of consecutively.
Just because it’s always been done a certain way doesn’t mean it can’t be done differently.
Eliminate the wait
Where does the “wait” happen in your business? Can you anticipate the choices your customer will likely make? What can be done ahead of time—before you even meet with the client?
These are questions that will lead to breakthroughs and innovation—and make it happen faster. Where is this trend leading us? And what does it mean for producers and insurance companies? Will clients continue to be willing to wait for underwriting decisions? For a check to be mailed when they want to take money from a policy? To find out the current value of their policy? For answers when they call or send us an email? To have a file pulled from storage? To have us go find the book that has the answer? For the right person to get back from vacation?
We may have to help other businesses change how they do business: the doctors to get an APS to us more quickly, the records company to retrieve files more quickly or the software engineers to improve the speed it takes to find information.
The question we must ask is simple, but we must ask it again and again and again: “Where are the roadblocks that keep us from getting [money, information, help] to our customers right now?” And then, “How do we get rid of that obstacle, or do we just go around it?”
The client’s mantra: I’m going to change my mind. Count on it. When I do, I expect you to change as well, or at least let me change how we do business together.
How about the way we do business? Is it by phone, mail or email? Do we offer customers the ability to do business with us in whatever fashion and by whatever means they deem best? Or do we require them to do business as we see fit? When they change their minds, are we flexible enough to change as well?
Where might this change be leading us? What kind of flexibility can we offer that we do not now offer? And this is not just about how we do business; it’s also about the products we offer and how we begin, maintain and end the lives of those products.
The question we must ask is simple, but we must ask it again and again and again: “Where are the roadblocks that keep us from getting [money, information, help] to our customers right now?”
More than a lifetime of protection
We say we want our products to provide lifetime protection and security. Do they really do that? Do they provide maximum protection and little else during those times of a customer’s lifetime when he needs protection? Can they then become accumulation vehicles when growth becomes more important? And when it’s time to begin taking money out of those products—whether they are life insurance policies or annuity contracts, and whether it is during a customer’s lifetime or after death—do they change their character from protection to accumulation and then to distribution?
Do we have to sell or try to sell multiple products, one to take care of each need? How do we respond when clients ask why they can’t just give us some money—a fair and reasonable amount they acknowledge, and then have us (the insurance industry) change what we have sold them as their needs change? Do we really walk the talk or just talk the walk?
Keep in mind what’s going through your client’s head: “Please understand that I’m not sure what I need or want. Over time, I expect I’ll learn. Maybe you’ll teach me. As I learn, I want to be able to change how I do business with you. Moreover, I want to be able to take what I’ve already bought from you and use it for different purposes. If you will let me do that, you’ll get my business. If you don’t, I’ll find someone who will.”
The client’s mantra: I want to have the financial resources to live comfortably for the rest of my life. I’m willing to do business with you because I believe you can help me. Don’t disappoint me, and please don’t mislead me.
Statistics show that the number of Americans age 55 and over will grow from 59 million in 2000 to 75 million in 2010, representing one-quarter of all Americans. By 2050, this group will be one-third of the total population. And more than 100 million U.S. families plan to retire in the next 10 years.
At the 2002 National Summit on Retirement Savings, Federal Reserve Board Chairman Alan Greenspan said, “[O]ne of the most complex economic calculations that most workers will ever undertake is, without doubt, deciding how much to save for retirement.”
Clients preparing for retirement are looking for two kinds of security. They want to be confident that what they are doing to prepare for the future is going to let them live their hopes and dreams. But perhaps more importantly, they want to feel that the floor is not going to fall out from under them.
We might believe that people have short memories and won’t remember Enron, WorldCom and the changes in their 401(k) accounts. However, keep in mind that those who grew up in the Depression remembered the lessons the rest of their lives.
We’ll continue to see people making high-risk investments with part of their money. But expect to see more risk aversion when it comes to investing the greater part of their investments—the core they’ve earmarked to provide a basic level of security when they decide to leave the work force.
Along with flexibility, expect to see an increased desire to create and guarantee, if possible, a minimum income for the future. And because we continue to live longer, our customers will be focused not so much on the size of their pot of money but on making sure that what comes out of that pot is enough to buy food, pay the light bill and give a few gifts to the grandkids each year, no matter how long they live. It won’t be important, at least for this particular pot of money, if there’s nothing left for the kids. They’ll make other plans for them, maybe.
What clients are really saying to you is: “Protect me so that there’s no (or at least only an acceptable) downside risk. However, if there’s upside potential, I’d like you to pass that on to me to enhance my feelings of being financially secure. Please, help me make sure I have enough money to live with dignity until I take my last breath. After that, I don’t care.”
Do we offer customers the ability to do business with us in whatever fashion and by whatever means they deem best?
The client’s mantra: I’m scared—not that my personal information is going to be shared with others. I’m scared that it will be used to hurt or embarrass me or those I love. I’m especially afraid that you will give my personal information to people who will then use it to make it harder for me to feel that financial security. I’m afraid I won’t have the security I desire for my future.
It’s hard to pick up a magazine today without seeing something about identity theft. We’re told to shred our mail before getting rid of it. Virginia just stopped using Social Security numbers on driver’s licenses. We are worried about what information we’re giving out when we surf the Internet. We worry about “Web bugs” and who gets our email address. National privacy surveys by Lou Harris and Associates and Opinion Research Corp. over the last 20 years also show a rising trend of public concerns about personal privacy. However, don’t believe those who tell you that privacy concerns are just as important as things like choice, cost or speed of access. It’s not just giving information that makes us worry; it is the concern about the misuse of that information as well.
Four major trends will have a significant impact on how you do business. Understanding them will allow you to better serve your client:
Speed: Technology and the speed at which life currently moves mean clients don’t want to wait. Question your current business practices and improve your turnaround times to meet that need. If not, clients will find someone who will.
Flexibility: Communicate with clients by the means they choose, even if it’s not how you’ve traditionally done business. Also, what your clients buy today may not be what they want or need 10 years—or 10 months—from now; you have to offer product flexibility.
Security: Your clients are living longer and want their money to last through their lifetime—with no surprises. They are looking to you to provide a guaranteed means to accomplish that.
Privacy: Clients will give you the information you need to get them the appropriate coverage, provided you tell them exactly what it is for and guard it carefully, ensuring it is used only for its intended purpose.
We’re willing to give up some privacy to do business with others. We’ll tell the state when we were born and where we live to get a driver’s license. But heaven help the state that sells millions of photos and personal data. Our concern about privacy is not absolute, however. People continue to do business willingly with businesses they trust. They’ll share very private information with them if they feel it will help them receive products and services they want, make doing business easier, lower prices for products and services, or change what they’ve bought when a new need arises.
What does this mean for insurers? Do customers understand why we ask them to give up a significant part of their privacy? Their medical records? Their driving and employment records? What must we do to make sure our customers feel confident we are asking only for what we need and no more? What are we doing—and what else must we do—to help them feel confident that when they give us that information, we will jealously guard it and not use it for any purpose other than what we’ve told them?
Along with flexibility, expect to see an increased desire to create and guarantee, if possible, a minimum income for the future.
This concern is not limited to insurance companies. What can we, as producers, do to make sure we protect that privacy? What do customers feel if they walk into our offices and see documents for other clients in plain view on our desks? Or even worse, what if these documents are on file cabinets or bookshelves where they’ve obviously been for some time?
Listen to what your clients are really thinking: “Feel free to ask me for personal or private information. But tell me why you need it. If I’m convinced of that need and if I’m comfortable that you’re not going to be so careless with it that it’ll fall into the hands of others who might misuse it, I’ll give it to you.”
The bottom line
If someone offers me what I’m looking for on terms that are reasonable and that meet my nonfinancial needs, that person will most likely get my business. Those nonfinancial needs include my desire to get it done now (or at least by tomorrow), my desire to change our business arrangement when it meets my changing needs, my desire to be secure in the future and my desire to keep some information about myself private. Everything else being equal, someone who does not meet those needs will lose the opportunity of doing business with me.
Walter Bristow III, J.D., CLU, ChFC, is the marketing leader of advanced marketing for the GE Financial Assurance family of companies, working in the areas of product taxation, and estate, business and retirement planning. He can be reached at 434-845-0911 ext. 4551.