3 minute read 10 May 2019
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How insurance carriers can evolve their practices to be future ready

By

Mark Hopkins

EY Insurance Customer and Growth Strategy, Product Innovation Leader

Worked with organizations on five continents. Appreciate the diversity of people and approaches to challenges.

3 minute read 10 May 2019

The results of a recent LIMRA-EY survey of nearly 1,500 financial advisors confirm the convergence of various advisory practice models.

Rising customer expectations. The growth of the advisory business. Intensifying competition for the most effective distribution partners. The maturation of digital tools and other technologies. Increased regulatory scrutiny.

These are among the powerful forces that are reshaping the financial services industry and the financial advisory marketplace. Traditional categories of insurance, investment and financial planning practices are converging. Because every part of the customer life cycle has felt the impact, long-held industry assumptions are being questioned and reframed to account for the evolution in:

  • What financial advisors, insurance agents and other investment professionals sell and the types of customers they serve
  • How they work and connect with clients and prospects
  • Why they choose to partner with financial product manufacturers and distribution organizations

About the study

To explore the needs and attitudes of financial professionals, EY and LIMRA jointly conducted an online quantitative survey of approximately 1,500 financial advisors from seven common insurance, investment and advisory practice models. Respondents had a minimum of three years of sales experience in the industry and met minimum income thresholds for their practice models. The questions focused on:

  • Recent and future growth
  • Drivers of productivity
  • Technology usage
  • Services and support they expect from their organizational partners

You can download the LIMRA-EY Experienced Financial Advisor Study here.

Key findings

1. Growth: advisors are growing and optimistic.

Thanks to significant practice growth during the last few years, advisors feel empowered and optimistic about their future prospects. It has also increased their expectations for service and support from insurers and other ecosystem partners.

Advisors are growing and optimistic

22%

of survey respondents reported growth in their client base over the two-year period.

2. Convergence: convergence blurs traditional lines and intensifies competition.

The changing business mix (i.e., investment products, life insurance, annuities, advisory-related fees and other insurance products) means more types of practices now offer a broader range of products and services and compete more intensely for similar customers.

3. Technology: digital is essential and growing exponentially.

All types of advisors are incorporating digital tools for marketing, prospecting, client communication and other tasks; the trend is certain to continue.

Going digital

43%

of advisors use social media today as compared to 13% in 2012.

4.  Collaboration: teaming and practice support are integral for many advisors.

More advisory practices have turned to teaming and other practice support models to keep up with complex customer needs, extend multi-generational relationships, and consolidate insurance and investment portfolios.

5.  Adaptation: fiduciary rules are the new normal.

Regulatory requirements on fiduciary standards are expected to drive up compliance costs and efforts, and impact the products that advisors sell, though some advisors see an upside. It is safe to say some advisory models are challenged by, but adapting to, the new expectations of regulators and consumers.

6.  Increased expectations: empowered advisors expect more.

Advisor expectations for product innovation, and best-in-class service and support are rising. Speed to market with products that address market trends and targeted support that helps advisors grow their business are the keys for insurers and distributors to win over advisors and retain their business for the long term.

Harnessing opportunities: Key questions to ask

As insurance carrier and distribution firms evaluate value propositions to advisors and consumers, they must ask themselves:

  • What are the signature products, services and other marketing and training support we can offer to advisors to signal interest in their growth aspirations and add to our competitive advantage?
  • How can we best align our products, services and internal processes, including digital capabilities, to support advisors in the practice models most important to our market ambitions?
  • Which investments in talent, technology and managerial capability are necessary to be more adaptive to new platforms and business models adopted by advisory firms?

Summary

Changes in regulations, technology advancements and the expectation for richer, more personalized customer experiences are causing advisors and the organizations they represent to step back and re-evaluate their fundamental value propositions. 

About this article

By

Mark Hopkins

EY Insurance Customer and Growth Strategy, Product Innovation Leader

Worked with organizations on five continents. Appreciate the diversity of people and approaches to challenges.