It’s been a challenge for advisers

Life stages and life spans are changing, and the financial adviser has critical role to play.

FAnews spoke to Gareth Friedlander, Deputy Chief Executive Officer of Discovery Life and Michael Porter, Head of Business Development at RGA South Africa about the trends in the life insurance space and how the industry can demonstrate value in a post-pandemic economy, when financial pressures are at an all-time high.

The new trends

“The new trends include the fact that people are working and living longer; marriage and birth rates are declining; the gig economy is gaining traction and many younger individuals are more interested in experience and free time than having a job title and a big salary,” said Porter.

According to Friedlander, there are two key trends playing out. “Clients are living longer, and living for longer in retirement, so they need more income in retirement, and their insurance cover needs to be sustainable over a longer term. Secondly, clients are working for larger parts of their lives and disability and income protection policies are relevant for longer.”

“Because of longer life spans and working lives, managing clients’ health is even more important due to the compounding effect of managing their health over the long-term. It is important for clients to look after themselves whilst they are still working; and secondly, to remain active and healthy in retirement,” said Friedlander.

“From our claims data we’ve seen the effects of long-term healthy behaviour play out strongly for our clients. We’ve seen that even individuals with heightened risk factors such as older individuals and those with comorbidities have modulated their COVID-19 mortality risk, having adopted healthy behaviours and engaging with the Vitality programme over time. For example, on average, a 65-year old that is highly engaged in their health and wellness will experience a 22% lower COVID-19 mortality risk than an unengaged 45-year old with no additional risk factors,” he added.

“The data not only highlights the importance of health engagement to manage health risk, but emphasises the robustness of the associated status levels in measuring and materially shifting health outcomes,” continued Friedlander.

Will it ever be the same ?

“The pandemic has brought devastation and great tragedy to many people, and it has changed the way that people think about risk. It also spurred innovation as we were forced to rethink how we previously did things, and it accelerated the development of digital solutions for advisers,” said Porter.

“It’s been a challenge for advisers to meet with their clients, thus advisers have had to adapt the way they connect with new and current clients. Advisers who have adapted well to the changes have continued to do well in this time,” added Friedlander.

“We’ve kept over R70 billion in cover in force through our premium relief options, helping clients maintain their cover when they have needed it the most. To support remote advice, we have adapted our processes and implemented technology to enable advisers to continue writing new business.”

What worked yesterday, will not work today

“There haven’t been drastic changes to consumer demand in terms of the type of cover needed from life insurance products – what has perhaps changed is how and where consumers would like to purchase and engage with such financial services, including engaging with rewards,” said Friedlander.

Porter emphasised that, “Companies like Apple, Amazon, and Netflix have radically shifted buying expectations of consumers. They sell exciting products in a personalised way that results in instant gratification. There is a lot we can learn from them, but we need to acknowledge that we are selling insurance and not entertainment. Selling a promise that may only materialise many years in the future requires a large amount of trust and a deep understanding of client circumstances and needs, which are often complex.”

“Consumer buying preferences are BREAK different for everyone and they change quickly, which makes flexibility so important. Data has a big role to play in understanding needs and preferences. Companies like Asset-Map, based in the US and now in South Africa, provide flexible, data-driven solutions to help advisers and their clients make better financial decisions,” added Porter.

Value in a post-pandemic economy 

“Embrace a future that is filled with new tech, artificial intelligence, and robots – make them work for you. Remember, however, that these things will never replace the human connection that only you can bring,” said Porter.

“Value for money has become more essential for clients than ever before, and the value of financial advice has never been more evident than now,” concluded Friedlander. 

Writer’s thoughts:
Porter mentioned that, “It’s been a privilege to be part of an industry that has added so much value to people’s lives in the last year, and we will continue to do so. For advisers, the opportunity to demonstrate value lies in showing empathy and coming alongside clients to help them determine their financial future in a world full of uncertainty…” My sentiments exactly! The industry has been there for people, in their time of need, and advisers have adapted well to the changes. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.