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The broker channel post-COVID

21 February 2022 Myra Knoesen

What will the broker channel look like in the post-COVID world and what role will technology play?

FAnews spoke to Kreethan Budhu, Head of Distribution at Fedgroup about the role technology plays, the challenges and opportunities for brokers and how brokers can remain resilient and stay one step ahead.

Modern tech systems

Brokers and service providers need client insights in order to understand their clients, offer products that suit their unique needs and ultimately add value. And even though modern tech systems have an inherent ability to optimise processes, legacy systems seldom have the capability to truly provide these types of valuable insights,” said Budhu.

“In instances where these systems have this type of capability, the availability of the data through APIs can pose a risk to the security of the client’s personal information. However, the risk of data exposure can be alleviated if you understand what data is required and how this data will benefit the client,” added Budhu. 

“For both service providers and brokers, being in a position to understand their clients through the accumulation and decumulation phases places them in a strong position. This will ensure they can continue to add value and support their client’s financial journey. The advancement in technology has resulted in clients wanting instant gratification, ease of use and constant valuable communication. The increase in the availability of information and the use of digital platforms means clients are now looking to do business when it suits them. Service providers and brokers now need to have the capability to fulfil the 24/7 engagement the client not only needs but expects,” continued Budhu. 

Challenges and opportunities for brokers

“The major opportunity for brokers and insurers is the ability to communicate with their clients regularly, through these digital platforms. In addition, this technology allows them to provide bespoke and relevant information to their clients. APIs, Machine Learning and Artificial Intelligence increase the opportunity for cross and up-selling, while a unique frontend that gives clients a better understanding of their position within the market will allow clients themselves to identify gaps in their financial portfolios. This will mean they can then contact their insurers and brokers for relevant advice,” said Budhu.  

“Although this technology can bring even more value to client relationships, the obvious challenge for both insurers and brokers would be the resourcing required to manage these systems. The always-on nature of the systems requires constant monitoring and updating to ensure that these systems are not only in working order but are available and continue to hold relevance with their clients,” added Budhu. 

Digital cannot replace physical

“With the right measures, the personal touch and face-to-face interaction should not be discounted when it comes to the post-Covid world. Even with all these technological advancements, clients will still require adequate support and advice when it comes to their financial portfolios. Digital cannot replace the physical, but rather it can complement the one-on-one nature of financial planning. Being able to make decisions about your future while sitting across from your broker will always be important,” emphasised Budhu. 

“Although information and investment platforms will become all the more prevalent, clients will still need sound advice when making these decisions. The future will certainly mean an increase in these types of digital platforms that allow clients to manage, interact and maintain their financial portfolios at a click of a button, but this will only better position the importance of the broker channel. This is largely due to clients needing to be cautious when entering into freely available financial products, without relevant sound financial advice, from a broker channel,” said Budhu. 

How does the broker remain resilient?

“Brokers can remain resilient and one step ahead of the industry by continuing to help and support clients with their financial portfolios. The correct mindset and ability to offer effective financial advice will generally put a broker on a sound platform and ensure they remain ahead of the game. Coupled with the right approach to technology, by innovating and harnessing the tools available, will mean they can continue to provide value to their clients. By incorporating these two concepts, the broker will create a sustainable and successful practice,” added Budhu. 

“Currently, there are various tools available both locally and internationally. These tools range from Customer Relationship Management Systems, social media platforms, virtual meeting platforms, as well as the traditional face-to-face meeting engagements. All these tools have a purpose in the broker’s arsenal and being able to leverage their benefits individually or collectively will place the broker ahead of the pack, as they continue to be a valuable partner to their clients for years to come,” concluded Budhu. 

Writer’s thoughts
The experience economy derives itself from technology. This is why technology plays a critical role, now and for the future. The key message here is that the decisions make now will set the course for years to come. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

Comments

Added by andre, 22 Feb 2022
i agree with Garrick. The typical short term Insurance clients going direct, are those whose premiums always bounce or they do not want to adhere to Laws rules, regulations or policy conditions etc- an on going fight that in fact is a losing battle- may the direct Insurers enjoy them. The Professional clients prefer to stay with brokers and adhere to everything required from them.
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Added by Garrick Bergh, 21 Feb 2022
What a load of twaddle!
I notice there is little or no comment on the mass of spurious regulation that has actually made it economical for intermediaries to decline certain relationships as they are too expensive to maintain.
The market has not really changed that much. There is still plenty of opportunity for intermediaries who are focused on establishing life long relationships with sound, 'hands on' guidance.
I'm grateful that a chunk of the market is happy to 'go direct' nad saves me from having to service them.
A lot of 'clients' (sic) are bone idle and cannot even be persuaded to return a change of debit order let alone manage all of their affairs electronically.
The more things change the more they remain the same.
The only development in my career is the reality that the authorities would like me to perform all of my services fro free.
The 'fun' went out of this business long ago. It's just an endless paper storm nowadays.

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