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A Wealth of Opportunities

Supporting an effective wealth management strategy requires data consolidation, personalization, and electronic communications among customer, agent and carrier.

By: Peggy Bresnick Kendler

This Month's Experts


President, ING Financial Horizons, Hartford


Vice President, Advanced Sales/Program Development & Management, Jefferson Pilot Financial, Greensboro, NC


Research Manager, Financial Insights, Framingham, MA


Vice President Product Development, Impact Technologies Group, Inc., Charlotte, NC

Q: What are the benefits of pursuing a wealth management model or strategy? Are there any drawbacks?

A: Shaun Mathews, ING Financial Horizons: Wealth management is becoming an extremely important part of financial services. Given the markets we are experiencing and the Baby Boomer generation, it will portend an environment where the advice, information, products and services that producers provide their clients will become more complex. This suggests that financial services companies have to broaden their portfolio of offerings. The good news for insurance companies is that we possess a number of important core competencies, such as asset allocation and guaranteed products. This is particularly relevant in the current environment, where people are increasingly concerned not only about accumulating assets, but developing strategies so that they don't outlive their assets.

A: Lisa H. O'Day, Jefferson Pilot Financial: Clearly, the benefits of pursing a wealth management strategy are building the end-customer's confidence in consulting with an insurance professional. The insurance professional must understand the holistic financial atmosphere in which the client is operating, and can use that wealth management system to identify key life goals that the client can then better meet. Using a wealth management system can help a client and insurance professional find the dollars to put first things first.

A: Shaw Lively, Financial Insights: Only companies willing to commit to full-fledged change in their culture, organization, customer service model, and technology infrastructure will benefit from adoption of a wealth management business model. Success will result in a diversified revenue stream and stronger customer relationships. Wealth management requires technology, but companies that approach it as a technology project will fail to maximize agent adoption and customer benefits.

A: J. Maxey Sanderson, Impact Technologies Group: Pursuing wealth management is the natural migration of agents from specialized expertise such as estate planning and business continuation planning. It is also where family planners are trying to expand their knowledge and expertise. The drawbacks are that almost all agents need help migrating to wealth management, but from completelydifferent directions. One advantage for the company is that software, training, and support materials can concentrate on one common strategy of wealth management.

Q: How does evolution toward a wealth management strategy affect the agent's role? What are some of the tools that can make agents more effective?

A: Mathews, ING Financial Horizons: Wealth management requires a more comprehensive relationship with a customer. Therefore, the relationship involves more trust and requires you to be more intimately involved with customers' overall facts, financial circumstances and risk profile. It will require spending more time with each customer and their broader needs, whether those needs are for mutual funds, life insurance, annuities, asset management or long-term care. More importantly, the future will be about retirement income; creating appropriate personalized "draw-down" strategies for people who will need to live off those assets for 25 or 30 years.

The technology issues are interesting. The question becomes, how does one provide effective and cost-efficient advice to customers? At ING, we're big believers that advice cannot be static--it needs to be dynamic because individuals' circumstances change over time. There will be a need for online advice tools connected with strong financial planning tools. Another important tool is aggregation, creating the ability to generate real-time valuations that allow a rep to monitor a plan.

A: O'Day, Jefferson Pilot Financial: Adopting a wealth management model will make agents into that valued trusted financial advisor that will embed them in the client's world. The technological tools that agents need include a client data management system that they adhere to religiously so that they can consistently stay in touch with clients to keep them happy. It's always easier to keep a client happy and get a referral from him or her than to go out and get a new one. Clients need to see that they have a financial advisor who is helping them get closer to reaching their goals.

A: Lively, Financial Insights: Agents can expect a strong impact to their current role, and the way they conduct their business. The shift from a product sale to relationship-based approach to the customer is difficult, and many agents will be unable to make the transition. Successful agents have already adopted prospecting and customer management software tools. A few have installed financial planning software. Customer interaction preferences are rapidly changing to e-mail, online application, Web-based customer service and electronic payment. Many agents and insurance companies are unprepared for this requirement.

A: Sanderson, Impact Technologies Group: The agent's role needs to change when evolving from a traditional means of prospecting, selling and servicing customers. Whereas traditional strategies once provided products that met specific needs, wealth management strategies are much broader, so the agent may be presenting financial information that may not relate to immediate needs or product solutions. To be most effective, agents should use technology tools like Web services and software to provide customers with the information and materials needed.

Q: What are the key technologies required to help an insurer evolve to a wealth management model in dealing with its policyholders?

A: Mathews, ING Financial Horizons: The critical elements for a registered rep will be to tie together financial planning and advice tools with aggregation capabilities, to deal with a person on a personalized, dynamic basis. For an insurance company to support reps, there will be an increasing need to link multiple products together--variable annuities, mutual funds, IRAs and life and long-term care insurance. Further, many traditional insurers have already morphed themselves into financial service companies, and they're very involved in the defined contribution marketplace.

We'll start to see much more advice delivered through defined contribution products and an increasing focus on the ability to seamlessly transition from a defined contribution product to an individual product when people change jobs. There will also be increasing demand in the workplace for participant education and plan-specific information online.

A: Lively, Financial Insights: The enterprise wealth management platform will be the catalyst for change but must be supported with ongoing sales management and business process improvements. The key requirement for the technology platform is to foster collaboration between the agent/advisor and the customer, covering needs assessment, goal formulation, product strategy recommendations, and ongoing monitoring and notification about results. Technology solutions for a wealth management platform must address customer data consolidation, probability forecasts of goal achievement, product strategy assessment and recommended adjustments, personalized automated monitoring of goal-related customer metrics and electronic communication among the customer, the agent/advisor and the firm.

A: Sanderson, Impact Technologies Group: Wealth management requires that a tremendous amount of information be provided to the client in almost every financial field. Technology is the only means to provide this broad-based information accurately, quickly and with the ability to integrate it into the client's circumstances. Technology today makes it possible to embed complex calculations such as Monte Carlo simulation into the planning. As the clients' knowledge grows, the demands for more personally integrated planning grow. Clients want to know the probability of needs and events, not just deterministic planning examples. Clients want guidance from an advisor.

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