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02:36 PM
Gavin Long, Broadridge
Gavin Long, Broadridge

The Prospectus Personalization Imperative

No one likes to read investor disclosure and compliance documents. But people are more likely to read information if it is more personal and easy to comprehend.

The industry for variable annuities (VA) is experiencing a shift. A changing customer base prefers information that is more personalized, available in digital format and that supports sustainable, environmental-friendly business practices. By not providing information specific to an individual policyholder, a carrier can over deliver and overspend on sending regulated materials to investors.

This costly, wasteful process can be perceived negatively by many consumers at a time when customer service and investor relationships are gaining greater importance.

Importance of Providing Targeted Information

No one likes to read investor disclosure and compliance documents. But people are more likely to read information if it is more personal and easy to comprehend. Tailoring to the policyholder's personal holdings in lieu of the more cumbersome Big Book is a good step to achieve this.

Gavin Long, Broadridge
Gavin Long, Broadridge

[Previously from Broadridge: 5 Reasons Why Annuities Carriers Should Change Their Compliance Fulfillment Practices]

Perhaps an even better approach is providing a summary prospectus – a streamlined version of the longer statutory prospectus – that is usually six to eight pages and written in plain English. Today about 84% of variable product subfund CUSIPs have a summary prospectus available for delivery1. Multiple documents often can be combined into a single personalized prospectus for investors, resulting in a book that is tailored to the recipient's personal holdings, uses far less paper and is more environmentally friendly.

Anatomy of a Traditional Policyholder Experience

The traditional experience for many policyholders is that they meet with an advisor, who then recommends a variable annuity product that may contain living benefits that the client picks out. Then, the policyholder purchases a product contract they are comfortable with and whose features they understand. It's a positive one-to-one experience.

[Where customer loyalty and document management meet]

In addition to receiving a product prospectus upon completion of the sale, the policyholder typically receives three annual mailings relating to subfunds − the prospectus update, semi-annual report and annual report. Each of these arrives as a massive book because the insurance carrier mails out one book for all subfunds to every policyholder. Arguably the most important document is the prospectus because that is the source of all fund rules, requirements, annual and historical performance, and other information. Because the average VA product has more than 50 subfunds and the average policyholder invests in only 4 of these, the result is a phone-book-sized document wherein 80% to 90% of the information is not relevant to the recipient. This is directly counter to the positive, personalized attention provided by the advisor upon setting the contract up.

A Better Approach

If you want to provide your VA customers with a better experience, you can use an alternative approach. Simply swap the Big Book for a personalized prospectus that is 100% relevant to the policyholder's investment selections. These portfolio-specific books, which use data intelligence and print on demand, deliver a more positive customer experience, are less costly to print and mail, eliminate inventory waste... and save more trees. There are no unsatisfied customers in this exchange.

Make Improved Customer Relations a Personal Priority

The VA industry is changing, and it's time your investor disclosure communications kept up in a digital era. Fortunately it is not difficult, once you understand what the customer wants. By personalizing your subfund prospectus and satisfying investor delivery preferences, you can generate benefits for both your customer base and also for your firm. You help create a better experience for your clients by providing them with information that is 100% relevant to their personal holdings and, by being environmentally considerate, you can cut your obligated expenses for printing and shipping.

About the author: Gavin Long is a Product Manager at Broadridge Financial Solutions. He manages the Intelligent Fulfillment Solutions product suite which optimizes print, e-delivery and web presentment of disclosure documents for leading variable product carriers. He also is an active member of the Insured Retirement Institute’s Research Committee.

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