Intermediaries should be comfortable with serving clients through both physical and digital interactions. Intermediaries in Cape Town, Johannesburg and Durban were asked at a recent Sanlam Broker Summit how future-ready they felt regarding how new technology could help grow their business, and the effect thereof on the future of financial planning.
More than 50% of intermediaries felt they were likely to try new digital onboarding platforms with clients.
When asked whether they were concerned about their future in financial planning given the rise of digital developments, most said they were concerned, but hopeful. However, some indicated real concerns about the profession’s sustainability.
The theme of the conference was ‘Business agility in a VUCA* world’. Times are changing, rapidly, but it’s a natural human response to resist change and keep doing what we’ve always done.
Petrie Marx, Product Actuary at Sanlam, talked about enabling intermediaries for the future world of work and how tools like Sanlam Now Cover, which lets intermediaries onboard and provide cover to clients in just 15 minutes, improve productivity. Simultaneously, they satisfy the changing demands of digitally connected clients who expect to interact differently. Clients increasingly demand solutions that are simple, fast and effortless, yet personalised. These expectations are shaped, not by other life insurance experiences, but by their experiences in other industries – notably other digital platforms.
So, why doesn’t everyone adopt this approach immediately? Speakers like behavioural economist Erik Vermeulen; columnist and editor-in-chief and publisher of Stuff, Toby Shapshak; and Jacques Coetzer, General Manager: SPF Distribution, addressed human reactions to change and emerging tech trends.
Why we don’t like change
Toby believes our resistance to change stems from nostalgia and how we’re wired. ‘Our brains are truly remarkable. Everything on this planet is the result of our forebrains. The problem is our brains respond to the environment and stimulus they’re in, and that environment has radically changed from 300 000 years ago when homo sapiens became the dominant species on the planet. Our brains are configured for an environment that no longer exists.’
He added that ‘neurons that fire together, wire together’. The way we do things and think about things creates ‘pathways’ in the brain. These make it easier for us to handle similar circumstances – the way we’ve always done things – but not change. Which is a problem in a world that’s changing at pace.
Toby used the example of the wireless – a wireless radio to his grandfather; something else entirely to us today. ‘The pace of technological change now compared to 10 years ago is amazing.’ He added that young people use tech in completely different ways, which calls for intermediaries to communicate with them differently. ‘You must evolve to a point where you are interacting with your client in the format the client wants.’
How we can use ‘behavioural techonomics’ to effect change
Erik said we don’t just need to accept change; we need to create it. ‘The easiest way to embrace change is to expect it, and when it happens, to accept it – because we can’t kick against it. Then, we need to create our own change. When I focus on behaviour and decision making and start thinking about what I can do to create my own change to nudge my clients forward, I become an agent of change rather than a victim of it.’
Erik mentioned a few behavioural economics principles applicable to the intermediary space and business in general:
- The importance of empathy. Why go to a doctor when you can often diagnose yourself via the web? Because you want face-to-face reassurance and empathy from someone you trust. The same goes for why clients seek relationships with intermediaries. Our need for connectedness won’t change.
- Acknowledge we’re irrational. People are irrational and we make decisions based on emotions. It turns out we also don’t always know what we want. When Pepsi won a blind Coke vs Pepsi taste test, Coke launched ‘new Coke’, which flopped. Turns out, people wanted the ‘old’ Coke – they just didn’t know that’s what they wanted. Businesses are linked to emotions. The ‘likeability’ measurement is the most efficient prediction of sales. So, intermediaries need to build positive associations with their brands.
- A great brand is a promise made and kept. Additionally, clients want a sense of perceived control, a sense of progress, to feel connected, and to be part of a shared vision and meaning. Intermediaries need to consider how to build connected tribes around their brands.
- We can use insights to nudge behaviour – and to overcome innate biases. That’s where big data plays a big role.
- It’s about a partnership model. With any relationship, it starts with glee, then there’s a fee – some issues/niggles start to emerge – then there’s an urge to flee, but we choose to stay because we see what’s possible through ‘we’. It’s up to intermediaries to show clients what’s possible through a sustained relationship.
- It’s about knowing your clients … really knowing them. Erik says there are four kinds of people – analytical, expressive, amiable and drivers – so intermediaries need to know their clients’ type and interact with them accordingly. For example, an analytical person needs detail, while an expressive person prefers the big picture.
So, are you ready?
Jacques Coetzer, GM: Strategy and Transformation at SPF Distribution, outlined how he believes the intermediary value proposition will evolve in the context of the Fourth Industrial Revolution.
- Understand your clients and their needs. The best way to know what they want from a relationship with you? Ask.
- Consider what will really set your value proposition apart. What must you do in person? Can technology do the rest? What’s important to the client and how do you deliver this?
- Understand the ‘advice compression’ conundrum. Your time available to influence the buying journey is limited. People research online and purchase offline when it comes to insurance. So, how do you tailor your model to this?
- Consider how the financial plan you offer can add value to your clients beyond individual product purchases – this can already be done via different channels.
Petrie concluded: ‘Intermediaries need to become “phygital”. Where does the physical stop and the digital begin? The lines are getting increasingly blurred. Intermediaries should capitalise on this through hybrid models, and be equally comfortable to serve their clients through physical and digital interactions.’
*VUCA is an acronym for Volatile, Uncertain Complex and Ambiguous.