On the heels of a year filled with opportunity, positive challenges lie ahead
By Eric ThomesMr. Thomes is Senior Vice President of Sales for Allianz Life Insurance Company of North America (Allianz Life®), and is responsible for managing the relationships with the field marketing organizations. Connect with him by e-mail: firstname.lastname@example.org
For those of us in the financial services industry, there were many opportunities in 2013. From the creation of innovative new insurance solutions and the emergence of new annuity companies to the increasing need for retirement products; financial professionals met these challenges and continued to grow their practices. Looking ahead, there are many things to look forward to in planning for retirement. This is especially true considering there were nearly 52 million baby boomers (age 50 to 65) very near retirement in 2012, with that number expected to increase in the coming years (LIMRA 2012 Retirement Income Book, LIMRA). Reflecting on 2013 will better prepare financial professionals for what 2014 and the years ahead may bring.
2013 was a great year for innovation across many product lines. Fixed Index Universal Life products saw enhancements that helped to expand our market and provide additional benefits to consumers. Crediting methods were improved allowing potential indexed interest to give greater accumulation potential.
FIA sales grew substantially in 2013. First and foremost, FIAs found a more prominent home with banks and broker/dealers. According to the Wink’s Sales & Market Report, sales of FIAs through banks and broker/dealers have nearly doubled in the last five years. In 2008, FIAs sold through banks and broker/dealers accounted for $1.5 billion in sales. In 2012, they accounted for $2.9 billion – a 93% increase (Wink’s Sales & Market Report; 4Q 2008 – 4Q 2012). Overall, FIAs were more competitive than ever with sales increasing annually by an average of nearly 5% since 2008 (Wink’s Sales & Market Report; 4Q 2012).
As products transformed and sales grew in 2013, so did the change of ownership on some carriers in the insurance industry. Financial professionals should always look at the rating and history of a company they sell for when exploring products for their clients. Financial services companies work diligently to earn and maintain high ratings in order to help deliver on the lasting promises made to their clients. For some new carriers who entered into the annuity business, their products’ rich benefits attracted new customers but also brought concerns from many financial professionals and financial services companies. There was debate in 2013 on whether these companies fit well with an annuity-type of insurance where long-term promises need to be kept. This debate will most likely continue in the years ahead.
Increasingly, clients needed effective and resourceful financial professionals to help them manage their transition into retirement. In 2013, Allianz Life and companies like us more fully recognized our role in supporting financial professionals’ development. As the need for retirement income solutions increased, so has regulatory oversight and attention. To recruit financial professionals who can manage in this environment, some companies embraced distribution strategies focused on getting higher quality sales results. Allianz Life did this by giving incentives to field marketing organizations and financial professionals with a higher commitment to quality and a commitment to ongoing training. Practices with this type of focus seem to generate clients with better product understanding. Ultimately, we believe they generate better sales experiences and lasting relationships with financial professionals.
Looking ahead to 2014 and the future
As we look ahead to 2014 and beyond, what was important in 2013 will continue to have precedence, but additional issues may also come into play for financial professionals. These issues include finding solutions for Americans’ possible need for increasing income, the carriers’ need for quality-focused sales, and the financial professionals’ need for a quality-focused marketing strategy. They should be able to find solutions to these issues while staying current with the continually changing technology landscape.
When it comes to the need for increasing income, it will become more prominent as the retirement income market accommodates the expected growth of retirees. According to LIMRA, 17 million baby boomers will reach age 65 and are expected to retire each year until 2017 (LIMRA 2012 Retirement Income Book). Based on these demographics, 2014-2017 are expected to be peak years for retirement in the United States. The Society of Actuaries also agrees that the demand for increasing income solutions for retirement will grow. They found that about half of all retirees today receive some income from defined-benefit plans, but this income source is steadily declining, making personal responsibility for building enough savings to live on even more critical (Society of Actuaries Key Findings and Issues: Longevity, June 2012).
The retirement income issue seems to come up whenever I sit down with my family members to discuss their future retirement. There are concerns about how they will cover increased expenses during retirement, whether for healthcare, taxes, or the inflation of everyday items. Clients may not always identify their increasing income needs during retirement, so as a financial professional, you can make a difference in your client’s retirement by finding income solutions for them before this becomes a critical need.
Compliance & Reputation
Financial services companies are expected to have a heightened focus on sales quality in 2014. Financial professionals can address this issue by embracing the compliance standards used for marketing materials that are put in place by many companies. By doing this, financial professionals can positively build their business reputation and those who do this may find that companies will show their appreciation through increased incentives as well. A continued focus on higher quality sales experiences will carry over, giving positive results for the customer. Financial professionals may also continue to see some carriers support an “inch wide mile deep” sales philosophy. These companies will work harder and offer more benefits to a smaller number of financial professionals who are committed to producing the highest quality sales results.
Beyond sales distribution practices, the financial services industry will likely continue to expand and embrace its technological capabilities. In recent years, many companies updated technology platforms on which processing and servicing business is managed. These investments position carriers for a stable and flexible future. Boosting technology improves service. The future is bright for companies making an investment in technology.
Technology continues to evolve
Many companies understand that for the sake of the client and the satisfaction of their financial professionals, it’s important to utilize technology to make it easier to do business. In the years to come, online product applications will become more user-friendly and mobile commerce will become easier for business-building and contract maintenance. The financial services industry as a whole will continue to become more agile; helping financial professionals and customers better prepare for retirement in new ways.
As a financial professional, you can do the same. Take advantage of the online tools available to you. Utilize these resources to create a simpler sales process and further educate your clients. There are many practice-building resources available to you – with marketing materials and comparison tools. Not only will these tools help the client base that you’ve built, but they can open the door to new clientele who are more comfortable with creating financial strategies online.
Whether looking at the past or seeing into the future, when it comes down to it, we’re in the business of making and keeping promises. A customer puts their trust and financial future in the hands of their financial professional and the companies that support them. As a leader in this business, it’s our responsibility to manage our business in a manner that strives to be secure and successful for decades to come. With the right decisions, the financial services industry can meet the future needs of the customer while innovating in a world that is continuously changing.