Understanding how and when consumers want to receive financial advice is an important aspect in gaining the upper hand in the competitive field of financial planning.By implementing automated systems to expand advice delivery channels, life and annuity insurers can remain competitive with other financial services institutions.

That advice is provided in a recent report, "Advice Delivery Models: Where High Tech Meets High Touch," from TowerGroup, a Needham, Mass-based financial services research and consulting firm. By broadening these channels, insurers will be able to promote a wider array of products and services to all types of investors, as well as manage more complex transactions, the report concludes.

It's become increasingly crucial for financial services providers to expand these delivery channels, notes TowerGroup research analyst Cynthia Saccocia, author of the study. For one, the primary business for life and annuity insurers has shifted from traditional insurance company to that of a full-service broker/dealer.

Yet, in order to gain a competitive advantage in the broader financial services marketplace, insurers must expand their ability to effectively deliver advice, Saccocia reports.

Another trend that places a premium on broadening these delivery channels is the fact that retirees will represent an estimated 13.3% of the U.S. population by 2010, and 16.5% by 2020.

Many of them are seeking professional help with their retirement portfolios due to the economic downturn, and only 25% say they are confident in their own investment skills, the report states.

"The ability to structure a cost-effective advice-delivery platform is a key factor in determining whether insurers will compete successfully with companies from other financial service sectors," Saccocia reports. "Insurers that succeed in implementing an advice delivery model will dominate, because they offer the types of advice and services that customers need, in the format they prefer."

High tech to high touch

TowerGroup identified four levels of advice services to be offered: mass market advice, modular advice, comprehensive advice and wealth management.

FSIs should provide an accelerated level of "high-touch" value that's predicated on advice-service level. In other words, mass market advice would consist of more "high-tech" accommodations, while the wealth management level clients would be showered with "high-touch" accommodations.

"Clients with the lowest account balances would get access only to Internet services or minimal guidance. Clients with the highest account balances would get personalized advice," Saccocia reports.

In order for insurers to remain competitive, automated solutions that facilitate customer and distributor activity are necessary today for future success, Saccocia reports.

"Insurers reluctant to invest in innovative technologies to advance an advice delivery model will find that short-term savings is likely to result in long-term pain," she states.

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