The Baby Boom generation is like a huge elephant walking through the economic, social, and psychological landscape of America, says Neal Slafsky, a financial planner in Ft. Lauderdale, Fla., citing an analogy popularized by Ken Dychtwald, a national expert on aging. "And if you're marketing to them, you have two choices: You can wait until the elephant passes you by and shoot arrows at its butt-or you can get out in front and dig a big hole."As president of Capital Planning Group, Slafsky is among many in the industry who view technology as the heavy equipment that financial services firms can use to dig that hole to capture Baby Boomers' retirement assets-assets that Conning Research & Consulting reports were $11 trillion in 2001 (see chart, page 18).

In an industry that depends upon advisors and agents to distribute its products, insurers that equip producers with technology that enables them to provide advice, service and products more efficiently, and to meet the needs of Baby-Boomer retirees, will win the battle, industry experts say.

"Insurance companies are in a tough spot when it comes to retaining retirement assets because a lot of their business comes through third-party distributors," says Cynthia Saccocia, senior analyst at Needham, Mass.-based TowerGroup.

Large insurers that have strong distribution systems-such as Allstate, MassMutual and Northwestern Mutual -and that also provide agents with portals and technology to manage the retirement business will end up winning, she says.

"Manulife doesn't sell direct, so we're all about empowering our third-party advisors," says Paul Henry, director of strategic marketing for U.S. group pensions for Canadian-based Manulife Financial, one of the largest providers of 401(k) defined contribution plans in the United States.

To that end, Manulife last year introduced i:evaluator, an online investment-option evaluation tool. The tool enables advisors to help plan sponsors select funds that are available under a group annuity contract from The Manufacturers Life Insurance Co.

Based on objective criteria, such as fund performance, investment risk and fees, i:evaluator compares Manulife funds to funds tracked by Morn-ingstar Advisors. And based on the plan sponsor's priorities, the tool narrows the choices down from 70-100 funds to a more manageable dozen or so.

Also aiming to support it agents with tools to provide better service to customers, Allstate Financial launched a year ago for its diverse producer network.

Although the site provides sales and marketing materials, it was designed primarily to focus on service, rather than sales, according to Patricia Coffey, vice president of technology for Allstate Financial, the financial services unit of Allstate Insurance Co., Northbrook, Ill.

Service-oriented agent portals are becoming more common in the industry, Saccocia notes. "What has yet to happen, however, is to use technology to facilitate activity," she says. "Right now, technology is offloading a lot of service capability-enabling agents to service customers more efficiently." And that opens the door to advising them more efficiently, she adds.

Seeking advice

Many Baby Boomers want retirement advice, according to industry research. A recent ING survey revealed that 52% of Americans believe investment advice is necessary to realize their retirement dreams.

Another survey, commissioned by Northwestern Mutual Life Insurance Co., Milwaukee, found that people who have met with a financial advisor feel more secure in their finances than those who have not.

Unlike their parents' generation, Baby Boomers do not like being told what to do, says Capital Planning's Slafsky. "We like to think of ourselves as smart," he says. "We want all the data and information, and then we want to make our own decisions. Therefore, we react poorly to a sales-based strategy," he says. "But we react nicely to advice, and we react nicely to technology."

Financial advisors also react favorably to technology, according to Boston-based Celent Communications Inc., which found in a survey that advisors ranked technology platforms and tools as highest in importance when it came to their current company affiliation. Surprisingly, technology even outranked operations support and compensation scheme.

But the Celent study also revealed that advisors found illustration systems, forms and materials, and sales presentations as the most helpful applications. Least helpful were financial planning tools, advice generation and needs-based selling tools.

"Considering that much effort is currently being expended on converting agents and brokers into financial advisors, this finding merits concern," according to Celent. It may indicate that advisors whom Celent surveyed-who were primarily affiliated with insurance companies-had not yet moved into the financial planning arena-or it could signal that advisors find the available tools hard to use or ineffective.

"Either way, home offices should ask their advisors why they do not find specific applications helpful," Celent suggests.

Indeed, the planning tools that insurers need to provide agents to assist Baby Boomers with retirement plans go well beyond simple illustrations and sales presentations. They need to be comprehensive tools that help the agent walk through the retirement planning process, TowerGroup's Saccocia says.

"Where are your assets residing today? Let's talk about personal savings. How much are you getting in Social Security? How much are you getting in pension?" These are the questions agents and advisors need to be asking Baby Boomers, she says. Then, the advisor can take that information and create a comprehensive plan that addresses growth, income and protection for retirement.

Changing the paradigm

That's exactly what Boston-based Massachusetts Mutual Life Insurance Co. (MassMutual) was hoping to provide its distributors last August when it launched an Internet-based wealth management system from eMoney Advisor Inc., Paoli, Pa.

eMoney Advisor changes the paradigm of financial planning, says Capital Planning's Slafsky, whose firm represents high-net worth clients and distributes MassMutual products. Clients provide their IDs and passwords to their various investment sites, and advisors and clients have access to "live" data on investments, policies and annuities through the platform.

The client's portal contains overall asset allocation, cash flow ledgers, retirement ledgers, estate planning design, and an online vault for important documents. In addition, with eMoney Advisor, Slafsky conducts interactive and virtual planning meetings, running what-if scenarios on various portfolio changes and sharing them with clients.

The system also automatically monitors clients' accounts and sends e-mail notification if investment asset allocations are out of balance.

"We can tell the system, 'For large cap growth, the holding range for this client is between 15% and 22%,'" Slafsky says. "'If it reaches more than 5% on either side, I want an e-mail.' And the system will send me an e-mail if the allocation is out of balance."

Monitoring engines that are built into online planning tools give advisors compelling reasons to call their clients, says Shaw Lively, research manager for the wealth management practice of Financial Insights, Framingham, Mass.

"Instead of giving agents a list of policies that have expired or payments that haven't been made yet, the system alerts them when the asset allocation is out of whack," he says. And that can be linked backed to a planning tool to recommend specific actions.

Slafsky's practice is more efficient since using the eMoney platform, he says. "We're able to create an investment strategy plan in about 40% to 50% of the time it took us to create it manually." Even more importantly, however, the tool provides incentive for his clients to continue their relationship with him, he says, because he's offering them up-to-date, comprehensive information about their assets, rather than just pitches to sell more products.

That's the type of relationship that insurers must provide Baby Boomers to attract and retain their retirement assets, according to industry sources.

"What's lacking today is the capability of insurers and other financial services institutions to be able to offer a comprehensive suite of products, and then to have that customer be able to view them in a single offering," says TowerGroup's Saccocia.

What's lacking

Research from Conning Research & Consulting Inc. found similar evidence. Financial services firms are not capable of meeting retirees' needs for advice and comprehensive products, the Hartford, Conn.-based firm reports.

Retirees want to buy products that will meet their income, insurance and asset protection needs throughout retirement, says David Montgomery, vice president at Conning. But most financial services firms still have to improve their ability to manage client information-particularly across the organization-as well as to develop and sell new products in retail versus wholesale markets, he says.

Still, insurers have been busy creating business models or units to deal with the retirement planning marketplace, Financial Insights' Lively says.

"You don't have to look hard in the insurance industry to see some really good examples of using technology in this market," he says.

"For all the bad rap they get for being late adopters, insurers are definitely doing work, whereas banks and brokerages have slowed down a lot more because . . . they've been hammered so badly."

He cites MassMutual's alliance with eMoney as one example. "They did it right," he says. "They piloted it. They took their time. It's a significant undertaking for a sleepy old insurance company in the middle of Massachusetts."

MassMutual is also trying to manage its client information better. That was the primary motive behind implementing a customer relationship management (CRM) system in its retirement services business several years ago, says Shefali Defai, second vice president for retirement services at MassMutual.

Like most CRM systems, the system-from Siebel Systems Inc., San Mateo, Calif.-pulls up customer information quickly, enabling retirement planning specialists to service calls more easily. "Before we implemented the system, a lot of time was spent calling up data rather than servicing the customer," Defai says.

With the Siebel system, when customers call, retirement specialists quickly have access to all that data. "We don't have to toggle between three or four systems any more," Defai says. "It enables us to really focus on what customers are calling for-and ask them probing questions about what we can do to help them."

Who's the customer?

Indeed, when MassMutual implemented its CRM system three years ago, management realized that changing demographics and market dynamics required a more customer-focused approach.

"We even needed to acknowledge that the participant was our customer," Shefali says. "We always knew we needed to service participants. But this system goes beyond that. This is really acknowledging that they're the ones who hold the assets."

Manulife Financial also is paying attention to the type of service and technology tools its 401(k) plan participants are requesting. The company recently launched a Web site, located at, which enables participants to do their own retirement planning online.

Participants visiting the site select a retirement lifestyle, and based on census and demographic data and behavioral trend information, the tool informs them how much income they'll need in retirement to enjoy that lifestyle. Then, depending on their other savings and investments, Social Security and pensions, the tool determines if a gap exists, and provides participants with alternative strategies to help them close the gap.

The launch of this site follows a strategic alliance Manulife formed in 2000 with San Francisco-based mPower LLC, an online investment advice provider.

Usage rates for Internet-based investment advice have been low, Henry acknowledges. "A lot of people don't have the time or the inclination to follow the detailed advice they get from (these sites). But a small group of people love it," he says.

Manulife's market research indicated that most people spend very little time planning for retirement.

"They don't do it because it's a subject that is hard to understand. It's intimidating. It's time-consuming," Henry says. As a result, the Web site was designed to reach the majority of investors who prefer a simplified retirement planning process.

That may be a prudent approach. In their zeal to capture or retain a piece of that $11 trillion retirement asset pie, insurers should consider how much self-service will help them or hurt them, notes Financial Insight's Lively.

The industry has made this assumption that people want self-service because they want control, Lively says. "And there are definitely people who want to do it themselves."

But a lot of people reluctantly use self-service financial planning tools-because they don't have enough assets to attract the attention of a planner or they don't want to pay the fee for the services of a fee-based planner.

"In the craziness of 1999 and 2000, we forgot: At the end of the day, it's people who have to (use this technology)," Lively says. "And finance is not as much fun as buying a ticket to go somewhere. You don't want to spend a lot of time doing it."

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