How digital may help insurance agents deliver financial advice

One of the most interesting aspects of digital transformation in the insurance industry right now is among insurance companies looking to grow through financial planning and advisory services. With demand for financial advice on the rise, insurance companies are in a strong position to win a greater share of wallet, but offering true omnichannel financial advice may not be quite as straightforward. 

Adding a digital, investor-led option (often referred to as a robo advisor) is a common starting point, but the world of financial advice is often more nuanced than what a digital-only solution can provide. For example, in a recent WSJ article, much can be learned about getting digital transformation right from life insurance, which has been slower to adopt a digital-first experience, in large part due to the personal nature of those decisions and the discussions that surround them. Innately personal and often very sensitive, it is no surprise that many previous attempts to digitize the process around life insurance policies have been met with resistance.  

But with increasing competition, changes in demographics, and advances in technology, financial advice is ripe for a new form of digital transformation –  one that puts well-timed, human advice at the center. 

Delivering the right financial advice

In many ways, consumers are more informed than ever about different investment opportunities.  But at the same time, demand for financial advisors is increasing, with the field expecting 15.4% employment growth between 2021 and 2031. Insurance professionals have an advantage as they venture further into the wealth management space, based on the strength of the relationships they've built with their clients. The conversations that many insurers are having with their clients are highly intimate, built around the need to plan for the unknown or unexpected. This trusted connection that they've developed is a valuable stepping stone for agents to naturally add advisory services to their relationships. ​ While outdated and disjointed technology made it difficult to naturally integrate, new technology is making it easier for agents to make the most of a growing portfolio of options for newly licensed advisors and for customers with varying wealth complicity needs.

For many, change can't come soon enough as insurers increasingly compete against other financial institutions for a greater share of wallet, especially as The Great Wealth Transfer unfolds. To stand out in this crowded environment, companies will need to increasingly anticipate the changing needs of their customers and also empower agents to be there for a customer's moment of need. To do so, agents need to go well beyond just providing clients with the right level of insurance—they need to offer more comprehensive advice on navigating every phase of the financial journey. 

A new generation, new expectations

It's important for agents to prepare themselves for the new, younger crop of tech-savvy Americans who are becoming buyers of insurance, not just beneficiaries. For example, the 2023 Insurance Barometer Study shows that 40% of Gen Z adults and 48% of Millennials say they own life insurance and a record-high proportion of Gen Z and Millennials say they intend to purchase coverage within the next year. These demographics may still be looking for financial guidance and advice, but these tech natives are turning the process around, more likely to educate themselves first through independent research before they determine whether human advice is warranted.

Similarly, we are seeing a new crop of younger insurance agents that are tech savvy and eager to build comprehensive relationships with their clients. Unlike their more seasoned predecessors, they tend to have less patience for the administrative, often manual tasks of their job. They certainly have less patience for the "swivel chair" phenomenon, preferring to move through systems instead of between one system and another.

Technology that elevates human advice

Most people eventually hit a moment when they need human guidance surrounding their financial health and wellness. Should I save for college or pay off my credit card debt? What is the tradeoff if I delay buying life insurance until I save for a down payment on a house? 

For insurance agents to effectively deliver comprehensive financial advice, address new demographic needs and deliver seamless client service, digital transformation needs to 1) reduce time spent on administrative, often manual tasks, and 2) enable human connection at a client's moment of need (e.g., online, in person, or another channel). 

The only way agents can deliver time-sensitive advice is if they are unshackled by administrative tasks that weigh them down. Technology can do so much to automate many time-consuming front- and back-end processes, like onboarding, account opening and compliance checks. For example, we have found that digitizing client onboarding can reduce time spent from an average of nearly 70 minutes down to approximately 15, and almost eradicate accounts stuck in NIGO (not in good order) status. This allows advisors to be more "hands off" with tedious duties, and much more "hands on" in delivering the highest levels of personalized service.

While no human agent can predict exactly when that need will hit, technology is doing more and more to connect customers with humans as these needs arise. It's not about replacing humans, but enabling human connection with a range of meaningful ways to interact. Imagine a client that does not yet have an advisor, but can be routed to a virtual team that matches them with an advisor that best meets their profile (versus a match based on proximity alone). Or conducting a virtual needs assessment, armed with a full suite of digital tools to collaboratively complete onboarding in a single virtual session.  

Managing actuarial risk and investment risk will always be core to the insurance industry, but insurance agents are increasingly managing the risk of missing a customer's advice-seeking moment. When agents are able to embrace the digital transformation occurring, they can increase the likelihood of being there for their clients when it matters most, while simultaneously driving the efficiency needed to make human advice possible at scale. 

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DISCLOSURE: The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.