The financial services industry faces unprecedented technological, regulatory and demographic changes. From robo-advisors to DOL regulations, some are even concerned about the viability of face-to-face financial distribution
Having attended the GAMA LAMP conference every year over the past decade, this year’s was the best one yet and I left the conference feeling more optimistic about our industry than ever before. In my mind, there has never been a better time to be in the financial services sector, especially those involved in selling protection products. LAMP provided great reaffirmation of this belief.
Do What No Robo Advisor Can Do
One of my favorite speaker’s from LAMP was Adam Holt, CEO of Asset Map. Adam quoted Jeff Bezos, CEO of Amazon, in saying:
“I very frequently get the question: ‘what’s going to change in the next 10 years? I almost never get the question ‘what’s not going to change in the next 10 years?’ And I submit to you that the second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time…”
Adam then went on to say, “When decisions are complex or there is a high cost of being wrong, people want another human’s insight for confidence.” Many of the early robo advisor's business models were predicated on replacing the face-to-face model. But as Mike Sha, CEO of SigFig notes, “the cost of acquisition is high and winning client's trust and cultivating relationships is hard." Adam Holt says it best, “you're not there to give clients an algorithm, but advice."
Since a number of the original FinTech companies that had a B2C business model went out of business, there seems to be a re-orientation towards using technology to enable rather than replace the advisor. As evidenced by SigFig's partnership with UBS and BlackRock's FutureAdvisor partnering with RBC .
Similarly, most InsureTech firms currently have a B2C business model attempting to go around the current distribution models. But, just as we have seen the robo advisor shift, I think the same will happen with InsureTech. The capital and technology skill gaps of current distribution and insurance companies can be filled by InsureTech Firms. According to Nick Richtsmeier, Executive VP at Trilogy Financial, in InsuranceNewsNet magazine, “The role of technology in financial services should be to enhance the client experience, not substitute for the empathy and advocacy that only a human advisor can provide."
We all know humanity is facing a demographic tsunami of people living longer. I believe that there will be huge need for financial professionals to educate and advocate for the financial needs of their clients.
Utilize The Power Of Storytelling
Storytelling was also a major theme at LAMP. Kindra Hall, speaker, author and consultant, spoke about this topic, sharing numerous reasons for why storytelling is so effective:
It builds trust and relationships
They are memorable and co-creative
They connect with people on an emotional level
Stories begat stories
They create a biochemical bond
Bonnie Godsman, CEO of GAMA International, then perfectly demonstrated all of these points by sharing a personal story for the second year in a row.
This year’s story was about her challenge with weight and the fact that at one point she weighed over 300 pounds. She was able to make significant, healthy lifestyle changes and lose the weight. Her story was inspiring, drew a standing ovation and everyone in the room felt a deeper connection with her for her courage to tell the story.
A Guide To Thriving In A Changing World
Over the last 14 years, I have spoken to over 400,000 advisors in 28 different countries on creating relationships and using storytelling, and I can tell you that these concepts resonate around the world.
The competitive advantage of financial advisors is their ability to build trust and relationships. That's a key point of my presentation, "A Guide to Thriving in a Changing World." It encourages reps to make connections through storytelling; I share my own personal story and other powerful stories from financial professionals about the impact they’ve had on their clients.
All wisdom comes from specific human experiences. While we may not always feel confident, the important thing is to understand the human, multi-generational impact we can have on clients and have the courage to engage in conversation, even in the face of rejection. LAMP this year was a great reinforcement of these ideas and insurance leaders must take action to drive these points home to their teams and clients.