As the stock market surges and competition for clients’ share of wallet increases, insurance advisors are paying more and more attention to the investment side of their business. In fact, advisors surveyed for this year’s Insurance Advisors’ Report Card expect more comprehensive and holistic support from their firms or managing general agencies (MGAs) in this area.
Case in point: advisors rated both their firm’s “support for developing a financial plan for clients” and “support for developing an investment plan for clients” higher by 0.6 of a point each in importance this year compared with 2013 – to 8.7 from 8.1 and to 8.4 from 7.8, respectively.
In contrast, advisors rated their firms lower in performance in these categories this year. The overall average performance rating for financial planning dropped to 7.2 from 7.6 last year and the overall average rating for investment planning fell to 7.2 from 7.4.
So, although advisors are looking to their firms or MGAs more and more for support in these areas, their needs are not being met. In fact, the financial planning category had the largest “satisfaction gap” – the difference between the overall average performance and importance ratings – among all the categories this year.
The main concern regarding financial planning involves technology: either it’s outdated or there’s little support to help advisors adapt to new technology.
“The system we are forced to use is antiquated,” says an advisor in Ontario with London, Ont.-based Freedom 55 Financial. “There is very limited flexibility in putting together a financial plan.”
Adds an advisor in Atlantic Canada with Winnipeg-based Great-West Life Assurance Co. (GWL): “They provided us with the software but no training. We had to go to the software provider to get trained.”
GWL’s financial planning software of choice is NaviPlan, which also is used by Waterloo, Ont.-based Sun Life Financial (Canada) Inc. Many advisors feel NaviPlan is overly complicated.
“It’s a mixed bag,” says a Sun Life advisor in British Columbia. “We have some of the best software, but there is no telephone support for complex programs. I send an email and wait two to three days for a response – then hope I can even understand the email.”
Mississauga, Ont.-based RBC Life Insurance Co. stood out in the financial planning category with a performance rating of 8.5. The reason for this, says Mike Hamilton, RBC Life’s senior vice president of sales and distribution, is that the firm introduced an advanced financial planning tool at the end of last year.
“The firm has great tools to analyze and develop your financial plans,” says an RBC Life advisor in Ontario. “It’s a great service.”
Much like for financial planning, advisors said they need more training, support and focus from their firms or MGAs in investment planning to increase this part of their businesses. Support staff, in particular, seems to be lacking in this area.
“They keep combining departments and blending support staff,” says an RBC Life advisor in Ontario. “The result is there are no specialists to give you a straight answer.”
Adds an advisor in Ontario with Calgary-based PPI Solutions Inc.: “[Support for investment planning] is very weak across the board, both in the know-how and the staff support numbers.”
Slow growth among firms in the investment side of the business also is reflected in the ratings for the “bringing new investment products to market” category. In particular, the majority of advisors said their firms either lack innovation or are slow to act.
“If something looks good that someone else is doing, RBC Life will just think about it for a while,” says an RBC Life advisor in Ontario.
Adds a GWL advisor in the same province: “We’re lagging the industry in that we’re the last in coming out with new products.”
But not all advisors believe caution is a bad thing when introducing new products. Says a Freedom 55 advisor in Atlantic Canada: “[My firm] is not the first off the block. They let everyone else do that and see who fails. They’re prudent and methodical.”
Sun Life advisors – many of whom say there’s still room for improvement – gave their insurer the highest rating in this category.
“Considering the climate and what’s out there,” says a Sun Life advisor in Ontario, “there are only a limited amount of investment products you can choose from. That said, we have all the ones that matter.”
It’s not just the dedicated sales agencies that are providing their advisors with investment products. More and more, MGAs are looking to develop proprietary investment products for their advisors.
Mississauga-based IDC Worldsource Insurance Network Inc. (IDC WIN) is in the preliminary stages of working with its parent firm, Guardian Capital Group Ltd., says Ron Madzia, president of IDC WIN, “to develop proprietary investment products that we feel would be suitable for the advisors dealing through our MGA.”
Kitchener, Ont.-based Financial Horizons Inc. may be headed in a similar direction, says John Hamilton, president and CEO: “We are definitely looking at [developing products], and I wouldn’t be surprised if we have something by the end of the year.”
© 2014 Investment Executive. All rights reserved.