A growing number of so-called “robo-advisors” are challenging traditional channels for investment advice, and some of these emerging competitors are exploring ways of expanding their offerings into the insurance side of the financial services sector. Insurance advisors should identify ways in which such new technologies could enhance – rather than compete with – their services.
“I think insurance is just a natural evolution [of robo-advice],” says Ray Adamson, chief customer officer with Burlington, Ont.-based BlueSun Inc., which provides the WealthServ software widely used in the financial services sector. “I don’t think it’s necessarily a disruption that’s going to push advisors out of the business. I think [robo-advice] is something that could augment and even streamline their business.”
Robo-advisors offer investors an online alternative to traditional, face-to-face financial planning advice. Generally, robo-advice platforms work by collecting information about clients who sign up, including details about their risk tolerance and financial goals, then recommend a portfolio of products that’s appropriate for each client.
Some robo-advice providers have extended their offerings to include insurance. Vancouver-based WealthBar Financial Services Inc., for example, provides an insurance needs analysis as a component of its financial planning services, and the firm is licensed to sell life insurance in Ontario and British Columbia. Other providers have indicated that they are exploring similar offerings.
The result could be an alternative life insurance distribution channel for clients who like the idea of doing things online rather than in person. “[Robo-advice would appeal to] someone who likes to go out and do their own research on products,” says Charlie Conron, chief technology officer with London, Ont.-based insurance technology firm Life Design Analysis Inc. (LDA). “Maybe he or she understands the industry and doesn’t want to deal with a broker; [these online clients] know what kind of product they want.”
Adamson suspects that some segments of the population will embrace robo- advisor tools for their insurance needs: “Where I see the potential is really mid-market Canada and the lower-end market, where a lot of advisors just aren’t actively going out to solicit in those areas.”
Although the prospect of an innovative new distribution channel may make some advisors nervous, Conron says, robo- advisor platforms won’t necessarily compete for the same types of clients that advisors are serving. Whereas robo-advisors are likely to appeal to clients who need basic types of coverage, such as term insurance, he says, advisors will always play an important role in advising clients with more complex insurance-planning needs.
“I think it’s more of a third market,” Conron says. “Big decisions are still going to be made face to face.”
Nonetheless, you shouldn’t ignore these emerging platforms. In fact, you may be able to find ways of embracing them and incorporating them into your practice. For example, you could use a robo-advisor platform as a more efficient way of serving clients who have very straightforward insurance needs. Rather than conducting the entire sales process in person with such clients, you could save time by letting clients fill out the needs analysis portion of the process via the online platform ahead of time. The face-to-face meeting then can be spent identifying an appropriate product and beginning the application process.
That process would allow you to focus more of your time and effort on your top-tier clients, while still serving clients seeking advice on more basic insurance needs.
“If I can continue my same process, but only focus on my high-end prospects or clients, that’s going to give me a significant return on effort,” Adamson says. “But the technology implemented into the same steps in my process – that could bring in more clients, in a profitable way, without having to involve as much of my time.”
Robo-advisor platforms also could be used as sales tools in client meetings, as a way of guiding your clients through the insurance-buying process in a way that’s engaging and interactive. By using an automated tool to generate product recommendations based on the information entered into the system, Conron says, you can eliminate any concerns about potential biases in the sales process.
“Being able to present products in a digital way,” Conron says, “or even have [the tool] recommend a few options to take the bias and emotion out of the sale, can be a good thing for the consumer.”
LDA is an example of a technological tool that you could use to enhance your service, says Conron, who describes LDA as a “robo-assistant” that you can use to evaluate insurance products and present them to your clients in a visual way.
Advisors can choose from various LDA subscription packages, ranging from $30 to $65 per month.
Conron urges you to embrace any technological tools that help you become more productive. “Advisors should be upping their service,” he says. “You can get ahead of the curve by versing yourself in technology solutions.”
Robo-advisor platforms can be used as sales tools to guide clients through the process in a way that is engaging and interactive
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