Every so often we see reports about how far the financial advice industry has to go to catch up to the technology of other industries.
Trust me, it’s no picnic on the insurance side, either.
Like advisor tech, insurtech has evolved rapidly in recent years to try and make up for lost time. But there are still shortfalls in the insurance tech toolkit, specifically regarding the needs of independent financial advisors. The responsibility lies with brokerages to go the extra mile and work within the tech framework of their advisor partners.
Carriers Don’t Play Well With Others
From the perspective of RIAs, the biggest limitation of insurtech is that insurance carriers focus almost exclusively on their own tech ecosystems and make interoperability someone else’s problem. It makes sense – after all, if you’re Lincoln Financial, you want people to do business with you, not New York Life. But that’s not how RIAs work. Advisors want the best solution for their clients, period. Not the best solutions offered by a single carrier.
So, if you’re working with multiple carriers, that often means learning how to track cases and reconcile commission statements in an app, website or workflow specific to each one. The information from each of these carriers needs to find its way into an advisor’s CRM one way or another, so the advisor can maintain an accurate, big-picture view of each client’s finances alongside their insurance solutions. There are third-party tools out there, but “one way or another” often means “lots of manual data entry.”
In our experience, this is one of the largest barriers for most RIAs trying to DIY the inclusion of insurance solutions into their client services. Advisors have better things to do with their lives than build parallel workflows for 20+ carriers. Ideally, a brokerage or dedicated in-house staff would take on this responsibility and invest heavily in tools to do it painlessly and at scale.
Focusing On The Follow-Through
Post-sale monitoring is another aspect of insurance solutions that deserves a closer look. To use an analogy, most advisors understand that financial plans are not a one-and-done prospect. Clients’ lives and priorities change over time. In the same manner, weaving insurance solutions into the greater financial profile of an RIA’s client involves far more than just a transaction.
You need to track changes to premium payments and policy values over time. And again, while carriers have made strides in the post-sale monitoring experience for their specific offerings, it is on the advisor to ensure this work is done with every carrier they use. It’s a tall order to create a central, unified dashboard of all client policies. But either the advisor or the broker needs to put in the work or make the tech investment, for the sake of their clients.
While more RIAs see the opportunities of insurance as an add-on service and a catalyst for organic growth, those of us on the insurance side must contend with decades of disinvestment in the technology side. We didn’t get here overnight – years of low interest rates meant that insurers’ maturing bond-holdings had to be replaced by lower-yield equivalents, meaning more premium dollars went to maintain long-term promises to policyholders, and fewer resources went into improving the tech and client experiences.
There will always be much vital work to do behind the scenes to give RIAs and their clients clear, headache-free insights into the insurance solutions they use. That said, we have great cause to be optimistic about 2024 and beyond.
Think about the level of sophistication of advisor tech today, compared to 2019. RIAs have gone from demanding something as simple as e-signatures to investigating the possibilities of generative AI within their work. As insurers continue to invest in technology, they will reap more rewards for growing advisors and the clients who depend on them for holistic financial guidance.
Joslyn Druvenga is Senior Vice President of CBS Brokerage.