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Holistic Tech: The future of advising is holistic tech

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The next time agents or advisors say they don’t do tech because that is for young people, ask them two questions.

  1. Do you golf?
  2. Do you have a digital watch?

That might be all you need to trigger a flood of laudatory comments about the GPS apps they use to improve their game.

Byrke Sestok swears by his Apple watch for guidance on the course. As a 41-year-old financial advisor, he can be considered a kid in the financial business — especially compared to insurance agents. That is true on the golf course as well.

“Most of the people I play with are older than me, in their 50s and 60s,” said Sestok, co-founder of Rightirement, White Plains, N.Y. “And they all have GPS watches. Very few of them have the Apple watch but they all have GPS watches.”

The watch helps off the course, too. Sestok uploads the data for analytics, much like a client can keep an eye on goals with a financial app.

“It allows me to tie my handicap index into the app and monitor it and I can upload my rounds directly from the phone data,” he said.

So, how is it the same technophobes who prefer pen and paper will take to golf tech?

“It’s something they’re passionate about,” Sestok said. “People don’t like change, right? But if you know you can definitely get improved performance, you’re probably going to go through the difficulties of change. And in golf, knowing how far you hit the ball is pretty important. So people are willing to adapt the technology.”

And if advisors are passionate about holistic advising — or they want to be — they will need to become comfortable with tech.

Holistic Needs Tech

Insurance companies are turning to holistic advisors. And clients are raising their expectations of all advisors. Consumers entering the target years for insurance and financial advice are not content with pen and paper and “just trust me” advising.

Deloitte examined this issue in its report “10 Disruptive Trends in Wealth Management,” which described a “Re-wired Investor.”

“With her expectations shaped by her interactions with non-financial digital firms (e.g., Google, Facebook, Amazon) as well as smartphones and other digital devices, she expects to be able to access advice anywhere and at any time, through multiple channels and devices as part of a cohesive, rich digital experience,” according to the report. “The Re-wired Investor has come to view risk through a different lens: she perceives risk as downside, rather than volatility. As a result, advisors have had to emphasize capital markets and hedging strategies that seek downside protection more than traditional portfolio allocations that seek to manage risk through diversification.”

Future Life Insurance Buyer Cycle

Even insurance companies traditionally focused on products are taking to the diversification message. In a survey conducted by EY, life insurance executives said they understood that consumers want holistic advising that explores options. The execs also know that tech will build the bridge to get the industry where consumers want it to be. 

“There is a need for a holistic, goals-based planning approach,” according to the EY report, “Opportunities in a Challenging and Fragmented Landscape.”

“Manufacturers and distributors alike have an opportunity to set themselves apart by engaging customers through the process of retirement and financial planning. Advisors will be called on to help build such relationships. To deliver this level of information, advice and service in a scalable way, significant investments in process and technology will be required.”

Tech is even key to targeting middle-income consumers, a demographic that insurers acknowledge is underserved. The EY report cites “the economics for advisors” as a major hindrance to reaching this segment — a nice way of saying that there isn’t any money in it for advisors.

But it can pay for companies and sellers through tech that eases and accelerates the sales process.

“Developing more cost-effective distribution strategies (most likely by increasing the use of digital channels) would help make the middle market more attractive,” according to the EY report. “Such technological advances, along with simplified processes, may lead to future profitability in this market.”

No wonder, the report writers said, that advisors have been moving up-market. But despite the gold rush, even the wealthy market is underserved.

“The number of advisors with the credentials and sophistication to serve this market is low,” the report said. “Many prospects have never been approached by an advisor — a situation that will only get worse, given the shortage of suitable advisors.”

Surely, advisors must be clustered way at the top of the wealth pyramid. Wrong again.

“The lack of qualified advisors is especially acute relative to the ultra-high-net-worth market (individuals or families with assets greater than $30 million),” according to the report, which added the additional factor of new generations of consumers that the Deloitte report had identified as the Re-wired Investor.

So, will carriers and perhaps wholesalers build a digital bridge straight to the consumer?  They have tried, but companies found out that although the bridge has one access point, it has many off-ramps.

Insurers discovered what online retailers know as cart abandonment, when consumers start the buying process but bail before ringing the register. 

Nationwide ran into that tendency last year when the company tried to sell an annuity online in Arizona. After six months, the carrier realized that consumers want a human to jump into the process at some point.

Assessing Risk

But how prepared are advisors to take on more of a holistic role? Sestok said tech is essential to making it work from prospect to plan. It takes software.

“Cool software like Riskalyze, which allows your client to go in and do kind of an in-depth risk analysis questionnaire that reports to you and the client what their risk number is on a scale of zero to 100,” Sestok said. “So that you can in theory better position their investment portfolio to match their risk tolerance.”

It is one of the many tools he has adopted to help automate important functions. Ever since the 2008 financial crash, Sestok has been sure to gauge client risk tolerance accurately. Otherwise, clients may not stick with the well-laid plan the next time markets go south.

“Most people don’t really know what their risk tolerance is until risk actually hits,” Sestok said, adding that good risk analysis software can yield surprises for advisors and clients. “You’ll find people who think they’re aggressive investors may not be able to tolerate more than a moderate style of investing, so you can right-size the portfolio.”

But he has also found that clients have become dangerously complacent: “It’s amazing how short-memoried people are. Basically, they’re moving up in a straight line.”

When Sestok reminds clients of the crash and they remember their portfolio had lost 35 percent of its value, he then asks them, “Well, should we take that in mind?”

Sometimes that answer is “no, full steam ahead,” but it is the clients who are doing the choosing with their eyes open.

The risk analysis is just one of the tools he uses for holistically advising and keeping clients in contact. He uses a Redtail customer relationship management system, one of the more commonly used CRMs for financial advisors and insurance agents. He uses eMoney Advisor Pro for financial planning.

Financial planning software tends to fall into either the cash flow- or goals-based approach, although eMoney does both. But this category of software is growing beyond just structuring scenarios. Many offer portals for advisors to work with clients in real time to reshape scenarios to answer different questions, such as “what if I retired five years earlier than we planned?”

This helps an advisor be a more responsive resource for clients, instead of having to wait a few days or so to draw up a report. Right during the meeting, an advisor can say, “Let’s take a look.”

Clients can log on themselves to answer their own questions and the program can alert the advisor when that happens.

Sestok has a website for his practice and his bio page has a button that says “schedule” on it. That connects with Calendly, which allows prospects to schedule a 15-minute call with him without having to talk to anybody. And more important, not taking staff time to talk with him.

Sestok is an LPL Financial advisor but he does not rely on the company for his tech. He supplies his own software and keeps his data, rather than store it with LPL. That was a hard-learned lesson for him.

“Whatever data you put into their systems, they own it — and frankly I don’t trust anybody,” Sestok said. “It might be the New Yorker in me but if I give somebody my data, even though they’ve said they deleted it later, why should I believe that?”

It is not a mistrust in the company. He just doesn’t want to repeat what happened when he left another large firm years ago.

“I don’t mind LPL having data,” Sestok said. “I’m not worried about LPL mismanaging it. I just don’t want to be in a situation where I can’t take it with me if I need to. I’ve made two career changes in my 17 years as a financial planner. In the first change, a lot of my data was captive and it was a real problem. It was a disservice to the client that the data was captive because it breaks the continuity of client service.”

He was able to retain clients in the move, but not their data. So he had to start reporting from scratch.

Then he got his own eMoney software so that when he moved to create Rightirement, it was not as painful. And although he could access a CRM through LPL, his firm has its own subscription to keep the data securely in-house.

“Now I’m just in a position where I own all my client data,” Sestok said. “I might lose some investment performance reporting if I ever needed to break away from LPL — although I have no intention of doing so at this time.”

Independent But Necessary

Sestok’s reluctance to participate fully in LPL’s tech offerings is part of a larger disconnect that confounds efforts by financial and insurance companies to develop tech initiatives with agents and advisors.

Clearly, opportunity exists. In a Deloitte survey with more than 1,600 25-to 54-year-old consumers released earlier this year, people said they were eager to use a digital platform to research life insurance options. In fact, 90 percent said they would but they also said they would be willing to manage their accounts that way.

But guess what they wouldn’t do — they were not likely to buy without an agent’s help. When respondents were asked what helped them with their decision-making, 93 percent said an agent’s follow-up was at least “somewhat helpful,” with 44 percent saying the contact was “very helpful.”

So, agents and advisors are integral to the sales process but independents are stubbornly disconnected from the carrier’s system.

Insurance companies have a long history of trying to go digital and automate. In fact, some of those earlier initiatives from several decades ago are coming back to bite companies. That’s because insurers are having difficulty retrieving data from systems using technology long buried by generations of successive tech.

And the companies’ effort to connect tech with independent agents has been around since there have been independent agents.

Robert McIsaac, senior vice president of research at Novarica, a tech advisor for insurance companies, remembers those days clearly. He started with Prudential in 1978, when companies were trying to establish tech norms with a distribution system that was slipping away from their grasp.

“I think carriers get lost in thinking that they have control in the market,” McIsaac said. “It was a food fight inside the company between the distribution arm — the broker-dealer, for instance — and the product manufacturers.”

Companies at that time behaved as if they still had primacy and could dictate terms. But McIsaac saw that was no longer true with the advent of independent distributors and agents. Companies accustomed to having a captive sales force did not have the same level of control over the third-party sellers they were ceding distribution to.

“I tried to argue the important fact they’d already lost the primacy and that they had to listen to what their distributors were telling them, in terms of the technology they were going to support,” McIsaac said. “Because the distribution partners aren’t going to care what you say because they’ve got other options to go to.”

As he predicted, the market itself shaped the platforms for processing, mainly Ebix and iPipeline.

“They were very effective at getting some level of critical mass of carriers to participate in the platform,” McIsaac said of the tech companies. “And because it made life much easier for distributors, carriers found themselves between a rock and a hard place. Either you play on the platform or you stand by your guns, your principles or whatever it is you’re standing by, and give up market share. That’s a technology that’s controlled by the IMO, by the general agent, by somebody else.”

But the distributors are facing the same tension that financial advisor Sestok has with LPL. Insurance agents want to keep client data in their house. They want their own customer management system. McIsaac said that ends up being a tug-of-war.

“The challenge becomes producers want the CRM to be something that they own and control,” McIsaac said. “Many of the companies I worked for struggled with that because we viewed the data as being ours. The producer viewed the data as being theirs.”

One of the players at the center of that tug is iPipeline, which started in 1995 as Internet Pipeline, back when the internet was being called The Information Superhighway.

More than two decades later, acceptance is still an issue among sellers. Tim Wallace, iPipeline CEO, said the industry is still trying to get agents to input customer data directly into the system.

“I think the biggest hurdles, quite frankly, are behavioral,” Wallace said. “The majority of the producers in the marketplace, most of them grew up without technology. Most of them are continuing to do the quotes and fill everything out on paper.”

Often the agent will fill in a 20- to 40-page life insurance application and either give it to an administrative person in their shop or pass it to a distributor.

“It’s taken 10 years for the industry to get to about 25 percent adoption of electronic apps,” Wallace said. “So, 75 percent of all life insurance applications today as we sit here in 2018 are still done on paper.”

Besides being inefficient, the transfer from handwritten to electronic forms slows the underwriting process to a crawl. Why? Errors.

“When they do it on paper, there’s a 65 percent error rate,” Wallace said. “If you do it electronically, it’s 100 percent accurate. So, the average sales cycle for a paper app is like 52 to 55 days. The average sales cycle for an electronic app is like 17.”

Ineffective life insurance marketing efforts continue to be exposed

That means with paper applications, the whole process is close to two months long. With an e-app, it drops to a little over two weeks.

If an agent is doing a high volume, Wallace finds that if an agent does about five apps electronically, they are likely to stick with that process. So, what does an ideal e-agent look like?

“The agents who are really out there on the bleeding edge typically have their own websites,” Wallace said. “They’re marketing on social media, whether it’s through Facebook or Instagram. They’re tweeting. They’re out there buying leads so that they can then develop marketing programs, typically either through Facebook or e-mail or even some through direct mail pieces. They’re constantly working their existing account base for one upsell opportunity or cross-sell opportunity as well as referrals. They’re tracking and they’re putting that into their CRM. They’re doing e-mail campaigns through a database of consumers that they’ve developed over a several-year time frame.”

But who will lead the agent to the e-water? It is tough to say, because independent agents can easily move on to another marketing organization if they become uncomfortable. That puts carriers in an increasingly difficult position because regulators are demanding documentation to show compliance.

“If you take a look at the regulations issued by the New York Department of Financial Services, you as a carrier, even if you’re selling through that independent channel, are responsible for that agent exercising fiduciary responsibility to that buying client,” Wallace said. “So that means you must have documentation that that agent understood the needs of that customer and they understood the type of product that they were selling them in relation to other products that they could have offered them because the agent has run multiple quotes.”

That puts distributors in the middle of serving carriers and agents — marketing organizations such as Crump Life Insurance Services.

When Insurance Plugs Into Finance

Crump, based in Harrisburg, Pa., is a top marketing organization for traditional insurance agents. The IMO is accustomed to processing paper applications from agents and tries mightily to get agents to submit electronically.

That e-acceptance is still slow, without much prospect of gaining much acceleration.

But a fundamental aspect of the business is changing. As the insurance industry turns to financial advisors and holistic planning, Crump is expanding to provide a wide array of products to cover a span of a client’s needs: long-term care, disability, life and annuities.

Besides the addition of financial advisors to the company’s base, Crump is finding another outcome, a growing acceptance of electronic filing. Or more accurately, an acceptance to have Crump file for them.

“That’s been helpful in gaining adoption because they’re used to using financial planning tools and that’s a point of integration that we’ve been focusing on — getting integrated with financial planning tools,” said Joe Johns, senior vice president of business planning and carrier relations. “As we do business with more professionals that aren’t traditionally trained insurance agents, it’s important for us to be at the point of transaction where their eyeballs are when they’re looking at these types of things.”

By integrating with financial planning tools, Crump also plugged into a practice that financial advisors are used to – drop tickets, said Ron Alexander, Crump’s senior vice president of direct-to-consumer services.

“We’re seeing drop ticket solutions emerge as a very efficient way for advisors and agents to reduce the amount of paperwork that they have to do while still being able to capture the data that the life insurance companies require,” Alexander said, adding that the company has a series of call centers to enter the data. “For non-life insurance-focused advisors, we have found this is the preferred method for applications.”

This is where Crump’s integration with financial planning tools comes in.

“If a MoneyGuide Pro plan calls for a million dollars of life insurance, we’re integrating with the financial planning software so that the advisor can click a button that says, ‘Get Quotes,’ ” Alexander said. “The quotes pop up on the screen. Then if they move forward with that, they can click a button and then provide a little bit of contact information, hit ‘Submit’ and be done with the transaction.”

Crump then handles the app from there, Alexander said. “From that point forward we’d do everything from soup to nuts and then ultimately send the commission check when it’s done.”

The advisor and client can then watch the process progress through a tracking system.

Does that leave traditional insurance agents out in the cold? If anything, the trend of distributors offering more services allows agents to plug in. In fact, their IMO or brokerage general agency probably already has help at the ready.

“If an organization doesn’t offer end-to-end digital tools to help you process transactions at every step of the way,” the agent ought to look for a new home, Alexander said. “The majority of BGAs offer something that can get you from Point A to Point Z electronically. Some offer more than others.”

Alexander said the company has seen agents and advisors across the age range adopt tech.

“I think that the usage of the electronic tools is being adopted a little bit faster by the millennials and Gen Xers,” Alexander said. “But it’s been fairly balanced across the board.”

Agents' Opinions: Importance of Tools

Loving Tech’s Effects

If e-acceptance crosses the age spectrum, so does non-acceptance. Just because people were brought up in an era when electronics became the norm doesn’t mean they love dealing with tech.

Kristi Sullivan of Sullivan Financial Planning in Denver is one such Gen Xer who doesn’t want to become a techie but wants the benefits of tech when they make sense. She is a fee-only planner who does not sell any products. But she does love dealing with the numbers.

“When I started my own business 11 years ago, I thought I would do the assets under management model like everybody else was doing, but when it got right down to it, I don’t really like managing investments,” Sullivan said. “I really like the financial planning part — the modeling, the life decisions, the prioritization, the running the numbers.”

Sullivan uses Money Tree financial planning software. But she does not ignore investments. Sullivan uses the Morningstar Premium platform to do analysis on portfolios and recommends changes. She refers to a list of insurance agents if she finds clients need insurance.

Although she relies on the typical tech, such as financial planning software, Sullivan recently adopted a tool that made a little change but a huge difference. Like Sestok in New York, she uses Calendly to allow prospects, clients and even colleagues to schedule meetings. Well, not exactly meetings.

Sullivan found that she was getting a lot of calls from people just starting out in financial planning who wanted to chat with her about the business. Invariably it was an invitation to go get a cup of coffee.

“I mean, I want to help, but I don’t want to necessarily drive across town and spend what turns out to be two hours on something like that, because I get paid by the hour,” Sullivan said. “So I got set up with this online scheduler where I have 30-minute virtual coffees and then I have one-hour appointments and I have 15-minute prospect calls.”

The simple tool was like a one-weird-trick diet that dropped massive weight from her schedule.

“I just say, ‘Great, can’t wait to talk to you. Here’s my online scheduler. Grab a slot,’” she said. “It just saves all that back and forth. ‘Well, can you do Oct. 3rd?’ ‘No, I can’t do Oct. 3rd. Can you do the 16th at 10:00, 12:00 or 4:00?’ ‘No.’ … All that. People can just see my calendar and it’s tied real-time to my Outlook and they just take what’s open.”

Sullivan makes sure she blocks the time she needs and the software takes care of the rest.  She loves it and wishes she had done it sooner.

“I’ve been toying with the idea forever — but I’m terrible with technology,” Sullivan said. “I hate getting a new phone. I hate getting a new computer. I hate learning new software. I was referred by another planner to this other financial planner in Arizona.”

That person was Arielle Minicozzi, co-founder of Sphynx Financial Planning in Chandler, Ariz.

Minicozzi took a circuitous route to opening her practice just a year ago as  a millennial focused on helping millennials.

She has an art degree and was working in the mortgage industry when she decided to be a financial advisor focusing on taxes. So she worked for H&R Block for a season before opening up her own registered investment advisory. She does not mind trying something new to see how it works.

She loved the business of helping people but not so much running the business.

“That’s part of the reason why I decided to automate a lot of my processes,” Minicozzi said. “I wrote down what my processes were going to be for financial planning from start to finish from the time a client reaches out to me as a prospect to the time we finish their plan. Then if they continue to work with me in an ongoing planning role, what that would look like as well.”

She found ways that tech can do those jobs and now she has automated more than 85 percent of her workflows.

Here is how it works:

When a client sets an appointment in Calendly, the software sends the client’s name, e-mail address and type of appointment to Mailchimp, an e-mail marketing platform. Then Mailchimp sends the appointment-setter a thank-you note.

“And then a day before the call, they’ll get a call agenda sent to them so that they know what to expect when we speak together,” Minicozzi said.

After the call, she sends them a manual thank-you e-mail with the details they discussed. Then an automated e-mail is sent with next steps, followed by other e-mails if the client has not set up a follow-up call.

“It will keep us front of mind without being like, ‘Hey, how are you doing? I’m following up with you,’” she said. “You know, those really annoying calls, e-mails that you feel terrible sending but you want to make sure that they’re still alive. Instead, I want to give them something informative and educational so that they know we still are there to help them if they need it but also not put that pressure and that awkwardness on them as well.”

When she told other advisors about her processes, they asked her to help them. So, she has what millennials know as a side hustle. She is a paid tech consultant.

Minicozzi found that the automation process is about more than tech for her colleagues. It is about standardizing their processes to build workflows — something Minicozzi requires before automation. 

“And a lot of people have told me that was actually their biggest benefit of doing this,” Minicozzi said. “It forced them to refine their process before doing anything else and that ensures a consistent client experience every single time. You know what’s going to happen at Point A, at Point B, at Point C. The goal is not to get everybody to automate for the sake of automation. The goal is to help people be able to serve more clients or serve them in a better capacity than they’re already doing.”

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Steve may be reached at [email protected] Follow him on Twitter @INNSteveM. [email protected].


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