Part two of a series of three articles by Susan Yellin
They’ve been called highly educated, tech savvy, confident, practical, team- and results-oriented and a demographic wanting instant gratification and recognition. And if you have discounted them up until now, it may be time to change.
Millennials – those born 1981-1996 – now number about 14 million strong, representing about 20% of all Canadian households and controlling about $150 billion of Canadian wealth.
But in 2024 – a mere eight years from now – that group will control about $900 billion, according to Karol Kalejta, a senior analyst with Investor Economics.
Unfortunately, when it comes to attracting this millennial cohort as clients, some say there couldn’t be anything more contrary to the way they go about their everyday lives than the staid, often old-fashioned insurance industry.
“Can you imagine a millennial just comes out of school, goes to perhaps a CIBC Wood Gundy and then comes into the traditional insurance business? They’re given a 37-page application and told to sit in a client’s kitchen and fill this out. It’s just not attractive,” says Terri Botosan, president of managing general agency (MGA) Hub Financial.
“There are definite attempts now to change that, but it still is a paper-based industry. We’ve still got to make some gains there before I think millennial clients [will embrace the industry].”
The push to get a better handle on technology has never been as intense in the industry as it is now, say some industry members. With younger (and older) clients constantly going online to research and an increasing number wanting to buy online – at least at the early stages – insurers that fail to grasp the ring now will have a hard time catching up.
Justin Hamilton, director of national education at MGA Financial Horizons, hopes this “current failure” of the industry won’t last much longer. Millennials generally want what they want now. If Insurer A can’t get it for them, then Insurer B or C or D will.
This is difficult for the bulk of an industry that still takes up to two months – or longer – to go through the underwriting process.
“I don’t know anywhere else in the world that you apply for something and you don’t get an answer for six to eight weeks,” says Hamilton.
“That turnaround time from application to delivery is way too slow right now. That’s where I think millennials will really have an impact. If we really want to get more millennials into these products, we have to quicken the process and we have to make the process more interactive.”
But some firms do see the potential windfall that can come with catering to the younger crowd and have stepped up. Teachers Life, for example, was recently awarded for its industry-leading ability to fully underwrite a product completely online, allowing its members to buy individual life insurance with a 10- to 40-year term in only 15 minutes, compared to the 45 days it takes on average with other insurers.
Teachers Life said it was able to reach this goal by investing four times as much money as its peers on technology.
Empire Life introduced its Fast and Full Life App in late 2013. The app is designed to work on any tablet, desktop or laptop and uses e-signatures to cut back on paper and speed up processing. Underwriting and processing can take anywhere from a few minutes to a few days. Advisors can talk their clients through the app by phone if requested without having to be in the same room.
Manufacturers like Manulife are helping to lead the change as well. This summer, Manulife will be introducing a new online application and e-signature options for term and critical illness products. In an email to advisors, Manulife said it’s partnering with “leaders in this type of technology” to ensure its new tool will help advisors grow their business.
One millennial advisor who targets 25-40-year-olds now uses an iPad, web-based technology and even his phone to use an app developed by London Life and Great West Life for their online applications for insurance.
Slow and painful transition
Robert Anderson said it was both a slow and painful transition for these insurers to adapt to online applications in 2014, but now that it’s done, he can hardly wait for the investment side to move forward.
Anderson, who will be 25 this summer, said 30-page applications for baby boomers is time-consuming and frustrating – but not so with millennial clients, who are looking for a long-term relationship with the advisor and guidance.
“If you go over an hour with baby boomers they start to get restless and annoyed sometimes,” says Anderson. “But the millennials, I have had two-to-three-hour meetings with them. Younger clients appreciate us taking the time to help them understand.”
He suggests all advisors talk to younger clients with common sense ideas where they can see the benefits 15-20 years down the road.
They should also be ready to answer a lot of questions, notes Greg Pollock, president and CEO of Advocis, the Financial Advisors Association of Canada. While millennials can and do google topics before they make financial decisions, many still like the comfort of hearing the information from a professional, especially as their lives get more complicated and the products become more sophisticated.
Pique their interest
Pollock proposes that advisors speak to what interests millennials most – how to pay off their tuition debt, the best way to start saving for a home or how best to protect their young families. Why not have a podcast or blog addressing those issues and put calculators and other types of apps on your website? Pollock says those tactics might just pique millennials’ interest. Once they come to you, they will see that you are knowledgeable and trustworthy and will reach out and contact you directly, he says.
Social media tools are crucial for both the millennial advisor and the millennial client, says Jim Virtue, president and CEO of PPI Solutions Inc. Virtue says these clients are looking for different product types from insurers with three main features:
Adaptability: Millennials, says Virtue, want products that can change with them as their lifestyle changes. And they want to know that even if they miss a payment, the insurer won’t cancel the product automatically. Basically, they want flexible options without penalties.
Empowerment: They want to make changes to the policy – not at the whim of the financial institution. “In that way, I think millennials are much more demanding clients. They are not willing to accept the status quo. And the status quo from the insurance industry point of view has been very, very rigid.”
Accountable: Younger people generally want new product designs that fit their needs as well as more consumer friendly products that come with contractual rights that allow them to make some changes. In this way, he says, Equibuild, a product designed by PPI and Industrial Alliance, is a prime example. Equibuild is a flexible universal life insurance product with a number of guarantees and investment options as well as an annual bonus.
Hamilton says Financial Horizons has developed a number of social media tools for its advisors, including an Ipad application with a needs analysis, a retirement planning analysis, a critical illness calculator, as well as tax and budgeting information for their clients. “We are constantly encouraging all of our advisors to use these tools and have them send them to their clients and let them play around with them.” In exchange, the advisor receives analytics as to how long the client looked at an app or returned to look a second (or third or fourth) time at a specific app.
Social media tools
While millennials may not be that interested in some insurance lines right now, social media tools allow them to get used to the idea of how much it costs to buy insurance and what they can get for their money down the road, says Don Hart, vice president training and development at IDC Worldsource in Mississauga, Ontario.
Millennials are also more concerned about the near future, not the distant future. So while they aren’t doing a lot in terms of retirement planning yet, they may want to talk about protection – mostly life insurance and critical illness insurance, says Hart. “I’m working with a couple of millennials right now. Their big concern is to protect their insurability for the future, buying larger amounts of term insurance today for a conversion option down the road.”
If you rattle off a string of statistics to millennials, don’t be surprised if they want to know where you got them and be aware that they may well verify your comment. “They want to see if you violated their trust,” says Hart. “So building that relationship with the millennial client is very important.”
Looking for mentors
The younger crowd is looking for someone who will be more of a mentor to them, rather than a salesperson. They want to make sure they’re being heard and understood. “It takes a little longer than you may want to spend as an advisor, but that’s your customer. You want to invest that time and in that person because once they are your customer they will typically stay with you.” Hart says advisors who ensure they have their clients’ financial back will make them less susceptible to leaving and going to another advisor.
“Building that relationship hasn’t changed – getting that relationship has changed.”