Over the next three years, ING Wealth Management is determined to double the number of property and casualty (P&C) brokerage insurance firms that follow its integrated financial services (IFS) model, despite the challenges involved.
ING aims to have 200 P&C brokerages offering a full range of financial products by 2008, says Laurent Nadeau, ING’s vice-president, distribution. These firms add a complete line of financial services – financial planning, mutual funds, banking products and life insurance – to their traditional P&C insurance product offering.
The company currently has about 100 integrated financial services firms across the country. The insurer has been inviting firms affiliated with ING to adopt this model for seven years.
Other players in the industry have found that implementing a financial services strategy with P&C firms is quite challenging because of the culture of the industry, which is oriented more toward service than sales.
On July 31, for example, Quebec-based Union Canadienne, a Co-Operator’s group subsidiary, announced that it had put an end to its IFS firm Finncor. The insurer admitted that it was difficult to develop the model and that Finncor did not generate the hoped-for results.
Meanwhile, last February, AXA Canada parted with two high executives who were developing its integrated financial services program. AXA, however, says financial services remains a priority for the company.
Despite such problems in the industry with respect to integrated financial services, ING is undaunted. “It’s a great time for financial services,” affirms Mr. Nadeau. He points out that Canadian banks are embracing this same strategy by opening insurance outlets next to their branches.
This summer, RBC Insurance opened an insurance office next to an RBC bank branch in Scarborough, Ontario and has plans to open many more of these adjacent-to-branch offices across Canada. These offices will sell both P&C insurance and simplified life products.
ING’s new offensive aimed at doubling its IFS network is largely the result of the growing success some firms are enjoying with diversifying their sales by offering financial services products, explains Mr. Nadeau.
The experience of several firms has now become a real success story, Mr. Nadeau says. Examples can be seen in Quebec, Ontario and Western Canada.
“We have acquired maturity in this business sector. We now possess the information and data that we didn’t have when we launched this model several years ago, which enables us to adopt better business practices, adds Mr. Nadeau. “Now we want to introduce them to as many firms as we can.”
In addition, since the beginning of the year, ING Wealth Management has relaxed the criteria that must be met by the brokerage firms before they can add financial services. ING no longer demands that they fall under the Televente concept, he explains. To belong to the Televente program, the firms must accept to concentrate 50% of their business with ING.
A six-step strategy
To encourage more of its brokerage firms to adopt the IFS model, ING Wealth Management has rolled out a new six-point program, said Mr. Nadeau. Although he declined to disclose all the details, he agreed to trace the broad outlines of the strategy.
In particular, it consists of analyzing the needs of brokerage firms to clearly identify the process to apply to “transform” them into financial services firms, Mr. Nadeau explained.
Among other things, this step helps them to analyze the feasibility of such a project. The objective is to determine if the IFS model suits the organization or not, he adds.
In light of the results of this analysis, the firms could then make an informed decision as to whether they want to introduce financial services.
“This approach is carried out in concert with the owners of the brokerage firms to ensure that the transformation is in line with their objectives. We have identified the keys to success. The trick is to figure out which ones the owners want to emphasize,” he continued.
The strategy also entails helping financial services firms that are already on board ramp up their revenues a few notches.
As part of this effort, ING Wealth Management hired a transformation process manager on Aug. 15. Jean-Daniel Lanctin is the first to hold this position and will work with brokerages across Canada. “He works directly with firms to ensure that the program is not an ING program, but rather a program adapted to each of the brokers,” Mr. Nadeau noted.
ING Wealth Management also looks at recruitment, selection and establishment of new investment fund representatives and financial security advisors within the brokerage firms, Mr. Nadeau said.
He added that the company is actively seeking 35 new representatives for all the firms operating in Canada.
“We also help firms that want to train new and existing resources,” Mr. Nadeau continued. He pointed out that ING is currently seeking a new trainer in financial products and services.
Mr. Nadeau cautioned that financial services are not a “panacea” that will automatically cure a brokerage firms’ profitability woes. In his opinion, a number of P&C firms have failed to successfully add financial services because they were under a false impression that it would be easy.
Others have run into trouble due to poor preparation, such as the lack of a business plan aimed at providing a framework for the development of financial services.
Discipline underlies IFS success. “This transformation requires a lot of effort and energy. Once the firm’s owners discover our six steps of transformation, and they realize the scope of the task, rigor and discipline will help them succeed.”
Mr. Nadeau added that the firms that do best in the financial services niche are the ones that stick to their business development strategy when they enter this sector. For Mr. Nadeau “rigor and discipline” means following the game plan to the letter.