WINDSOR, Conn. and WASHINGTON DC, July 8, 2020—Not being able to meet in person with their clients during the pandemic ranks as the biggest impact for 9 in 10 advisors according to a recent study. Market factors including low interest rates and increased market volatility have also been disruptive to advisors’ practices.
This study, COVID-19 Social Distance and Distribution: Advisor Survey Summary of Results, was conducted by LIMRA, the Insured Retirement Institute (IRI), Oliver Wyman and the National Association of Insurance and Financial Advisors (NAIFA). In May 2020, more than 400 financial professionals in distribution (advisors, agents, RIAs, etc.) selling insurance, annuities and investment products were surveyed to determine the biggest challenges they face while adhering to social distancing guidelines during this pandemic.
“For many advisors the human connection is a critical part of developing a trusted relationship with clients. According to our research, nearly two-thirds of advisors are now working from home creating new challenges in the advisor-client relationship,” said David Levenson, president and chief executive officer, LIMRA, LOMA and LL Global. “Our study shows carriers and the industry have helped advisors continue to drive successful client outcomes through customized training and digital tools designed to help them operate optimally in this virtual environment.”
What Support Advisors Value Most
While the vast majority of advisors say they have received significant training and expanded communications about best practices for working remotely and leveraging technology, advisors most value the carriers’ and professional associations’ advocacy efforts to change or reduce compliance requirements and enable them to submit business digitally rather than via paper.
Clients Worried About the Economy
As the pandemic spread and social distancing measures were implemented, 7 in 10 advisors increased their communications with their clients. They said their clients’ top two concerns were stock market volatility (74%) and low interest rates (45%). Other things on clients’ minds include job and income security, current and future income stability, and life insurance coverage issues—including whether their policies will cover COVID-19. (Editor’s note: Life insurance policies in good standing will cover COVID-19 related deaths).
“Even under normal conditions, consumers worry about making the right financial decisions,” said Wayne Chopus, IRI president and chief executive officer. “These are extraordinary times and consumers need the support and guidance of their financial advisors to help them make sound choices about their investments and take steps to protect their families. As advisors communicate more with clients, they can help alleviate anxiety by reinforcing the benefits of a comprehensive financial plan that includes products providing guaranteed lifetime income and financial protection.”
How the Pandemic Shifted Business Activity
Eight in 10 advisors say they are selling more to their existing clients, with a quarter selling exclusively to their existing clients. Less than 1 in 4 have reported selling more financial solutions to new clients (chart). Most advisors say social distancing has made it more challenging to find new clients and conduct initial planning activities with them. Advisors surveyed said they would value more help with virtual prospecting and lead generation.
“It is not surprising that social distancing measures have impeded advisors’ ability to gain new clients,” said Scott Campion, partner, Oliver Wyman. “Especially since we don’t know when or how business will return to normal, the industry needs to identify ways to help advisors virtually connect with consumers who need the solutions to achieve their financial goals.”
Despite the challenges, the study reveals 8 in 10 advisors are optimistic about their ability to maintain their practices and serve existing clients. While many expect investment and annuity sales to fall less than 10% in the second quarter (compared with pre-COVID-19 expectations/forecasts), advisors expect sales of life insurance to remain level.
“The pandemic has disrupted business practices across all industries, driving companies to seek innovative solutions to connect with their customers. Our industry is no different,” said Kevin Mayeux, chief executive officer, NAIFA. “While traditionally, our industry has relied on the face-to-face model to help Americans address their financial concerns, the silver lining in all this is we are seeing advisors adapting and leveraging digital platforms to stay engaged with their clients.”
Serving the industry since 1916, LIMRA helps to advance the financial services industry by empowering nearly 600 financial services companies in 64 countries with knowledge, insights, connections, and solutions. Visit LIMRA at www.limra.com.
Founded in 1890, NAIFA is the oldest, largest and most prestigious association representing the interests of financial services professionals from every Congressional district in the United States. Our mission – to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members – is the reason NAIFA has consistently and resoundingly stood up for financial services professionals and called upon members to grow their knowledge while following the highest ethical standards in the industry. To learn more, visit naifa.org.
About Insured Retirement Institute
The Insured Retirement Institute (IRI) is the leading association for the entire supply chain of insured retirement strategies, including life insurers, asset managers, and distributors such as broker-dealers, banks and marketing organizations. IRI members account for 90 percent of annuity assets in the U.S., include the top 10 distributors of annuities ranked by assets under management, and are represented by financial professionals serving millions of Americans. IRI champions retirement security for all through leadership in advocacy, awareness, research, and the advancement of digital solutions within a collaborative industry community. Learn more at www.irionline.org.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 60 cities across 29 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.