From the July 2008 issue of Investment Advisor • Subscribe!

July 1, 2008

Dutch Life Planning

When Paul Versteeg became CEO of Allianz's Dutch insurance operations in 2004, he realized he had a problem. Having spent most of his career in Allianz's asset management division, he knew the insurance operation was structured differently, but there was a deeper-seated issue. "I learned that our industry is not very popular with the public. In the Netherlands we always say we have second-hand car sellers, and insurance companies." Versteeg deadpans: "This is not a very interesting situation for a CEO to be in." Having determined that the problem wasn't so much what the company sold--"life insurance has a serious function within society"--but how it was sold, Versteeg called together the independent agents (IFAs, or independent financial agents) through whom Allianz sells its insurance products. The IFAs asked for help in figuring out how they could "build relationships with our end consumer when they're only remunerated when we sell a policy." There was a second question from the IFAs: "Is there a business model that can make this philosophy profitable?"

Versteeg says Allianz then researched "How we could train them on these two subjects; our journey ended up with George Kinder" of life planning fame, since Kinder's approach "is an excellent methodology to put the client's interests central, and to get a bond between the IFAs and their clients." Versteeg then called on the services of Brett Davidson of FP Advance in the U.K., who "trains IFAs in how to change their business model, how to ask a fee for their services, and on building an ongoing income stream." Allianz put together these two approaches into a program for its IFAs called Allianz Pure Life.

For Kinder, Allianz's approach reflects "the same struggle happening all over the globe--this move from sales to service," that had its genesis in the move toward fees in the U.S. in the 1980s. He cites the move of the SEC equivalent in the U.K., the Financial Services Authority, with its ongoing Retail Distribution Review. In releasing a draft report on the Review on April 29, the FSA reiterated its call "for a simpler marketplace, particularly a clear separation between advice and sales." "That's an example of the Brits leading us," notes Kinder.

The topic is more than academic for Kinder, who when interviewed June 1 had just returned to the States from South Africa, where he conducted his Seven Stages of Money Maturity workshop to 85 professionals, his largest group ever, he says. Kinder is clearly a fan of Versteeg, whom he says is "looking five to 10 years down the road," is thinking "how do we revolutionize financial services?" and points out that part of Versteeg's "passion is to make people proud of where they work."

There's another benefit to the Pure Life program. A new Dutch law that requires more transparency on the part of insurance companies plays right into the program's hands. "The law says all commissions must be transparent to the end client," notes Versteeg, so the actual cost of the insurance portion of a policy is revealed to the consumer, along with the commission and the advice fee. Versteeg says this disclosure helps IFAs "explain to their clients what their value added is."

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