By Timothy K. Traynor

Financial convergence is, at its core, a marketing issue. To be effective in convergent marketing, however, producers and financial services companies need to find ways to align their core competencies and customer needs within a cohesive strategy.

Following are some suggestions for doing this:

Identify the core. Increasingly, producers and advisors must ask some challenging questions about their future direction.

What are my core strengths? How do I best “package” and present myself to my targeted market? Am I a life and health agent, an estate planner, a financial planner, a mortgage brokeror am I most effective blending two or more of those roles? Do I stay in a traditional agency, go out on my own, or pool talents and resources with other professionals?

This questioning must occur in all sorts of distribution channels. For example:

John A. is a career life agent who has built his niche in insurance and investment counseling to upper-income professional and retiree clients. He has just been approached by First & Last National Bank to join its trust department and minister to its high-net-worth clients.

Mary M. has a health insurance background, has moved comfortably into marketing and selling long term care insurance and sees her mission as helping families with older, disabled parents address their special needs. She is increasingly using reverse mortgages as a tool.

Tom S. has a good career as a multiline agent, but his main carrier is pressuring him to sell a lot more life insurance, and soon the company will be rolling out a mutual funds and investments campaign.

Each of these individuals is being swept into the realm of converging financial services. How they identify what they do will determine the marketing direction they will take.

Be open to new products. Producers need to be aware of, and thoughtfully approach, the type of questions and tensions that arise when new products and services arrive. In the convergent marketplace, these arrivals will bring new features, systems and possibilities.

Sooner or later, producers will need to decide whether to go with an expanded portfolio or stick with the familiar and comfortable. XYZ Insurance Company may, for example, insist that its producers expand sales to include the new offerings. Even if XYZ allows producers a choice, are these same producers prepared to see some new-look distributors, emblazoned with the familiar XYZ corporate logo, active in “their own” marketplaces?

Everybody involved also needs to explore a related question: How will consumers view this expanded availability of products and distributors? Favorably? Hesitantly? Skeptically?

Consider the existing distribution system. Producers and carriers need to consider what happens when XYZ has doubts about how its top-producing distribution system will handle requests to sell additional products and services to additional markets.

The existing distribution system may well be able and willing to go in this direction. But, if this does not prove successful, then XYZ will likely need to add a complementary distribution channel. Should XYZ develop or acquire this channel, or negotiate an alliance with an outside distribution partner? Can the different distribution systems “share” customers in order to optimize revenues, profits, customer retention and allegiance?

Settle on strategies for the corporate marketers. These marketers are the people at insurance companies, securities firms and banks who are charged with expanding sales, revenue and market share.

The question here is, how can these individuals approach convergent marketing in a way that benefits their own organizations, distributors and consumers? Here are some ideas.

First, they should identify the core competencies of their company that have clear value to consumers and also are marketable, expandable, complementary and sustainable as advantages.

Second, given those core competencies, they should identify new products or markets in which the company can achieve market share that is profitable, significant and defensible. Conversely, they should identify and then eliminate potential products or market areas that do not have the earmarks of viable candidates.

Third, they should develop any additional required competencies or acquire them. These additional competencies can be part of the corporate structure or part of a cooperative arrangement with another company that can achieve the goal efficiently and profitably.

Develop a plan for managing the “intramural tension” and “culture clash” that might occur when previously distinct products, services or distribution systems are brought together.

This planning requires managers to address several key questions, such as: Will the existing people sell the new products? Can new distributors fit within an existing structure without straining relationships and raising resentments? Should the company try to bring the new distributors in house, or is it more practical and prudent to keep them under a separate roof? Will the new distributors respect and enhance the new corporate culture?

And, at the end of the day, will the new and expanded offerings meet expectations in terms of enhanced marketplace image, increased usage or penetration per customer or household, expanded and maintainable market share, and greater revenues and profits?

There are no immediate or easy answers to the questions that convergent marketers confront. But asking the questions honestly and persistently, and pursuing the answers intelligently, constructively and doggedly, will go a long way to assuring success.

Timothy K. Traynor, CLU, ChFC, is principal of sr4consulting, Chicago, Ill. His e-mail is tim@si4consulting.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, May 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.