“There is no question, branding is an increasingly important driver for sales and distribution in the life, annuity and long term care insurance business,” says Michael Hughes.
A senior actuarial advisor with Ernst & Young, in the Chicago office, Hughes says branding is particularly important in the boomer market, where obtaining trust is all important.
Boomers are facing a complex set of issues, Hughes explains. These surround boomer mortality and morbidity, the loss of income from disability, meeting the education needs of their children, and their own retirement and care needs, among others. Many advisors and retail insurers do offer planning and advice in these areas, he continues, but to be effective, they need to have the clients trust.
“Boomers are putting their financial future in the hands of someone else, and they need to know their choices will serve them well for 20 or 30 more years,” he says, and branding helps build trust.
How to work with branded products when advising boomers is the focus here.
This is not a small matter. Robert Walker, a financial planner in Florence, Ky., went from selling a relatively unknown product line to selling a branded product line and says his sales cycle has been cut by 10 to 15 minutes per case as a result.
A vice president with Millison-Walker Financial, whose broker-dealer is Questar Capital Corp., Walker had sold insurance under the Manufacturers Life USA (Manulife USA) name for several years. But all that changed in April 2004. Thats when the parent company, Manulife of Canada, purchased John Hancock. This brought the Hancock name into the selling picture. Then, in January 2005, Manulife rebranded its U.S. variable life and annuity products and its Signator Financial Network career agency system with the Hancock name. It also renamed the U.S. company John Hancock Life Insurance Company (USA).
Those changes made a big difference for Walker. Most U.S. customers did not recognize the Manufacturers name, he explains, “so I had to spend time explaining who Manulife is and what they do” before moving on to making more detailed recommendations.
But virtually all customers recognize the John Hancock name, so now he no longer needs to “explain the company,” he says. Thats how he has saved 10-15 minutes in sales time.
Branding simplifies things for the client, he says, explaining that many boomers do not want to be “bombarded” with detailed information. Boomers want to bring their financial problems to the advisor and have the advisor make recommendations, he says, adding this discussion is about financial strength, disclosure and how the plan meets goals and objectives, not company particulars. He focuses on company strength, a point he says is “of paramount importance when offering products with guarantees.”
Walker believes brand recognition gives people a sense of relief. “It makes it possible for us to move on to the next part of the discussion.”
What does the term “branded products” mean? In the insurance sector, it refers to insurance policies issued by carriers widely perceived as offering financial strength, long-term stability and integrity in service, says E&Ys Hughes.
Many insurers brand both themselves and their products/services, building a “name” that becomes associated in public perception with expectations of top quality, service and strength. Financial advisors can brand themselves, too, says Hughesfor instance, as trusted advisors whose advice, recommendations and other services have earned them the confidence of their clients.
Insurance company branding especially emphasizes the insurer will “be there” for the long term, he adds. “And advisors and providers both position their brands to reinforce the message that they have the customers best interests at heart.”
James M. Benson, president and CEO of John Hancock Life Insurance Company (USA), predicts that using branded products and services with baby boomers will be “essential” in the years to come.
“Top ratings, scale and product innovationsthose are the things that count” to be a major industry player, to be among the top 5 or 10 companies. But if a top-10 company wants to grow its market share, he says, there will be more consolidationsand “the branded companies will do best.”