Upgrade Challenge Or Upgrade Hell?

Multi-disciplined: This goes hand in hand with the previous point. Advisors must not only be conversant with the income features of ever-changing insurance products but also with those in allied sectors–mutual funds and other securities, banking products, reverse mortgages, and managed money accounts.

New: Here is the biggest challenge. The myriad of income features and products that are popping up today are making upgrade tracking a must-do. This is not just a matter of keeping tabs on things like guaranteed minimum income benefits and guaranteed minimum withdrawal benefits in variable annuities. It also entails following upgrades in emerging areas like return-of-premium products; combination products (life with LTC, annuity with LTC, disability income with conversion to LTC, etc.); targeted asset allocation packages (i.e., for retirement goals or total asset management); stochastic modeling; etc.

In short, tracking upgrades means tracking more products and product categories than ever before.

This is a lot for a single advisor to do. Hence, the growing importance of the products desk at brokerages, wirehouses, marketing organizations and other distribution channels. Hence, the greater reliance on expert wholesalers.

At least the advisor has someone to turn to. But what about the consumer?

Presumably, the advisor is the one who keeps the client up to speed on upgrades.

Many advisors tell me they welcome the opportunity to do just that. It’s a good chance to re-educate and to firm up expectations. It provides relationship-building time. It can lead to cross-selling.

When advisors don’t do the relevant education, however, clients may end up grousing like that man who did not like his computer upgrade. He did not know what to expect, what to do or where to go for help.

Even when the enhancements are state of the art, if customers don’t see the advantage, understand how they work and know where to go for help, the new and improved choices can backfire.

Some people I know actually have rejected upgrades (and even terminated contracts) because they felt uneasy about the enhanced features. (In a few cases, I learned the rejected items were consumer-friendly, but the people did not know that.)

Better outcomes would likely occur if consumers receive suitable education on enhancements offered and on the consequences of moving from older products (by way of upgrade, rollover or purchase) to newer versions. This sets appropriate expectations and lays the groundwork for a more positive experience.