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July 02, 2006 at 04:00 PM
At a recent industry meeting, a panel of portfolio managers and mutual fund distributors were discussing how most mutual fund sales are made using lifestyle or asset allocation strategies.
The approach has been embraced by customers, but there is a side issue that has come up that is relevant to sales in the variable universal life insurance business.
The side issue is, according to the panel, that it has been difficult for individual fund families to market their products to customers unless those funds are included in the lifestyle or asset allocation programs. (To be included, those funds would need to be performing near the top.)
The takeaway is that buyer demand for simplicity is so strong that it is pressuring the industry to comply.
Later that week, I ran into the same point, this time on a sleepless night when I saw a popular TV infomercial for a cooking appliance. The product is not the least expensive one in its category nor is it stylish. In fact, it’s kind of an ugly box. However, the marketing strategy is simple and right on target: Put your meal in and wait for it to be done. The audience gets involved, shouts the product slogan and reinforces how easy it all is.
Clearly, those Americans want simplicity. So do many others including registered reps and their clients.
Think back. How many individuals want to make a life insurance purchase as easy as popping some item into a cooking appliance and saying “presto” a few minutes later?
Actually, most do something like that.
Unfortunately, unlike the cooking machine that already has a mechanism to heat, cook and stop at the appropriate time, VUL insurance contracts need to be managed. It is not a “buy it and put it in the box” kind of policy. If the client buys it and forgets it, and if the rep sells it and forgets it, the end result may not satisfy customer expectations.
