Flummoxed By Financial Forms

The greening of America notwithstanding, some baby boomers are almost drowning in a sea of financial forms, insurance and otherwise.

These are forms for opening/closing accounts and purchasing products, for making beneficiary, ownership or other changes to existing products; for executing withdrawals, policy loans, and other product options; for gifting assets; for suitability sign-offs, and more.

Four or five years ago, most insurance transactions involved an application, a transfer form and a disclosure form, recalls Andrew Unkefer, president and CEO of Unkefer & Associates, a brokerage general agency in Glendale, Ariz. “It was pretty easy.”

But now, Unkefer says, “companies are adding more and longer disclosure forms, and many states require them. In addition, there are lengthy buyers’ guides to go through, longer applications to fill out, and multiple pages of disclosure on products and features (surrender charges, nursing home waivers, withdrawals, riders, etc.).”

How can advisors and providers navigate? Here are some suggestions:

1) Recognize that the problem exists, suggests Unkefer. To illustrate, he recounts the story of a boomer–a 52-year-old woman who wanted to move money out of her qualified account. “They (the provider) kept sending her more and more forms,” he says, and she ended up in tears because she could not figure it all out. The woman’s advisor brought her to his firm, and together, they wrote letters and filled out forms. The following week, the firm followed up with the provider–Did you get the fax? What else do you need?–until the money moved.

Financial providers and advisors need to recognize the burden this “paperwork” creates for customers, Unkefer maintains. “They need to help the customer.”

2) Be aware of the magnitude of the problem, says Danny Fisher, principal of The Fisher Agency, a BGA based in Dallas.

For example:

–When a company launches a promotion with a limited time frame, check to see if a new form is needed to participate in that promotion, and find out how to get the form and fill it out. “It’s not the same with every company,” he cautions.

–If it’s an annuity, determine if it is owner-driven or annuitant-driven, Fisher says. “If you fill it out the wrong way, there will be problems later.”

–If the state changes requirements–as Texas did for replacements forms, effective January 1, 2008–find out how the carriers are complying. Insurers don’t always interpret things the same way, he says, “and some will say, ‘we’re right,’ while others say, ‘no, we’re right.’” In fact, he says, with forms in general, the “we’re right” interpretations of various parties are a key part of the problem.

–Learn what forms each carrier requires, Fisher continues. “For instance, some companies require a trust certification form while others don’t, and some companies require a suitability form for certain types of contracts while others don’t or they say it’s open” to choice.

–Be aware that “some companies don’t require a policy disclosure form and don’t want to see it with the application.” Fisher says he personally finds such forms to be helpful, but if a company doesn’t want it, he doesn’t send it.

–If the application does not allow enough room to list multiple beneficiaries, says Fisher, “find out if you’ll need another form for that, or if the carrier will accept an additional sheet of paper with the names.”

–Some forms may have a company name on them that does not match the name of the issuing company, says Fisher, noting that this frustrates customers. This can occur as a result of one or more mergers between the issuing company and successor companies, he says. “An administrator often handles the issuing company’s policy but the actual forms may not change, or the forms may now show both old and new company names, confusing the customer.”

Most people just don’t like change, Fisher sums up. “They know you can’t stop change, but they want consistency. And they want help with filling out their forms.”

The cost of not dealing with forms effectively is that “clients can become suspicious, anxious or confused,” he says.

3) “There does need to be more consistency and a better consumer experience,” agrees Christopher Grady, president and CEO-retirement income at Genworth, Richmond, Va. Many forms and applications are too complicated, he says, so the industry needs to simplify them.

Technology is a component to getting it right, he continues, citing the straight through processing initiative of NAVA Inc., Reston, Va., as an example of a positive step forward. The STP project is a multi-company effort to automate settlement of variable annuity sales; among other things, it requires consistency in online forms and information sought for those transactions, and its byproduct is greater simplicity.

But just “throwing money at technology is not the right answer,” Grady adds.