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Industry Spotlight > Broker Dealers

Flummoxed By Financial Forms

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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.

Citing retirement income products as an example, he says “the industry has to take a step back–to build simple income solutions, simple processes and simple marketing. We don’t need to explain how the watch works; we just need to explain what it’s for.”

This simplification needs to happen at the industry level, not via individual company solutions, Grady stresses.

4) Keep an eye on regulatory and legislative changes that affect forms, suggests Scott Logan, a registered investment advisor with Cornerstone Financial Planning, Inc., Fort Myers, Fla.

The new Rule 2821 issued by the Financial Industry Regulatory Authority, Washington, D.C. is an example, he says. A major section of the rule adds more documentation requirements for registered reps and their principals, in sales involving variable annuities, Logan says.

In many cases, this will require reps to obtain more information than ever from
VA clients–details on objectives, tax status, etc.–and to fill out more detailed forms.

If a boomer is overwhelmed by the questions asked, or concerned about disclosing so much information, “the broker-dealer will have to address that as part of the principal’s review,” Logan says. “Some B-Ds may ask the client to sign a statement (yet another form) indicating he or she does not want to supply this information, and then make a judgment on whether to go ahead or not.”

A concern the VA industry has with this rule is that the heavy emphasis on documenting advice and disclosure will become burdensome to customers, says Logan, noting that the mutual fund industry does not have such detailed requirements. “That could discourage VA sales,” he says.

What is needed, in regulations and laws, is “balance,” Logan sums up. “We need to find a balance between what is required, needed and helpful, and what is overkill.”

5) “Address the inherent nature of baby boomers,” advises Mike Sullivan, president of 50-Plus Communications Consulting, Charlotte, N.C.

For instance, the oldest boomers are now in their early 60s. “With age, small print is becoming a problem, so it’s hard for some boomers to see the small print used in some forms.” His advice: make the print larger.

In addition, older people tend to respond more readily to forms that use pictures and other visual cues, Sullivan says. “Right now, many financial forms are just words,” he says, speculating that younger people, who do not need visual cues, may have developed them. His suggestion: design forms to use icons or pictures, where possible.

Boomers respond to simplicity too, Sullivan says. So, figure out ways to simplify things. “That will be easier on processing too–the right information will go in the right place and all the things that need to be checked will be checked.”

He likes the idea of advisors helping clients fill out forms. That helps ensure accuracy, he says, and also helps build the relationship.

“If an advisor is too busy to do this, consider hiring a detail-oriented part-timer who is bonded to do this work. Or create a section of the agency website to help clients understand the forms and how to fill them out or to enable advisors to print out the information and hand it over to the client.”

Problems with forms are real, Sullivan concludes. But, he adds, “financial professionals can use that as an opportunity to create a ‘wow’ experience for the client.”

There is an “unspoken issue” related to forms, points out Unkefer, the Arizona BGA. And that is: “filling out forms is service work for which the advisor is not directly compensated,” he says.

But advisors and providers need to keep in mind that, if forms are filled out incorrectly, that’s an issue too, he says. It takes time and money to go back for corrections, he explains, and incorrect forms could lead to problems later on.

His suggestion: review client forms as part of the annual review, even for products the advisor did not place, and/or fix problems while doing a new transaction.

Filling out forms online might help, he adds. Many such forms are set up so people can’t move on to the next area unless they’ve completed the previous one.

Boomers’ lives are always changing, Unkefer says, so they do need updates. But if it’s not easy for them to make updates and corrections, if boomers aren’t committed to doing it by themselves, and if advisors don’t help, “the boomer might not do it at all,” he cautions.


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