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Retirement Planning > Retirement Investing

Insurers Should Digitize Retirement Services Sales: McKinsey

By Allison Bell

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Making more use of website sales systems and call centers could increase insurers’ sales of life and annuity products to U.S. retirement savers.

Consultants at McKinsey & Company make that argument in a new report based on a recent survey of about 4,600 U.S. adults. The consultants are releasing the report as the country is heading into National Retirement Security Week, which starts Oct. 15.

(Related: When It Comes to Financial Literacy, Fintech Is Dropping the Ball)

The firm asked survey participants with $25,000 to $250,000 in investable assets to describe whether they see life insurers as a “preferred provider” for various types of solutions.

About 68% of those participants identified life insurers as a preferred provider for “providing for loved ones in case I die,” and 52% identified life insurers as a preferred provider for “leaving extra wealth for family in case I die.”

Just 12% identified life insurers as preferred provider either for “preparing for retirement” or for “not outliving assets and savings.”

Consumers with $25,000 to $250,000 in assets “have a narrow view of the value that life insurers can deliver across top financial priorities” and “often feel skeptical toward and distrust life insurance carriers and agents,” according to McKinsey.

McKinsey classifies consumers with $25,000 to $100,000 in assets as mass-market consumers, and those with $100,000 to $250,000 in assets as middle-market consumers.

Those consumers tend to be more comfortable with using remote and online information sources than with getting advice from human advisors in person, according to McKinsey.

“Making the transition from a predominantly in-person, agency-based distribution system to a portfolio of models, including digital direct and call center–based remote advisors, will require carriers to change the way they operate in several important areas,” the firm says. “Carriers often focus on the needs of advisors when building new capabilities, but, in the future, they will need to adopt a more consumer-centric mind-set and reorient their strategies and processes accordingly.”

The firm notes that it found that some mass-market consumers do like to get advice from human advisors.

“These customers tend to place heavy emphasis on their personality fit with the advisor, and they are willing to hand over all their information so that the advisor can provide the most informed advice based on a full view of their financial situation,” the firm says. 

— Read 7 Critical Changes Driving Fintech Evolution: McKinsey on ThinkAdvisor.


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