Tag Archives: Maddock Douglas

Navigating a Path to ‘Jubilescence’

LIMRA and Maddock Douglas embarked on a study that unveils significant findings among mass-market consumers and their attitudes about “retirement.”

Retirement is in quotes because the notion of traditional retirement, that is, the stoppage of work at a set age, and saving up enough in advance to prepare for it is likely passé, perhaps even irrelevant.

There is significant opportunity for providers who can crack the code in the mass market, also known as the “middle class.” This study aims to learn about the middle class, not from a demographic point of view but from an attitudinal one. Some significant findings include: Middle class is a state of mind, not an asset or income level.

Interestingly, 36% of people in lower income ranges and 81%of people in upper income ranges consider themselves middle class. So that state of mind is quite widespread, and 74% agree middle class values are worth protecting.

We found out only 25 % of the people who define themselves as middle class are thinking of retirement in the traditional sense (stopping their current work at the age of 65). Another 22% are thinking retirement will be after the age of 70, and 39% think it will be by age 64 or earlier. A full one-third say they very well may not retire at all.

See also: 75% of People Not on Track for Retirement

In addition, the notion of retreating on beaches and sailboats is also passé, as many report they aspire to a lifestyle that is more down to earth, that makes more time for family, or even for pursuing modest hobbies, health and faith.

And the notion of retirement in general is being replaced by the notion of a lifestyle change, but one that is firmly rooted within a middle-class mindset. It’s not about a life of leisure; it is about being active with a different purpose. And this can happen in any timeframe and with many different catalysts.

We should stop thinking about retirement as a bright line goal and be more fluid in our ways of helping people navigate their path to “jubilescence,” a new word coined by combining the Spanish translation of retirement (jubilación) and the idea of adolescence, a transition to a future self. Some people may have several jubilescence phases in their lives; some may have one. Some may be brought on in a positive and proactive way; some may be thrust upon people unexpectedly. Either way, the opportunity for professional advice is abundant. And perhaps the planning time horizon should be shorter and make room for more than one transition.

In addition, jubilescence is highly individual; we cannot use demographics as an indicator of what people need or want. In an analysis of individuals in the same demographic class and circumstance, we found high degrees of individuality, even uniqueness, in terms of priorities and needs. One size does not fit all.

See also: Why People Don’t Save for Retirement

About one-third admit they don’t have an advisor and believe that’s appropriate. This suggests that we have a lot of work ahead of us to change the model and change the outcomes for consumers and ultimately the industry. If the current incumbents of the industry don’t, then disruptors will because the new Department of Labor rule will force some players out of the game, making opportunity for others.

Finally, this study opens up spaces for new kinds of expertise beyond current products. We should be thinking about developing and delivering expertise that addresses needs that go beyond saving, investing and insurance, and assist in skilling up for new work opportunities, maximizing the value of living spaces and managing crises. This could be a transition opportunity for the advisors of today or a recruiting opportunity for the advisors of tomorrow.

So the question is … Can this industry commit to serving the middle class in a way that is attractive, unbiased and also profitable? With the right work, analysis and innovation, the answer is yes.

Does DOL Ruling Require a Plan C?

As the Department of Labor’s “ultimate” ruling becomes finalized in the short weeks ahead, insurance carriers across the country are putting a lot of sweat equity into various strategies. These strategies include many variants of two plans going on simultaneously:

Plan A: Fight. After all, there are flaws in the way this ruling was brought to bear, and it places significant burdens on the industry that could harm consumers.

Plan B: Alter. If the fight fails, then companies must be ready with alternative plans that are the least disruptive to their business model.

Both plan A and plan B make a ton of sense, and there is no doubt that they must be done, and done quickly. The sales engines will shut down without them. However, both plan A and plan B are missing something really important: the future.

See Also: Stepping Over Dollars to Pick up Pennies

Why is the future missing? Both of these strategies rely on keeping things the same or as close as possible to the status quo. Yet, things have changed. While we may despise the way this legislation was brought to bear, and the math is very questionable, there is something we can’t deny. There is growing consumer mistrust in commissioned agents and advisers because it is believed they will sell products that make them the most money.

While we all know that many commissioned agents do act in the best interests of their clients, consumer perception is the reality. A 2012 study by Maddock Douglas revealed that more than 70% of the population agrees that “insurance agents always try to sell people stuff they don’t really need.” Ouch.

So, in spirit, this legislation is inevitable, and if it doesn’t take effect now it will keep coming back in new forms, and we will be fighting the same fight over and over. This realization blows up plan A.

Further, if the ruling does take effect, and we merely alter our processes to work within the exceptions and leave the current compensation model largely intact, the consumer won’t be satisfied and will gravitate toward another model. That realization blows up plan B.

So then we must create a new plan. Plan C: Lean in.

No, I don’t necessarily mean robo-advice. While robo-advice is the proposed solution against bias, it is only one solution. It may not actually be the right answer for your organization. The consumer mistrust around agents and advisers does not mean we need to eliminate humans; we just need to eliminate bias.

This is clearly an innovation challenge, and it requires developing many ideas and then choosing the best one(s) to pursue as your plan C. Your plan C ideas need to push thinking beyond the status quo, and if it is to be a successful alternative it should contemplate the following: 1) What would an unbiased advice model look like if it were invented today and the current one never existed? 2) What kinds of adviser incentives would the consumer see as aligned with their own best interests? 3) Who has solved a similar challenge in another industry, and what can you learn from them? 4) How can you prototype one or more of these models and learn if it will work before you invest a large sum in building it?

All of these questions, and others, can be answered if you apply the right process for getting to your plan C. Yes, it is possible. Some may wince when I state the old wisdom that there is opportunity at every point of major change, because this one really hurts. I’ve heard some of the most respected experts call this the biggest change in the industry since the Armstrong investigation in 1905. It is painful; however, the old wisdom is still true.

There is always opportunity in change, as long as we keep our wits about us enough to see it. If not, then the opportunity belongs to the disrupters of our industry.

This article first appeared on National Underwriter Life and Health magazine.