Money Moves

Managing behaviour in the insurance profession

by Wendy Shair

Joseph Jordan, senior vice president, Metlife
Photo: Courtesy of Metlife

Savvy financial advisers do more than simply manage their customers' assets—it is equally important that the ways that they conduct their business will fulfil their customers' expectation emotionally. As such, an understanding in customer behaviour can be crucial to tapping business opportunities in the fast-changing insurance industry.

This view is advocated by Joseph Jordan, senior vice president, Metlife, a leading global provider of insurance, annuities and employee benefit programmes.

A guru in "behavioural finance", Mr Jordan believes that most people are not motivated by hard facts and data. Rather, they act primarily in accordance with their emotions. "Customer engagement is all about recognising their behaviour patterns and this is pretty much the concept of behavioural finance," he explains.

Most financial information and services are delivered conventionally in a rational approach, Mr Jordan comments. He advises that insurance professionals look instead at behavioural finance as an emotional tool to achieve goals for both customers and themselves.

He points out that people tend to think of what they are supposed to do and subsequently do the opposite when it comes to financial decisions. "One example in the financial market is that investors often buy high and sell low," he explains.

Facts and figures can exist alongside emotions in harmony, he notes. "At the end of the day, it's really about the consequences of the decision that you make."

He adds that insurance professionals and financial advisers need to learn to stimulate their clients' thinking process and in so doing prompt them to develop insights into how the benefits generated from insurance products can be converted into tangible financial gains.

"Most people would feel reluctant to purchase insurance products for one reason or another. All they want to buy is the process," he states. "For this reason, part of a professional financial adviser's responsibility are to facilitate or trigger the decision process and help customers to analyse their decisions."

Professionals in the insurance business must therefore have a positive mindset, analytical techniques and a thorough understanding of their customers' needs and financial aspirations. "Insurance professionals have the power or influence to change of course of their clients' lives," he says, emphasising that this again is supported by and not about hard evidence and data.

He remarks that there remains a lot of potential to develop the idea of behavioural finance in Hong Kong. "Behavioural finance is an inevitable trend," he claims.

In view of increased life expectancy, Mr Jordon cautions that people nowadays must take into account the economic implications on the quality of their retirement life. "The burden of retirement is going to fall on the individuals, not the society, and people definitely need someone to help manage their assets and prepare them well for potentially longer retirement," he stresses.

Inevitable trends

  • Fulfilment of customers' emotional expectation equally important
  • Behavioural finance a tool for achieving goals for both customers and financial advisers
  • People need to prepare for longer retirement life

Taken from Career Times 5 August 2011

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