Financial Planning / Wealth Management

Wealth of options

by Alex Lai

Michael Leung, chief agency officer
The Prudential Assurance Co Ltd
Photo: Courtesy of Prudential

Insurance companies and banks have complementary roles

Banks are increasingly launching financial planning services that are similar to those offered by the insurance industry. But while both types of institutions aim to help clients manage and protect their wealth, there are a number of fundamental differences between them when it comes to company infrastructure and customer relations models.

Products such as life insurance offered by insurance companies usually target on meeting medium- to long-term financial goals and often have an element of protection built in. Such products tend to be fairly complicated, and it is important that clients are comprehensively briefed about their attributes and benefits. Personal interaction between advisors and clients are therefore crucial when such products are recommended.

"Prudential's face-to-face advisory distribution model reflects the fact that our advisors need to understand our clients' lifestyles and requirements, so that they can recommend the right product combinations and explain the product features effectively," points out Michael Leung, chief agency officer, The Prudential Assurance Co Ltd.

Stressing that there are a number of operational differences between insurance companies and banks, Mr Leung says insurance companies tend to focus on building close client relations and on assisting clients to achieve their medium- to long-term financial goals. In such long-term relationships, insurance advisors provide clients with convenient one-stop services to meet their needs.

Niche markets

Insurance companies focus on clients' life and medical insurance needs and retirement planning, so they tend to be specialised in developing medium- to long-term savings products, Mr Leung says. Insurance advisors therefore like to establish long-term relationships with their clients as early as possible, so that they can assist them with their financial planning throughout the different stages of their lives.

"Prudential offers a range of longer-term products from 15- to 30-year investment plans. These types of programmes are niche products and personal consultations play a major role during the selling process. Once again, this reflects the "face-to-face advisory distribution model", Mr Leung states.

In addition, insurance advisors enjoy high mobility, which allows them to meet with clients at venues and times convenient to them. This leads to greater flexibility for clients too.

Insurance companies also tend to stress long-term financial planning goals and protection, as well as life cover, which are not necessarily priorities for banks.

Another reason why it can be beneficial for clients to choose an insurance company to handle their investments is that they are not charged when they rearrange their fund portfolios. "Particularly in times of risk, investors tend to switch funds from time to time. Insurance companies provide a free fund switching service, which many customers find attractive." Mr Leung notes.

Essential tools

In order to build long-term relationships with clients, Prudential places great emphasis on finding suitable candidates to join the industry.

Through Prudential's Academy of Financial Services, comprehensive recruitment and training programmes are rolled out. In particular, a career profile test helps find the right candidate and the PRUfinancial planning seminars help recruits to equip themselves with professional financial planning skills.

On the training side, a comprehensive three-level training scheme and an online learning portal help newcomers to acquire the necessary professional skill sets. Extensive on-going training is offered to financial advisors, keeping them abreast of the market trends.

Innovative products and sales tools are essential for financial planners to meet their clients' needs. Prudential's insurance consultant homepage is a one-stop portal where advisors can access the latest product information, company news and client information. Another effective tool "Mobile+" is handy for advisors to efficiently conduct financial-need analyses and risk profiling for clients. These tools help financial planners explain the risk levels associated with products, and find products that match their clients' profiles.

Prudential has developed a full spectrum of comprehensive financial planning services, including an introduction to financial planning and wealth management, risk profiling, proposing tailor-made financial plans and regular financial reports.

Clients investing in long-term savings or investment plans can expect returns that exceed those of bank deposits in the long run, Mr Leung says, but he emphasises that banks and insurance companies are not necessarily in direct competition with one another, since the two parties cater for different needs.

"After all, many people use both insurance companies and banks for their different financial services needs. What is certain is that a proper long-term financial plan can help clients increase their wealth," he concludes.


Taken from Career Times 31 August 2007
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