Podcast on Disruption sponsored by Sun Life

(Runtime: 15 min, 58 sec; size: 7.30 MB)

The financial industry is on the cusp of major change from technology disruption, robo-advice and changing Client expectations. In this episode, the 1st of a 3 part series, we uncover if advisors are at risk. We’ll also look at what they can do to prepare for and stay ahead of the change.

In the first of this 3-part series, Jillian Farrow, Director of Strategic Business Development at Sun Life, and Wayne Miller, AVP of Strategic Business Development at Sun Life discuss disruption
© Sun Life Assurance Company of Canada 2019

Text Transcript

Jillian: You’re listening to Advisor Insights, brought to you by Sun Life. I’m your host, Jillian Farrow, the Director of Strategic Business Development’s Client Engagement Mandate.  With me today is Wayne Miller, who is the Associate Vice President of the Strategic Business Development team. Wayne is an actuary by training and has held a variety of different roles in his 30 year career at Sun Life. Wayne is a thought leader, a published author, keynote speaker and has made it his personal and professional passion to lead the advice revolution. Today, we’re going to be talking about disruption in the financial services industry. This is the first topic of a three part series. Welcome Wayne and thank you for joining me today.

Wayne: Thank you for having me Jillian. This my first recorded podcast so please be easy on me.

Jillian: I will. So this podcast today is going to cover a range of topics. First we’re going to unpack disruption by giving some recent examples of disruption, and highlighting what our industry can learn from them. Then we’re going to look at what’s driving disruption and whether or not our industry is at risk. We’re going to end the podcast by talking about ways advisors can make themselves untouchable by disruption. Go to sunlife.ca/podcast to get a copy of this latest episode and others in our series. Okay, Wayne, let’s dive right into this. So disruption is certainly a buzzword of our time. Why do you think this is?

Wayne: Well, it certainly is a buzzword. Almost a day doesn’t go by that I not see an email or a presentation of somebody talking about disruption. So it is the word of the day. A similar word that comes up a lot these days is evolution. And frankly, the two are related. I think disruption sort of has a negative tone to it and evolution probably has a positive tone, but they’re sort of one in the same. The reason they’re so popular today is just the speed at which things are both being disrupted, and the speed of which evolution is happening. It’s had an unprecedented speed, and I suspect it will continue to increase in speed over time.

Jillian: So Wayne, I’m sure there’s lots of examples of destruction in many different industries. Can you shed some light on these?

Wayne:  We all know the common industries that have been disrupted. The ones that come top of mind would be like the retail shopping industry. There was a time not that long ago where all shopping you had to get out of your house. Get in your car, go to the store and buy stuff. And then along came Amazon. The frequency of which people are buying online and doing their shopping online is increasing all the time and therefore disrupting the more traditional big box stores or malls. On the transportation side, like ground transportation, you know, if you wanted to get from point A to point B and didn’t have a car, you would hail a taxi or rent a car. Now there’s things like Uber and Lyft. Which actually are driving more customers from point A to point B, then taxis and rental cars are today and that evolution and disruption happened in basically a three year period. Travel. Booking vacations, you used to go to a travel agent. Now there’s things like Expedia. Which is, again, sort of the common place to go to those types of websites and apps to do your homework and book vacations. And then, usually at those vacations, you used to stay at hotel. But today, the biggest lodging organization, measured by number of rooms, is actually Airbnb. Which doesn’t actually have hotels or motels. So those are for the most common industries and you know I always say, I’m kind of old and probably a little slower to adapt to technology than Millennials, but I’m using all four of those things on a regular basis today. So that’s proof and point that those industries have very much been disrupted.

Jillian: I’d agree, and even from my personal experience, over this past weekend alone I purchase two different things online. I went on travel, um, or Expedia to look up some hotels and book an Airbnb. I didn’t take an Uber this weekend, but it really is in daily lives.

Wayne: Well, good for you Jillian! [laughs] You are, normally, not the first either [laughs again]

Jillian: That is very true! [laughs] So Wayne, a lot of people are under the impression that technology is driving disruption. Do you believe that’s the case? 

Wayne: Yeah, I agree that most people believe that as technology that’s driving it. It’s not at all driving the disruption. I would say it’s fueling it rather than driving it. It’s enabling the disruption. What’s driving disruption in any industry, frankly, is the client experience. And if the client experience currently, in whatever industry we’re talking about, is not a good one that’s a big open door for any disrupter. I recently saw a video, it’s an old video, it’s by Steve Jobs. I think he was addressing a shareholders meeting in the mid 1980s. And that video, he did a phenomenal job answering questions. So a lot of shareholders were not too happy with Apple at the time and were bombarding him with difficult questions. And there was one very angry question that was asked of him and his response was amazing. I’ll just paraphrase what he said. You wouldn’t have necessarily have thought that he would say this, certainly at that point in time, but he learned something obviously just prior to that. He said that: “You’ve got to start with a customer experience and work backwards to the product. You can’t start with a product and figure out where to sell it” and frankly, our industry, the financial services industry for as long as I’ve been in it, close to a hundred years, has very much been that way. Let’s just start with the product and find out where we’re going to sell it. And not a lot of attention given to the client experience and is it good, is it bad and if it’s bad, why is it bad? So it’s that poor client experience is what’s driving it and the technology is enabling those that want to disrupt it.

Jillian: That’s great. So really, Amazon and Uber can be considered major disruptors, and what I heard you say is that disrupters see pain points and things that are lacking in the marketplace as that opportunity. And then they come up with a way to improve that client experience.

Wayne: Yeah, and you probably experienced this yourself when you were just telling your story about what you were doing this weekend. You know, I find myself from time to time, you know, needing to purchase something. And I think, when am I going to find the time to go to the store? And then you get the store, and they’re out of stock. So it’s not a good client experience. And then I remember before I go to the store that hey, there’s Amazon! So just while I’m watching TV, bring up my phone, click on the app. And literally in 30 seconds I can find what I’m looking for, be happy with price point and swipe, and it says it’s arriving at my house the next day. It’s a perfect experience and Uber is the same way. The days of trying to hail a taxi that’s whipping past you on a street or not coming by at all. You just bring out your phone, click on the app, it tells you when they’re going to arrive, how long it’s going to take to get to where you want to get to and how much it’s going to cost. It’s really a very pleasant client experience.

Jillian: And I think convenience goes across all of this.

Wayne: That’s sort of why it’s an ideal client experience.

Jillian: Absolutely. So what can we learn from all this, is our industry at risk of disruption?

Wayne: Well, I know that all industries are potentially facing disruption. If it’s not this year it will be next year. And so our industry, financial services, very much because again the client experience is not ideal. [We’ll] talk about that maybe a little bit later. We do know for a fact that things like fintech and insuretech are sort of emerging industries. Basically disrupting industries. Alternatives to the traditional channels and firms in our industry. And you know, this particular stat is probably a couple years old, but we know that in the US alone there were 130 start-ups on the insuretech side representing a 3.5 billion dollar industry. So another study, [which] was very recent in fact, that it says 65% of Canadians are open to disruptors in buying financial products from new entrants. And it was broken down by generation as well. And not surprisingly, Millennials, basically were 100% open to buying financial  investing and financial products in a very non traditional matter. Which again, wide open door to a disrupter. It sort of comes back to these client pain points, and what exactly are they. And we have found, and I’m not surprised by this, I’ve said this myself for a long time, you know, if you were looking for an advisor, a good financial advisor, how would you actually do that? How it’s done today is not the way that really we want it to be done. It’s done purely from referrals. You’ve got a friend or family member that says “Hey, my advisor is great”. And you say “Hey, I should talk to that advisor”. That’s kind of a crude way of being introduced to advisors. The skepticism around the industry and financial advisors themselves is strong enough to be a pain point, frankly. And then I don’t think the average person knows what an advisor does, if they actually sit down with them. And I don’t think many advisors actually explain what they do. Because there’s some people that call themselves advisors that only do insurance. There are some advisors that only do investments. And then others that do both insurance and investments and if it’s investments, it could be asset accumulation. It could be retirement planning. It could also be estate planning. But it’s not clear who does what in our industry.

Jillian: So I guess this is the biggest question. If our industry, like others you said, is at risk of disruption, what can advisors do about it to stay ahead of it and to stay relevant?

Wayne:  Well, the first thing I have to do is decide whether they’re a salesperson or an advisor. I don’t know what the actual stats are [but] the general consensus seems to be that there are more sales people in our industry than there are actual advisors. And if they’re a salesperson they have to decide do they want to stay in the business or not. I don’t think that staying in the business as a salesperson is an option, frankly, because those are the very people that are going to get impacted by disruption. So choose between salesperson and advisor. So if you want to choose salesperson just think about an early retirement [laughs]. If you want to be an advisor then let’s move on to the next step. The next step then would be just tell your story. This is the average consumer does not really know what an advisor does, and advisors don’t do a lot of marketing and branding, then that particular gap is not going to get closed. So tell your story. And frankly, your story needs to include three different elements. What you do, how you do it, and why you do it. But in the reverse order. Which maybe might not be obvious to most people. Because typically in our industry we do a lot of talking about what we do and don’t really get to the other two things. But as Simon Sinek said “People don’t buy what you do, they buy why you do it”. And that’s just because the part of your brain that actually is driven by emotion is what makes decisions on whether to sit down with you as an advisor and ultimately stay with you as a client. So make sure you tell your story by starting with why you’re in the business. What are your beliefs? What’s your belief system. And usually that’s going to be compelling enough story for the client to stay and listen to the rest. Which is how. Because again, the perception is that the advisor is going to come in that first meeting and try to sell you something.  And I do know a lot of very good advisors who do not ever talk about product or what they do or try to sell anything in that first meeting. So the expectation is “You’re going to try to sell me a product”. But the actual process you take your clients or prospects through is a more thought provoking fact-finding exercise to understand goals, and wants, and dreams. Way before you get to the product solutions. Then you have a very compelling why, and I think clients and prospects want to know what that process is, in fact. So again, start with why. Spend some time explaining what your process, and how it is you help take clients from where they are today to where they want to go tomorrow. And then, at the end of the day, what you do. Do you just do investments. Do you just do insurance. Do you do everything for all people.

Jillian: Those are some great points. So thank you very much Wayne. I want to take a moment to summarize what you’ve said. So first off, good advisors shouldn’t be afraid of disruption. It’s the sales people and the product pushers that should be. We heard you say that advisors need to focus on their why, their how and the what, in order to stay ahead of disruption. And if an advisor is doing all the right things to create a truly great client experience, you should be on the right course here. So thank you everyone for joining us today. Just a reminder, to access this podcast and others, go to sunlife.ca/podcast and I encourage you to tune into our next podcast, which is all about the landscape of financial advice.