TECHNOLOGY
The Hybrid BGA
Profound changes to the back-office BGA model
Best Interest regulation is not a question of if , but when .
The US economy is rapidly shifting to a “ platform economy ”. An economy where the business model of today ’ s Fortune 500 leaders is based on a technology platform . Think Amazon , Tesla , Apple — the list goes on . This has been underway for several decades , picking up momentum for the foreseeable future . Yet , another trend is also increasingly on the rise : the growth of “ hybrid ” business models . What is a “ hybrid ” business ? Simple definition — a fusion of people and technologybased servicing , where technology is streamlining the “ 80 %” of low-value interactions , while unleashing people to focus on the “ 20 %” of high-value activities , which require a human touch , whether due to customer demand , the complexity of the interactions , or the strategy behind the service model .
Future of the market
This is the future of financial services , including Life and Annuity distribution . Just look at the growth of Vanguard™ , which focused its business model on an intuitive digital user experience ; making it easy for clients to take action ; and integrating the online experience with other channels . Vanguard re-envisioned what types of transactions are more appropriately ‘ self-serviced ’, relative to those which require a financial professional ’ s touch .
In the next 3-5 years , the BGA model needs to move away from a back-office focused , people-centric model in order to survive today ’ s market dynamics . Let ’ s quickly look at the present trends :
Prior to Ensight™ , Matt Essick spent a decade at Zurich Insurance leading marketing divisions and innovation programs . As the leading Life and Annuity sales platform , Ensight™ is focused on supporting the BGA community ’ s transition to virtual sales . Messick @ ensightcloud . com .
The coming dominance of the Millennial financial professional class : We have known for years now that demographic change is here . A large percentage of today ’ s current financial professionals are now on the verge of retirement . On the other hand , Millennials now age up to 40 years old , and have become the largest generation in the US labor force .
This group is setting new expectations , emphasizing digital services and self-service options . Given Millennials ’ smartphone-centric lives , expect more demand for servicing their own life and annuity illustration and submission transactions , online .
The shift towards Best Interest ( BI ) and auditability : The Best Interest ( BI ) regulatory environment continues to expand at pace . The age of transparency — extending across suitability , pricing , cost and recommendations — is here . More broadly , think about the expectations set every second by a truly transparent Amazon shopping experience .
Best Interest regulation is not a question of if , but when . BGAs should now expect key channel relationships , whether it is institutions , wirehouses , RIAs or other financial advice providers , to move ahead of the regulatory dynamic . You will need to demonstrate a clientcentric approach to illustrating products across the market , while capturing an audit trail for every transaction , from initial case design to final revisions and submission .
Hybrid BGA continued on page 40
38 Perspectives Q2 2021