OK, I apologise that this seminal speech of 1963 has been slightly adjusted to meet my purpose but do we believe we inhabit an industry where all customers are equal?
In my last article, I argued that focusing on customers makes good business sense and in order to develop a successful business, it’s important to target specific customers and to gather a detailed understanding of their goals, hopes and fears, attitudes and behaviours. There is no room for ‘one size fits all’ customer solutions and only when we have real insight can we build an offering that results in customer equality.
In this article I am going to share some of Friends Provident International’s valuable insight and pose a few questions for the industry.
Friends Provident International has carried out a substantial amount of research over the past two years with Indian, British and Australian expatriate customers in UAE, Hong Kong and Singapore, both of a qualitative and quantitative nature and the insight we gained has been used to reshape our proposition. Insight is, of course important to all businesses. Insight is robustly gathered intelligence from multiple sources rather than the opinion of individuals, so you can rely on it. And it’s just as important to advisers as it is to life companies – all businesses need it to make informed decisions.
So what has Friends Provident International learned and what does it mean for advisers and life companies?
Six of the best
- Between 50% and 76% of all expatriates are likely to return to their country of origin to retire.
- Retirement is the top goal for all expats in HK and Singapore. In the UAE property purchase is the top goal.
- Most expats wish to save for less than 5 years in HK and Singapore. In the UAE they prefer to save for 6-10 years.
- All expats prefer investments from their home country.
- Most expats need less than 25 funds to choose from or have no interest in funds at all, focusing instead on meeting the goal they are saving for.
- Advisers come second to friends and family for advice except for American and British expats in Singapore and UAE and for British expats in HK.
Six resulting questions for life companies and advisers
- If we know that customers are going to be returning to countries with high tax liabilities such as Australia, UK, USA etc. and we want their business, then isn’t it appropriate to adjust international life products to mitigate these liabilities and isn’t it only fair that customers should be made aware of the tax position of these products in their home country so they can work out if they are efficient or not? Friends Provident International has produced a series of guides on the subject of tax and estate planning to demonstrate the effectiveness of its solutions for its target expatriates returning home.
- If we know that retirement is the top goal of expats, isn’t it appropriate for product providers to develop specific products and for advisers to promote specific products to meet this goal rather than push ‘one size fits all’ savings products? We think there is significant room for innovation in this space.
- If expats prefer to save for less than 5 years, why are there so few alternatives in the market that meet this? Shouldn’t life companies be developing products that meet the shorter-term tenure and needs of expats? This is something that Friends Provident International has been working on for some time.
- If expats prefer investments from their home country, shouldn’t providers be linking their products to fund managers from India and other countries whose nationals they are targeting rather than just linking to the usual Western brands? Friends Provident International recently added three new funds from HDFC to its fund range to appeal to the Indian expatriate.
- If expats don’t want huge investment choice, why do advisers insist on, and life companies continue to offer such a wide fund choice? Is the adviser value proposition dependent on a wide and esoteric fund range so it can ‘demystify’ the complex world of investments for its customers? This world could be a lot simpler. Are we missing the point that we are all here to help customers meet their objectives?
- If British expats trust their advisers, are they one of the best sources of expat customers for advisers worldwide? Other analysis of British expatriates by Friends Provident International reveals they are amongst the most profitable customers, too, paying high premiums with good persistency rates.
Hopefully you will find this insight thought provoking and challenging and use some of it to support your own business. Does insight play a big enough role in your organisation? Remember that insight is what Henry T Ford used to develop the model T Ford whilst others turned their attention to breeding faster horses.
This is the second of three articles on the subject of customers in International Adviser. My final article will see me hop into Dr Who’s TARDIS, to gain a glimpse of the future of an international life industry that is truly customer centric.
