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Thread: Robo Adviser

  1. #1
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    Robo Adviser

    Hi, I have been pushing the online insurance side of my business for some time now. I went online years ago, when I was virtually the only insurance broker in this area.
    The number of players has steadily been increasing, and in fact the status of a Robo Adviser is now becoming a real platform for people to acquire insurance.
    A Robo Adviser is really a site where users interact with that provider, getting the information they need to investigate And make a purchase, all online. There is never a face-to-face meeting.
    Whilst this form of selling is accepted in countries like the USA and UK, it is still in its infancy in South Africa.

    The advantages of buying products in this way that everything is in writing, so there should be no misunderstanding is later on. Next, it can be done at the purchases own pace.
    There is no undue sales pressure. Lastly, the seller is available 24/7 by e-mail or phone. In fact I will reply to most queries before any face-to-face meeting takes place!

    But, I experience a large hurdle in that life insurance and investment product sales not happening. It would appear that the South African mindset with these products is still a face-to-face meeting.
    I go through the whole sales process of advice in selecting and quoting on the product for that particular prospect, yet the final signing of the application does not happen.
    Whilst I believe a number of prospects then seek a local broker and present the outcome of my research and presentation to that broker, there still seems to be a stigma around trusting and online sales platform.

    Does this happened with any other online business or product?
    Is there an effective strategy to combat this reluctance?

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    Trust is the big issue when trying to automate things that are usually done by humans.

    When Paypal was trying to combat fraud they put an algorithm in place that tried to track fraudulent transactions and it turned out to be a disaster. The solution was to make it 80% machine and 20% final approval by an actual human, they found this combination worked well.

    People will adopt the new tech when they see that they are saving time and money avoiding face to face meetings but how to get them to take the first step?

    I think the most powerful form of validation is peer reviews from other users similar to the star rating of Uber and AirBnB. Once users see other users in the system they will try it out...Paypal got over this initial adoption hurdle by offering (I think) $10 voucher for referrals (this almost bankrupted them) to get their first user base, they achieved network effect after this.

  3. #3
    Email problem Phil Cooper's Avatar
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    In terms of the FAIS Act you HAVE to show you have done a needs analysis, have a record of it, and given options.

    Are you FSB Registered, and comply with all their requirements - PI and Fidelity Guarantee cover, etc?

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    Yup Phil, fully licensed and qualified. My compliance officer buts heads with FSB over my space.
    I don't see clients as they are from all over the world - South Africans abroad as well. And ask someone to do a 2 page needs analysis for medical aid by email - you must be joking.
    So my due diligence is somewhat different, working in this space. I do get confirmation emails are opened. But read? Same as a broker delivering a document - you can confirm receipt, but is is read?
    I have a track record that has stood up to a complaint - so it seems to work.
    There is a huge market online and if they take at least a minimum premium of life cover, that's better than nothing at all. At least that's what I'll convey to the FSB!

    Life cover is a once-off situation, so limited needs analysis. I do ask the questions, but most are unanswered anyway. My client record has a fairly large "disclaimer" and explanation - passed by my compliance officers.
    Another problem is the large applications from some life offices. Husband an wife with Old Mutual - buying life, disability and dread can be as large as 15 pages. Over 2MB email space.
    So those emails are either discarded or never received! And for years I have been trying to get simplified online applications. Problem seems to lie with signatures. Digital signatures are not yet accepted.

    Challenging space, but exciting. And it's growing every minute.

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