Your Thriving Practice

How fintech is reshaping the financial services industry

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Speaker 1 (00:07): Welcome back to your thriving practice, a podcast from global Atlantic. I'm your host. Dan cran, global Atlantic is a leading retirement and life insurance company that creates innovative products to help meet your clients' financial goals.

Speaker 1 (00:24): InsureTech well, tech and FinTech are changing the financial and insurance industry landscape, but it's a broad topic that is not always clearly understood. It encompasses technology, everything from automation to the cloud analytics and machine learning along with a growing lineup of products and services and array of companies that create and use those offerings. And the field is constantly evolving and a future podcast will continue to explore the topic by drilling down into inure tech, specifically to find out how it's affecting the industry, what it means to financial professionals, where it's going in the near future and the challenges and opportunities involved, and its continued evolution to understand this complex landscape. We're speaking today with Steve Gresham. Steve is CEO of the execution project, which consults with firms and their advisors to help them meet the needs of clients who are retired or about to retire. He'll be helping us gain a clearer picture of these technologies where they've come from, where they're going and how they're changing the industry. So Steve joins us now, Steve, thanks so much for being here with us.

Speaker 2 (01:32): Oh, Dan, it's great to be here. Thank you

Speaker 1 (01:34): To the best of your ability. Can you just define inure tech for me and for this audience?

Speaker 2 (01:39): Soure tech is a subset of FinTech for me, says, can we get after first and foremost improvement around process because paper is not cool. The fax machine should be outlawed. We really should find some way to make all of this stuff a lot simpler and inure tech so far has made significant improvements where it's been most effective in some of these small things. I mean just electronic signature. I myself bought an annuity this week. I'm not telling you it only took this week to get it. It took longer than that. Mm-hmm but the final documentation was all done without me having to set foot in an office or go visit a human. So that's a big change compared to just even five years ago. And again, accelerated by some of the situation that we've had with the global pandemic.

Speaker 1 (02:28): How would you define and differentiate FinTech wealth tech and inure tech? How do they fit together and what technologies are enabling this revolution?

Speaker 2 (02:36): Well, it's a really big question. It's a great question. And I want to thank you and global Atlantic for actually shining some light on this issue. So think about it from big picture to smaller picture. So the, the way I view it is that FinTech is all kinds of financial technology capabilities. We'll come back to the specific aspects of it, but I think it includes data as well as the technological capabilities themselves. FinTech is then broken down into how it applies to individual industries. And so the wealth management business is gonna grab all it can from the efficiencies provided by wealth tech. And then more recently insurance companies have taken different perspectives and different opportunities from that broader work. And so now you have inure tech

Speaker 1 (03:16): And this is all changing constantly. How quickly has this been evolving? And is it changing right now?

Speaker 2 (03:22): It's always changing and what's been going on always is the pursuit of a better way to do something. And so the analogy I like to use is if you looked at a car 30 years ago, you would be probably pretty easy to see a lot of things that you'd like to improve individual product component companies that are supplying the industry would say, Hey, I've got a better way to make a tire, or I've got a better way to build, you know, a cup holder or, you know, the brake system. And they sit there offering those opportunities and the car company thinks about them maybe, but pushes back because it's not the right time. Or we're not really sure how we would fit that into the production queue or we'd have to make all these other changes along the way. In that sense, the car is almost like the ecosystem of finance, whether it's the insurance industry, wealth management or broader financial services. And so what we're really asking is does that particular component, which on the face of it looks like, of course it's a fantastic improvement. How does it get involved? How does it get inserted into the car?

Speaker 1 (04:24): So when you talk about that car analogy, I think that really helps because I think when a lot of people are hearing these terms, FinTech, wealth, tech, InsureTech, they do get confused about it. So what are some of the more useful or innovative examples of wealth tech and FinTech that you've seen lately?

Speaker 2 (04:39): I break it down first into three different categories. One is the use of data that is the most important from my perspective, because I don't believe the industry uses all of the information that is at its fingertips. And so I'd hate to say it, but a more ubiquitous use of CRM is probably the biggest achievement that I have seen in financial services in the past 20 years, from the perspective of data and

Speaker 1 (05:02): FinTech and CRM stands for

Speaker 2 (05:04): Customer relationship management system, the second area would be the use of tools that improve process. And here again, we're gonna start with incredibly basic stuff like payments, like money movement, like document signing, which to ordinary people can be scaled at enormous levels. And so again, we sometimes forget how a very simple technological capability when broad at scale can have enormous impact on that scale. The third place is the innovation, and this is unfortunately the place where all the headlines arrive. This is where some of the more cool shiny toys are developed. The difficulty is that there is a greater supply of those than there is potential demand. And so for examples, you can look across all of the industry and ask yourself, do we really need 30 different portfolio management systems? They're never gonna get adopted. And that's the place where I think the opportunity is best to create better pathing. And that's on the industry to do that, to do a much better job of identifying the stuff. That's really gonna make a difference because as one industry executive pointed out to me the other day, these are great technologies, but most of the business plans are trying to fight for attention. And they end up spending a disproportionate amount of their monetary backing on simply trying to get that attention through Facebook and Google search.

Speaker 1 (06:22): It seems like there are so many things changing in the industry when it comes to technology. What are some of the things that are pushing that change? What's forcing this and what's forcing it so quickly.

Speaker 2 (06:31): So disruption of any kind and improvements are usually invited. You know, they're not just something that somebody thinks up one day and says, they're gonna go out and change the world. I think what's happened, especially when we talk about retirement is that people are entering the retirement business as consumers. For the first time. They don't like it. They find it awkward. They find that jargony, they find an awful lot of operations that don't make any sense. They look at the things they do with companies. They can't understand why they can't move money on their own very easily. They go to apply to buy a product. It takes a long time. They don't really understand that there's lots and lots of paperwork and don't confuse electronic delivery with paper. They're both bad when you have to read 63 pages of a single application. Yeah. So I think the stuff that's happening right now, the disruption is there, but at a certain point, the consumer is going to demand. And that consumer demand historically has always brought new players in and they

Speaker 1 (07:29): Win. And you've talked about retirement and rethinking retirement. So what do you mean by that? And can technology play a role in that?

Speaker 2 (07:37): Of course. So when I think of rethinking retirement, you primarily have to focus on three items. One is that we have to be now. Absolutely hyper-focused on outcomes. The difference between helping people save and invest for retirement and helping people exist and survive and thrive in that retirement is that you've now gotta be able to fund it. I think in many ways there's a different level of responsibility that has to happen on behalf of the industry. So we help get the people to the brink of retirement. Now we have to get them through it. And that's where the anxiety arrives for these individuals that we've been talking about. The second part is that we have to improve the ease of delivery. So it's not only simpler and more reliable outcomes, but it's also simpler process for the advisors to be able to deliver because they're a big part of the story. And then the third one is sort of the elephant in the room for the entire industry, which is, there are more people that need help than we have capabilities where people to deliver. We are not connecting with the vast majority. And I will take on the challenge from anybody who says that this is not true. What I'm about to say again, which is that I don't think that the vast majority of people are prepared either financially or mentally or emotionally for, for the stage that we call retirement.

Speaker 1 (08:57): And when you think about that, I mean, that's a big societal thing where you have a generation of people or maybe multiple generations of people, not really thinking seriously about retirement. There's gotta be a consequence for that, right?

Speaker 2 (09:10): You bet. You bet. And I think that this is one of the most important, if not the most important bipartisan issue that exists in this country today, we have had an opportunity to get a little bit of a taste of what happens when the healthcare industry confronts this aging demographic. Again, it wasn't so much that demographic, but that pandemic woke everybody up to the limits of the capacity of the healthcare system. We ain't seen nothing yet when it comes to the aging demographic, you know, right now the baby boom generation is median age of 66. A lot of 66 year olds are pretty robust. That will begin to slide in a negative way. And that's just the reality. Now we can view it as, oh, that's really terrible. Or we can say, man, we oughta do something about it. That is one of the things that I worry about the most is that the pandemic has helped people kind of disengage from their day to day. I, I don't believe that people have the productivity that they had beforehand now, is that a good thing or a bad thing? I'm not arguing that my question is, can we really mobilize around this topic cuz I don't see it yet.

Speaker 1 (10:10): So you talk about those challenges and now we're talking about these new technologies that maybe can actually help advisors address these situations. Talk about what that would look like specifically if we know when it comes to a financial professional or down the line to their consumer.

Speaker 2 (10:26): Yeah. You know, so it's tricky to put new stuff in the hands of anybody because financial advisors, financial professionals, consumers, clients, they, everyone views new stuff with the same way that any human would view anything new. It's sort of a combination of anxiety and disdain, right? So if I didn't know about it, how important could it be if somebody else thinks it's important for me to do, then I probably don't want to do it anyway. And again, you know, I hate to create the parallel, but we are learning as a society. When we look at personal healthcare, especially when that rolls along in parallel to what people are doing around retirement, personal healthcare and your actual finances are inextricably linked, but do we really manage that process? And so what people are finding out is that they can do more on their own. If there was a silver lining to the pandemic, it was the use of technology. And so people who never thought that they would set up an appointment with a CVS or a Walgreens, you know, are now actually doing that all the time and they're expanding those services. So I think we're learning as we go. And it's the essential nature of the services that are gonna help. So again, we could try to push people, but we always do better when we create the poll from them.

Speaker 1 (11:38): Let's talk about how financial professionals can actually put some of these technologies into use. If they know how to, at this point, you talk about how those professionals and maybe their clients are already viewing these technologies.

Speaker 2 (11:50): Yeah. You know this, I think this is probably Dan the biggest issue confronting advisors right now, because for all the reasons that we've talked about so far, the clientele is in the process of arriving on the scene of retirement, quote unquote. So the challenge, I think right now for the financial professional industry is to determine whether or not they can actually make the transition with the clients because really what they've been doing for the past 30 years is helping them get there. And so now you go back to that car analogy, I'm gonna stretch it a little bit. I'll use the example of a couple of neighbors of mine skidded off to Florida, from Connecticut, where you and I live and they get down there and they buy a convertible. Well, they never even thought about buying one when they lived in Connecticut. Mm-hmm, not that you can't use it, but it's not optimal all year round.

Speaker 2 (12:41): So in Florida seems to make sense where I think the financial professional is stuck right now is that they're so used to that work, that now making the hedge, basically the headset shift with the empathy required to support a family in their retirement is just a different business. And when we tiptoe around the significance of that change, we do a disservice to the financial professional. So I think what we're gonna find is that all of these supportive technologies and all these capabilities we're talking about are pointed to the inevitable and the financial professionals haven't necessarily accepted that new role. So it's a little bit about having one foot on the dock and one foot on the boat. You know, how you got here. But as an industry, we've always been better when we declared a new world, a new role, and then the advisors and professionals that joined us there said that all makes sense without doing that, without making that change and without supporting that role, which is a lot of what the work that global Atlantic and the Alliance for lifetime income do without supporting that role, all of these different capabilities arrive and they're not arriving in context.

Speaker 2 (13:48): So they actually have a harder path to adoption than otherwise.

Speaker 1 (13:53): Somebody's gonna step out there first though, someone has to take that leap first,

Speaker 2 (13:57): Right? Absolutely. And the, and the leadership is being provided by really good financial professionals who already see the need, but they're the ones that typically say, well, I've got kind of a longer term view. Lots of advisors are age contemporaries of their clients. So you can't really be racing the client for the retirement gate. When you know, the client wants you to be around, to take care of them and more importantly, their family. So now what's the shift gonna be? So for the financial professionals that wanna be in the business and succeed over the next 10, 10 to 15 years, this is the sweet spot. But again, it's a different business. So when they see that and they accept it, the leaders that we see out there already have made that decision and that's the way it always works.

Speaker 1 (14:37): And some people believe that technology is gonna put, I guess, distance or a wall in between financial professionals and their clients. Some people might feel that way, that technology takes away from that relationship. But do you see it as an enhancement in certain ways that we wouldn't get otherwise

Speaker 2 (14:52): Where we get ourselves in trouble is when we start to think of technology to be used only when we don't want to do something. When some role becomes simple, becomes pedantic, you know, it's beneath us to do it. And I would actually ask you to turn it around. And I found this out, managing the retail strategy at fidelity is that if you think of technology, as you are first placed to go to create a solution who can actually be dependent on to do this, right, is the way I would say it. And I bet on technology any day to be able to be there 24 7, 365 for the capturing of data, sharing of data, all of that. Now, if you work off of that and most people wouldn't argue about that. If you build off of that base, however, and you start saying, well, how far could we take some of those technology capabilities? And that's what the FinTech inure tech and wealth tech entrepreneurs are trying to say, stop trying to do this stuff. And don't just default to us or defer to us when you don't want to do it instead, let's figure out how to make the technology do more so that the humans can be increasingly saved for the stuff that only humans can do.

Speaker 1 (16:01): All right. So Steve, if someone's hearing this and they're interested, but still a bit confused, what would you say to them? How would you recommend that they get started in learning about this and also waiting into this new world?

Speaker 2 (16:14): Well, again, I think the most important thing is that the financial professional determine what role he or she has. The significance of that decision means their center of gravity. It's the way they portray themselves to their clients. It's the way they portray themselves to what I think is going to be a terribly long parade that is marching toward them looking for better advice. Because again, I don't think most people are financially, emotionally, or otherwise prepared for this thing that we all call retirement, they refer to as next chapter. So when you take responsibility for that next chapter, that is a very, very different role than the industry has had historically, when we have been sort of helping them, guiding them and then telling them to be smart about investing for the long term. Well, it's not long term anymore. Now it's happening. The bills are arriving and there's a lot of anxiety which has been heightened by the pandemic global instability.

Speaker 2 (17:13): And of course the markets. So I think we have to snap to and say, we are going to help you. And that tone is very different from what we have said in the past, as an industry, because I think most financial professionals, if we actually looked at what they do on a day to day basis, and we looked at who their clients actually are, I think we would find that they are stretched with one foot on the dock and one foot on the boat. I think they're still thinking like people who help people accumulate and save, they are not thinking so much about helping people survive their retirement, ind dignity and independence. So if they pick the ladder, it's not to say that it doesn't fit with the other one. It's just that that becomes a center of gravity. Now you look back and say, where's the help that I'm gonna need along the way.

Speaker 2 (17:56): Can I really keep track of three generations of one household? Do I really know when everybody turns 63 and is gonna start thinking about their Medicare election? I mean, where is it that I really need to be? And this is where we're gonna go back to that point, that, that you and I talked about a few minutes ago, which is, are we really getting to all the people? And so when you now say that I am responsible for 150 households times potentially 20 people, now that's a completely different business. And I don't think very many people think about it that way. That's where the technology FinTech, inure tech wealth tech components begin to make sense.

Speaker 1 (18:33): When you think about the future, I know it's tough to have a crystal ball and understand what could happen in the next five years or so, but what do you see for the future? When it comes to FinTech wealth tech and inure tech,

Speaker 2 (18:45): I see the blending of an ecosystem that is supportive, that is kept on the balls of its feet in its progress, by the demands of the consumers, because this is going to become, as you mentioned a minute ago, this is going to be a social phenomenon. It is going to be a day to day lifestyle phenomenon. This is not something that is happening in the dark, in the financial services industry, associated with the markets and who knows go, what goes on there? This is going to be a day to day issue when people start feeling the day to day and, and normal and completely predictable issues around longevity, a lot of which is diminish capacity in some form. And that's where the real innovations come from because the people are gonna need it. And I think the issue is that the consumers and their families demand, demand, demand that demand is not going away.

Speaker 2 (19:33): It's only accelerating and that's where all of the friction will be eliminated because it just simply have to be all of these supportive technologies are being created by brilliant entrepreneurs who see various aspects of this. As I said before, this new car that's arrived, they have lots of improvements they wanna make. We have not done a good job of being able to create the path of acceptance for those improvements. That then leads to saying, as an industry, we should really be building a better car, right? And that's the thing, that's the method of conveyance for these people in their next chapter. So I think all the capabilities are there, but it is on the industry to get along better, to be able to work them together in that ecosystem. It's, what's gonna be supportive of the financial professional

Speaker 1 (20:21): And the technologies continue to change. Steve, thanks so much for helping us understand this topic better.

Speaker 2 (20:27): Hey, my pleasure.

Speaker 1 (20:28): And just a reminder in the next episode of this series, we'll be talking with Greg Hoff. Nale a partner at the Goodwin Proctor law firm and Brock shack, a senior vice president of inure tech partners and platforms at global Atlantic. As we drill down even further into the impact that inure tech is likely to have on our industry. I'm Dan Corrin. Thanks so much for being with us and we'll see you next time. Global Atlantic, your thriving practice podcasts are available on apple podcasts, Spotify and Google podcasts, as well as by visiting global atlantic.com forward slash professionals.

Speaker 3 (21:09): The opinions, beliefs, and viewpoints expressed by the guests on this podcast do not necessarily reflect the opinions, beliefs, and viewpoints of global Atlantic financial group, global Atlantic financial group. Global Atlantic is the marketing name for the global Atlantic financial group, LLC and its subsidiaries, including forethought life insurance company and Accordia life and annuity company. Each subsidiary is responsible for its own financial and contractual obligations. These subsidiaries are not authorized to do business in New York.

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