Volatility pushes insurance companies towards financial advisory services

Companies in the industry see opportunities for advisory services due to uncertainty in a new interest-rate environment that could revive interest in products with guaranteed returns.

Insurance companies’ foray into the financial advisory and wealth management sector is not new, but this trend has been accelerating in recent years. Relying on their experience, their understanding of the customer and the similar ways in which financial advisors and insurance agents work, these companies are gaining ground in an area traditionally dominated by banks.

Moreover, the new scenario of higher interest rates opens up a range of opportunities that insurance companies are determined to leverage. This was made clear at Offensive, a forum for insurance companies offering wealth advisory services in the new interest rate environment organized by EXPANSIÓN in collaboration with Finseguralia.

In this regard, “insurance networks are increasingly prepared to provide financial advisory services,” said Rafael Sierra, head of SegurosNews.com and elAsesorFinanciero.com, who moderated the conference.

Challenges

At these times of volatility, “the main risk to be managed is uncertainty itself. We therefore highlight our experience in terms of managing both risks and balance sheets to hedge against these risks,” explained Enrique Palmer, business development manager at Mapfre Gestión Patrimonial. For the company, which continues to grow this year, attracting new clients compared to 2021, “the advisor's support is essential to adjust the time horizon for the client's savings and investments.”

This sentiment was echoed by Eustaquio Arrimadas, sales and marketing manager at Santalucía Asset Management, who pointed out that, “in years like this one, we feel that we are more important than ever to clients, who need our support.” As insurance companies move towards financial advisory services, Arrimadas explained, "we have expanded our range of products that underpin the solutions we offer, and we are also moving towards an advisor role that is far more specialized, complex and prepared to meet the client’s needs.”

Meanwhile, Caser Asesores Financieros points out that “now more than ever, clients need to receive high-quality advice in the medium and long term.” Despite the challenges looming on the global horizon, the company maintains an optimistic view, choosing to focus on understanding the needs and risk profiles in each case: “Right now the most important thing is for clients to feel comfortable with what they have in their portfolios.”

Added value

Regarding insurance companies’ advantages compared to the banking sector, Eustaquio Arrimadas stressed that “our strong point is the added value that we bring in terms of monitoring, advising and support.” In particular, the sales and marketing manager at Santalucía Asset Management distinguished between two themes: “In terms of the product, we are all competing in the same market, so the key lies in the added value that you can offer through your advisory service.”

Enrique Palmer emphasized that insurance companies have “a unique capacity to act for two reasons." He pointed out that "open architecture systems democratize advisory services, because they make it possible to reach all clients in a way that previously only wealthy clients could access, through technology." Secondly, the Mapfre Gestión Patrimonial representative added that “the relationship of closeness and trust between insurance companies and our clients also gives us advantages.”

According to Caser Asesores Financieros, “the main objective is to take care of the client: it's essential for them to feel like we are listening to them and that their interests are aligned with those of the company. It’s about what they need coinciding with what we can offer them.” The participants therefore agreed that support is the aspect that makes the difference.

Products

After many years of negative interest rates, the new scenario could determine which products are the most attractive to clients. “The evolution of the product mix will depend on its ability to meet the client's needs and objectives, but we are starting to see more interest in guaranteed, target return products due to the environment” said Arrimadas.

Enrique Palmer also emphasized that “there won't be an automatic shift in clients’ decisions, because they are based on their needs more than the situation in the market.” However, he did acknowledge that the current interest-rate context will strengthen products with guaranteed returns, such as insured pension plans and systematic savings plans.

On the other hand, the business development manager at Mapfre Gestión Patrimonial believes that “inflation will help revive periodic, long-term savings for retirement, differentiated from other types of investments for other specific purposes.”

The experts agreed that financial education is fundamental, and both the financial and insurance industries are trying to promote it. This is a pending issue for many Spaniards that would improve their quality of life and help them to manage their finances more efficiently. As Caser Asesores Financieros explains, “there are different instruments, but the main challenge is to raise society's awareness of the need for periodic savings.”