Turning the Tide on early Policy Lapses

Turning the Tide A Proposed Approach to Stemming EDL

February 2021

Liberty Group Limited is an Insurer and an Authorised Financial Services Provider (no. 2409).

"The lifetime profitability of a satisfied customer [making a recommendation] to friends is five to eight times greater than one who had a negative perception."

McKinsey Financial Services Insights

CONTEXT The time and expense of acquiring and onboarding new clients and paying out commissions are amortised over time through premium payments. When policies lapse within six months to a year, the premiums accrued fall far short of the investment made.

CHALLENGE Most EDLs occur among the inexperienced cohort of FAs who cannot extend their book beyond immediate family and friends.

Therefore, they terminate their advisership, and the tentative and often emotional incentive of their clients to maintain the policy falls away.

COMPLICATION The onboarding commission paid on these EDL policies goes to the franchise manager running inexperienced FAs. They can replace these FAs with others, and we do not incentivise them to maintain the existing vulnerable client relationships.

We need to address this via Sales Leader AQC, in line with and the advice philosophy of quality over quantity.

"An important part of motivating sales teams is a full alignment of incentives with customer needs, which also reduces the risk of mis-selling."

McKinsey Financial Services Insights

CLIENT INSIGHT A person who has bought a Liberty life insurance protection or investment policy has shown appreciation for and commitment to the goal of personal financial freedom.

If we can use the adviser's loss as an opportunity to deepen the relationship with the brand and its promise, we can secure the client and reinforce this commitment.

BUSINESS INSIGHT Without a measurable and creative incentive, any leader or manager in the sales chain is unlikely to adopt the new Advice Philosophy's behaviour shift.

OPPORTUNITY We can stem the early lapse of policies by communicating their value to clients when their FA resigns the book, incentivise the Sales Lead to oversee their handover to the sales manager, who will then seamlessly allocate an appropriate replacement adviser.

STRATEGY 1.

2.

3.

Turn a short-term adverse event into a positive long-term opportunity.

Communicate immediately, sympathetically, persuasively and transparently.

Standardise the handover operation of the client to accountable managers.

COMMS JOURNEY Client Immediacy As soon as we hear about the 'resignation' of an adviser we will send out a personalised version of standard communications to their client. This will advise them of the situation, and reassure them of Liberty's ongoing commitment.

[We will send an automated outline of this message to the Regional Head and Sales Lead for them to monitor and manage the outcome.]

COMMS JOURNEY From then on, all communications will come via the intermediary franchise manager responsible for the client relationship.

This not only ensures active manager participation, but it also keeps the relationship at a personal, rather than institutional level.

COMMS JOURNEY Manager Immediacy On the following day, the manager will send out a personalised version of a standard communication advising the client of the situation, confirming Liberty's ongoing commitment, and outlining the role they will play in managing the client's portfolio in the meantime, before securing a replacement adviser.

COMMS JOURNEY Manager Empathy The manager's message will include an empathetic understanding of the anxiety of losing a trusted financial life partner and reaffirm their commitment to actively securing the perfect replacement.

They will provide an omnichannel solution to any queries they may have in the meantime, including a personal call or text to the manager for specific questions, the MyLiberty portal for general updates, or the Liberty Call Centre for transactional policy guidance.

COMMS JOURNEY Persuasion The manager's message will conclude by reinforcing the constructive decision made to start their financial freedom journey and reiterate the generic features and benefits of Liberty life and investment policies.

[We will send an automated copy of this action to the appropriate Regional Head and Sales Leader.]

COMMS JOURNEY Updates A week later, we will send a message to managers asking for an update on their search for the perfect replacement adviser.

We will then update clients on the progress, including brief biographies on their potential replacement advisers if there is more than one candidate.

[We will send an automated copy of both these actions to the appropriate Regional Head and Sales Leader.]

P ick M e !

COMMS JOURNEY New Adviser Handover Once the replacement adviser has been selected and allocated, the manager will message the client congratulating them on overcoming this unexpected hurdle in their financial freedom journey.

[We will send an automated copy of this action to the appropriate Regional Head and Sales Leader.]

COMMS JOURNEY New Adviser Follow On On the same day, the new adviser will send a personalised version of a standard message reinforcing the decision to partner with Liberty, whilst reaffirming their enthusiasm and commitment to their new client's financial well-being.

COMMS JOURNEY Personal Call The adviser will follow up with a KYC-informed video or voice call to establish a relationship, arrange a meeting to discuss options, and outline the hygiene factors for the next three months.

COMMS JOURNEY Premium Payment Once a client has paid the next due premium, we will send an automated notice of this action to the appropriate Regional Head and Sales Leader. They can then close the case and add a metric to their AQC.

AUTOMATION We will programme the above process and content into Salesforce for access via Workbench and corollary platforms in line with our digital transformation.

NEGATIVE LOOP Suppose there is a negative response from a client at any point along the comms journey.

In that case, Liberty will send a personalised message regretting the decision, reiterating the benefits of maintaining a policy, inviting them to reconsider, and offering our services if/when their situation changes.

PROCESS SUMMARY

1.

Liberty Message to Client

2.

Liberty Message to Manager

3.

Sales Leader Update Request to Manager

4.

Sales Leader Update Request to Client

5.

Manager New Adviser Message to Client

6.

New Adviser Introductory Message to Client

7.

Personal Adviser Call to Client

8.

Client's Premium Payment to Liberty

9.

Final Report to Sales Leader for AQC

A New Partne r in You r Jour ney to Fina ncial F reedom

Uninte rrupte d Sup port fr om Dear N

SAMPLE MESSAGE

Libert y

ame, Being in it w ith you person al sup means port o you ar f a pro e neve fessio r witho when n al fina your a ut the n c dviser ial adv l e iser – For th aves L is reas even iberty. on, I a advise m lookin r for N g for t ame S advise he per urnam fect re r is co e .

I w i placem n ll mak venien entirel e ent y up to sure th tly loc ated, s at you date w uitably r new invest ith you ment g skilled r finan oals a , cial si and nd pro tuation As soo tection , c urrent n as I requir have f e m e n touch ts. ound t to cha he per t throu f e c t partn person gh you er, the a r l p l y o , y will b r a t develo folio, g nd dis e in cuss a pment et to k s that ny cha now y o may h nges o u elp yo r recen In the u achi t meant eve yo ime, I ur goa portfo w i l l take p ls. lio and e r am av sonal a a i ccoun lable t arise b tability o disc efore y uss an for yo our ne y need ur w adv s i ser joi You ca that m ns the ay n call or text team. me on 000 00 name@ 0 0000 emaila or ema ddress il me a .co.za t .

Kind r egards , Name

CONCLUSION We believe that by responding as above, we can incentivise a seamless handover to new advisers, provide excellent customer experience, and deepen the human partnership that is at the heart of the Liberty brand promise.