Product Design 101: Developing Products That Cater to Client’s Needs

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  Product Design 101: Developing Products That Cater to Client’s Needs. Calvin Foo CFP Asia Regional Head Financial Advisory & High-Net-Worth Development. Agenda. Product Strategy Different Stakeholders’ Roles & Points of View Client Segmentation Client Life Cycle Case Studies
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Product Design 101: Developing Products That Cater to Client’s NeedsCalvin Foo CFPAsia Regional HeadFinancial Advisory & High-Net-Worth DevelopmentAgenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • ObjectiveDiscuss the strategy behind designing products for the clientDeveloping Products That Cater to Client’s NeedsFirst issue
  • most clients don’t know what they need
  • Second issue
  • some insurance companies are weak at marketing
  • Third issue
  • some insurance companies have reverse strategies
  • Fourth issue
  • some insurance companies don’t tend to align the interests of clients, distributors and the finance/actuarial operations…..each may have their own personal agendas
  • Fifth issue
  • regulation is not embraced
  • Agenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • Strategy
  • Starts and finishes with the customer
  • Is aligned to product (differentiated where possible)
  • Distribution and the who’s, the where’s, the how’s and the when’s, is how you execute the strategy
  • The definition of marketing: "the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage.“
  • Product→Solution
  • Promotion→Information
  • Price→Value
  • Place→Access
  • Constructive criticism helps marketers adapt offerings to meet changing customer needs.Product PositioningInfluencing Factors for Product DesignExisting Product RangeSales Competence of DistributorTechnology(POS, Underwriting, MI, Web-site)ProductPositioningProfitability Fee Income (Up-front and trail)PersistencyMarketing / After-sales Service FacilitiesCompetition(Insurers and Fund Houses)Clients’ Needs / Target Group (Clients)Regulation (Tax System, ILAS)8Product Strategyfrom Cradle to Grave…….Starts with the ClientEnds with the ClientLife expectancy when state pensions were first introduced…matching needs to expectation!!“ WHEN Otto von Bismarck introduced the first pension for workers over 70 in 1889, the life expectancy of a Prussian was 45. In 1908, when Lloyd George bullied through a payment of five shillings a week for poor men who had reached 70, Britons, especially poor ones, were lucky to survive much past 50. By 1935, when America set up its Social Security system, the official pension age was 65 - three years beyond the lifespan of the typical American. State-sponsored retirement was designed to be a brief sunset to life, for a few hardy souls.” - “The End of Retirement”, The Economist, Jun 25th 2009Singapore philosophy…“ A universal problem we had to resolve was retirement benefits or pensions when a worker became too old to work. In Europe and America, the government provided these pensions, paid by taxpayers. We decided that every worker should accumulate his own savings in the CPF for old age”- Minister Mentor Lee Kuan Yew, in his memoir “From Third World to First”Product StrategyActuary’s RoleDeals with the financial impact of risk & uncertaintyProduct StrategyDistributor’s RoleSells, solicits & negotiates for compensationProduct StrategyClient’s RoleAchieve financial security & independence for self & dependentsProduct StrategyDifferent Stakeholder’s Point of View
  • Actuary
  • Risks, Pricing, Experience, Profit
  • Distributor
  • Features & Benefits, Market Competitiveness
  • Client
  • Funds for Major Illness Protection, Peace of Mind
  • Product StrategyDifferent Stakeholder’s Point of View
  • Actuary
  • Risks, Pricing, Experience, Sustainability of Future Bonuses
  • Distributor
  • Features & Benefits, Market Competitiveness
  • Client
  • Funds for retirement, Peace of Mind
  • The Customer FranchiseUnderstanding the customers’ product and service preferences drives the creation of offers and needs-based approaches that are relevant and seamlessly integratedSecure my future & reduce my risksGive mepeace of mindSave time for meHelp me enjoymy lifeSimplify my life
  • Lifestyle needs
  • Security
  • Life-stage needs
  • Long-term relationship
  • Household budgeting
  • Financial planning
  • Asset management
  • Tailored products
  • Financing
  • Retirement planning
  • Emergency planning
  • Disaster planning
  • Best of breed product
  • Charges transparency
  • Fair choices
  • Trust and integrity
  • Demystified guidance
  • Convenience
  • Non-financial help
  • Complete delegation for managing assets and liabilities
  • One-stop shop
  • Anytime, anywhere
  • Prompt service
  • Flexible options
  • Non-financial needs
  • Innovation
  • Financial planning
  • Prestige & exclusivity
  • Performance
  • Value for money
  • Account aggregation
  • Entrepreneur management
  • Long term relationship
  • Simple administration
  • Integrated services
  • E-payments
  • Product aggregators
  • Automated optimisers
  • Long term products require an ongoing relationship with the distributor and insurer and may require specialised servicing.Agenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • Client Segmentation Client Life StagesAgenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • Singapore Population: Growing, ageing, increasing longevity and wealthChart 2: Population Age PyramidChart 1: Resident PopulationChart 4: Per Capita GDP (US$)Chart 3: Life Expectancy Source: Department of Statistics, SingaporeHigh Net Worth MarketGlobalHNW wealth will grow at an annual rate of 6%By 2010, Asia’s HNW assets expected to reach US$10.6 trillion, close to the European wealth market
  • Singapore has the highest rate of growth of HNWIs of 21%!
  • There are 67,000 of HNWIs in Singapore with US$323b in total assets!
  • This is 2.5% of the adult population!
  • This also means 5 out of every 200 adults in Singapore are millionaires, with very real Estate Planning needs !!
  • World Wealth Report 2007 by Capgemini and Merrill LynchHigh Net Worth MarketAsia-Pacific HNWI Wealth Distribution, by Market,2006 HNWI Wealth,2006(US$ Billions)
  • Others US$810
  • Indonesia US$70
  • Taiwan US$220
  • South Korea US$270
  • Singapore US$320
  • India US$350
  • Hong Kong US$460
  • Australia US$510
  • China US$1730
  • Japan US$3680
  • Total HNWI Wealth in Asia-Pacific Region = US$8.42 TrillionComprised of 9 countries namely Kazakhstan, Malaysia, Myanmar,New Zealand, Pakistan, Philippines, Sri Lanka, Thailand and VietnamAsia-Pacific HNWI’s financial wealthforecasted to reach US$12.7 trillionby 2011Source: Asia-Pacific Wealth Report 2007 by Capgemini and Merrill LynchMass MarketSingapore will be among the world leaders when it comes to increasing the number of mass affluent people.The number of mass affluent residents (individuals with > USD60,000 in liquid assets)in Singapore will grow from 410,000 last year to more than 600,000 by 2011 (close to 20% of resident adult population)!Additionally, Singapore is likely to benefit from greater inflows of wealth from regional (e.g. Indonesia, Malaysia & Thailand)and global market (e.g. Middle-East), as investors look to diversify portfolios in safe havens such as Singapore.WealthHence, the number of mass affluent non-residents adults in Singapore will also grow!* Wealth Management in Singapore 2007 by DatamonitorClient Segmentation Assets Under Management> USD20mioUSD1mio to < USD20mioUSD500k to < USD1mioUSD100k to < USD500k< USD100k Based on AUMSources: Credit Suisse Global Wealth Databook 2011, Cap Gemini & Merrill Lynch World Wealth ReportClient Segmentation Life Stages Needs & ProductsAgenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • Product PositioningAlignment by Client SegmentationMulti-Channel Distribution ModelRetail Br Managers/RMsRetail RMs/ISsCorporate (SME)RMs/ISsHNWRMs/ISsTelemarketingInvestment Linked & WM ProductsNeed-based ProductsEmployee BenefitsKey-men InsuranceUniversal LifeWM ProductsLow premium, high perceived value productsPrivilegedYouthLife Stage / Value SegmentStriversAchieversHigh Net WorthMatureManulife’s product and distribution expertise positions us to support RHB in realizing its full financial services potential29Product Range of Retail BanksEquitiesForeign ExchangeBusinessFinancingFundsCredit CardsComplexityMortgageBondsCurrent AccountsConsumerLoanSavingsAccountsInvestmentLoanInsurance Offers a Third Dimension: ProtectionBusinessFinancingEquitiesSecurityComplexityFundsMortgageBondsCredit CardsConsumerLoanSavingsAccountsCurrent AccountsInvestmentLoanInsurance Offers a Third Dimension: ProtectionGuaranteed Productswith LAEquitiesUnit LinkedAssuranceComplexityULA + RidersFundsEndowmentAssuranceBondsEA + RidersTermAssuranceSavingsAccountsInvestmentProtectionInsurance Offers a Third Dimension: ProtectionTerm Ass.Group Life Ass.PensionsBusinessFinancingHome Ins.ComplexityMortgage AssuranceMotor Ins.MortgageCredit LifeConsumerLoanLoan ProtectionTravelers InsInvestmentProtectionProduct PositioningCase Study - Bancassurance Channel34Direct and Telemarketing ModelTRADITIONALMARKETING MODELCONTEMPORARYMARKETING MODELOVERALL STRATEGY Sell ProductsServe CustomersOPERATIONSProduct LedCustomer LedMIND-SETPortfolio of ProductsPortfolio of CustomersMARKETINGTACTICSIncrease Product AppealIncrease Customer ProfitabilitySALESAPPROACHHow many customers can we sell this product to?How many products can we sell to this customer?STRATEGICOBJECTIVESales MaximisationCustomer Lifetime ValueMaximisationBasic Marketing Style Follows Up On Value Proposition: Value-for-money, Simplicity and ConvenienceAgenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • FMCG Approach in Stores
  • 20,000 units in 650 stores
  • Permanently displayed
  • Instant Products For Sale in StoresAgenda
  • Product Strategy
  • Different Stakeholders’ Roles & Points of View
  • Client Segmentation
  • Client Life Cycle
  • Case Studies
  • Singapore – ASEAN Wealth Management Hub
  • Bancassurance – Multiple products for multi-channel distribution
  • The FMCG Approach – to simplified product marketing
  • Micro-insurance – one countries success
  • Manulife Vietnam Life Insurance (MVL) began its operations in September 1999 as the first foreign life insurance company in Vietnam since the country opened its insurance market to foreign companies MVL operates in 12 cities through a network of 7,000 agents, serving 300,000 urban middle class customerWe also partner with selected banks to distribute life insurance in major urban cities In 2007, Manulife established Manulife Vietnam Fund Management Company (MVFM) to enter the wealth management business. MVFM managed third party institutional asset and is one of the three companies in Vietnam offering local retail mutual fund.Manulife VietnamEstablished in 1930A political mass-based national organization aiming to promote the welfare of Vietnamese women in all aspects: economic, political, health and educationVWU has 13 million women membersnation wide, through an extensive administration network at national, provincial and district levelSince 2003 the VWU acts as the main partner of the Vietnam Bank for Social Policies for disbursing their loans to low income families VWU manages about 40 microfinance and credit programsVietnam is considered one of the most successful countries in reducing poverty, the percentage of the population living under the poverty line has reduced from 58% in 1993 to 14.87% at the end of 2007 and VWU plays an important role in Vietnam’s poverty reduction effortsVietnam Women’s Union (VWU)The rural market in Vietnam is a large market with approximately fifteen million households and around sixty million people. This market largely remains under-served due to the remoteness of the locations and the lack of accessibility to financial servicesIn 2008/2009 the Vietnam Ministry of Finance (MoF) started to look into rural area insurance needs and encouraged commercial insurance companies to develop commercially viable micro-insurance for the mass rural marketManulife went through an extensive distribution partner selection process with the following criteria: NGO & non-profit organisation focusing on low income familiesNationwide network with administration capability – Vietnam Post Office & BanksExperience with micro-finance or micro-insurance projects Identified VWU as an ideal partner for the micro-insurance project and signed an MOU in early 2009. Project officially launched in Sept 2009.Micro-Insurance Project BackgroundPartnership – Manulife & Vietnam Women Union’sSigning of MOUProduct & Benefit CoverageEngagement Process
  • Presentations of micro-insurance via pre-scheduled seminars at the commune level organized by VWU commune and district leaders
  • Over 1,000 seminars held during 12 months period
  • About 50 to 200 attendees per seminar, sign up rate over 70% and signed up 60,000 micro-insurance customers so far
  • Product introduction and fulfillment conducted by Manulife employees
  • Simplified business process at the end of the seminar
  • Pre-scheduled sales seminar to avoid anti-selection
  • The seminars also serve as an introduction to the concept of insurance and protecting family welfare to the rural mass
  • A Typical Engagement Seminar The meeting house was too small so some sat outside along the corridorThere was not enough seats so VWU members had to stand or sit on the ladder on the right hand side of the house.Customer VisitsAt a customer's house..On the way to a customer's house…We are really bringing hope to a family that is so much in need of money.Claim Cheque DeliverySource: Saturday's Globe and Mail,published on Friday, Feb. 19, 2010Vietnam Post Pilot Project Lessons learnt
  • The wealthy rural market offers real potential and there is a continual need to explore options to penetrate this market segment.
  • Must build strong relationships with Postal workers and Post Office management at different levels
  • Micro-insurance advisors must have positive attitudes and must be suitable for the work to be undertaken.
  • The range of micro-insurance products offered should be comprehensive and offer many choices.
  • Mode of payment must be flexible or at least allow various modes of payment. Restriction to annual mode only is a distinct disadvantage.
  • All the engagement processes must be simple, especially premium collection and policyholder services.
  • “The human being needs a challenge, and my advice to every person in Singapore and elsewhere, keep yourself interested, have a challenge. If you're not interested in the world and the world is not interested in you, the biggest punishment a man can receive is total isolation, black...complete withdrawal of all stimuli, that's real torture. So when I read that our people believe in retiring at 62, I said to them: "You really want to die quickly?" If you want to see sunrise tomorrow or sunset, you must have a reason, you must have the stimuli to keep going."Minister Mentor Lee Kuan Yew at age 85 shared his own experiences of active ageing at the Silver Industry Conference and Exhibition, 12 Jan 2008ABOUT MANULIFEManulife FinancialStrong & Diversified Businesses
  • Asia
  • Hong Kong, Philippines, Singapore, Indonesia, Vietnam, Malaysia, Thailand, Taiwan, China, Cambodia
  • Individual Life Insurance
  • Group Life & Health Insurance
  • Pension Products
  • Mutual Funds
  • Canada
  • Individual Insurance
  • Individual Wealth Management
  • Group Benefits
  • Group Pensions
  • United States
  • Insurance
  • Long Term Care
  • Annuities
  • Group Pensions
  • Mutual Funds
  • Reinsurance
  • United States
  • Canada
  • Europe
  • Asia
  • Japan
  • Individual Insurance
  • Variable Annuities
  • InvestmentsUnited States, Canada, United Kingdom, Japan, Australia, Hong Kong, Southeast Asia 575757Manulife FinancialCompetitive Strength5858Manulife Financial Strong Multi-Channel DistributionFinancial PlannersAdvisorsIndependent AgentsIn-house AgentsBrokersBanksDealersWire-houses
  • Deep & growing relationships across multiple channels worldwide
  • Over 110 Bank partnerships across Insurance and Mutual Funds distribution in Asia
  • Meet varying needs of our international base of customers, regardless of their chosen distribution channel.
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