Consumer Knowledge, Attitudes, and Habits - insurance

The very existence of financial planning is an example of consum­erism in action. The consumer demands an understanding of how and when? his or her money is to be invested. The regulators de­mand that the consumer receive complete disclosure Heretofore, placing money in a whole life insurance policy was like putting it in a black box. The money went in, mysteriously did whatever it did, and neither the policy owner nor the salesperson had usable information regarding return and expenses. Black-box money management is unsatisfactory to today's consumer.

It is important to have a picture of what has been going on behind the scenes in the last few years to understand why many insurance companies are stumbling as they try to cope with change. They are being asked to both increase returns and reduce expenses. They are being asked to become more flexible to provide more consumer information and new products, and to do this all in an environment of economic and regulatory instability. Fur­thermore, the companies are managed by people who perceive the need to change at different times and in different ways from one another. We have seen major companies start to adapt and then suddenly pull back as political forces within the company change and as new people with new views take over the decision-making positions. The good news today is that market forces have taken over. More and more companies are stressing the fact to their agents, brokers, salespeople, or advisors that the first loyalty must be to you, the consumer. All sales must be "suitable." and the salesperson must be able to prove that suitability to company-trained compliance officers. Indeed many salespeople have signed documents acknowledging that they have a "fiduciary" relation­ship with you, the client This means that the salespeople must put your interests ahead of their own, must disclose to you all their business relationships, must disclose any conflicts of interest they might have, and must respect the confidentiality of your rec­ords and financial information. Clients who have reason to doubt that they have been treated in accordance with these very strict standards have a great deal of assistance and support in pressing their complaints. It is wise for today's consumer to seek out in­termediaries who recognize this fiduciary relationship with their clients.