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Pandemic Imperative for Insurance: Virtual Financial Coaching

The pandemic-led economic crisis has left millions of people grappling with tough financial decisions. Which financial priority do they focus on and which do they let slip? This has pushed down insurance from a need-to-have to a nice-to-have for many consumers.

What can insurance companies do to help more people afford more insurance? Assist your customers and prospects in improving their financial health. Customers, who can afford insurance, are also able to tuck more money into their retirement accounts.

The crux of the problem is that agents focus almost exclusively on insurance products, when the consumer’s underlying financial situation is often what prevents them from buying proper coverage. Being there for customers with personalized financial advice will help you grow your market share while creating competitive advantage. The question then is how can insurance carriers provide financial advice, at scale with compliance, in

a cost-effective manner? The answer lies in automating advice with digital financial coaching, powered by digital engagement, artificial intelligence (AI), and knowledge, that mimics your best advisor.

In this white paper, we’ll highlight how AI-powered digital financial coaching can help your customers become financially viable so they can afford to buy insurance and qualify for your other financial offerings.

Why is financial advice so critical today?

People are struggling financially

Even pre-pandemic, most Americans were in poor financial shape. As of August 2020, despite increased government assistance and loan forbearance programs, the Financial Health Network found that only 33% of Americans are financially healthy. Therefore, the need for basic financial guidance extends well beyond those living paycheck to paycheck.

Financial difficulties hurt insurance sales and decrease assets managed

Insurance coverage is a casualty of poor financial health. The 2020 Financial Pulse Survey sizes this issue—43% of Americans acknowledge that they lack sufficient insurance coverage. Tough times cause customers to let existing policies lapse, a trend that has accelerated over the last several months. It also leads to reduced contributions to retirement accounts and, for those hit particularly hard, withdrawals from those accounts, reducing the assets that insurance companies manage.

Advice is a top consumer financial want— and need

While wealthy Americans get personalized advice, the rest are left to manage their financial journey on their own. That is a formula for disaster. Human nature makes controlling spending a challenge, and the complexity of financial offerings makes it hard to select the right products. People recognize their financial shortcomings, which is why over 50%

in a CGI study ranked advice on how to save and guidance on building wealth as their top financial needs.

Sustainable competitive advantage

According to Forrester Research, financial firms

that practice advocacy—customer advocacy refers to customers’ perception that a firm does what’s best for them, not just what’s best for the firm’s own bottom line—earn higher customer loyalty and stronger future purchase intent. Customer loyalty driven by advocacy is so strong that it constitutes a sustainable competitive advantage.

Why companies have failed to provide advice

The case for insurance firms to help their customers improve their financial wellness is strong. So why have insurance companies failed to deliver on this front? It comes down to the three Cs: Complexity, Compliance, and Cost.

Complexity

Every consumer is different when it comes to their finances or their understanding of financial concepts and products. So, one-size-fits-all advice is doomed to failure. Few agents are skilled enough to meet

the herculean challenge of providing personalized advice. Information on carrier websites is no better, with painfully long brochures that put the onus on the customer to figure out answers for themselves. And rarely does any of this digital content influence behavioral changes (such as spending habits), which can help customers get on track.

Compliance

Financial advice and guidance is highly regulated. Deliver incorrect or misleading advice, and your firm will face fines and irreparable damage to its brand.

Since most agents are specialists only in selling, with little knowledge of the domain, the risk of improper financial wellness guidance is high for most firms. Monitoring agent-delivered advice is expensive or technologically difficult, particularly in the branch office. Without recordings of the conversations, management lacks quality or audit controls to ensure agents do not go off script. The risks are too great, so most firms avoid delivering financial wellness guidance.

Cost

Financial expertise does not come cheap. Top financial advisors are expensive, and consumers often need multiple sessions, driving up the cost of advice—anywhere from $200 to $500 per consumer.

AI-powered digital coaching automation massively scales up advice

What’s possible with AI?

An AI-powered virtual financial coach can create a personalized advice experience that rivals what the best advisor can deliver. It can deliver guidance that includes a customized action plan and follow up with messaging and nudges to help the consumer achieve their plan.

Using the customer’s preferred frequency and messaging channel (e.g., email, text messages, WhatsApp), the AI coach encourages, establishes accountability, makes progress easier, and uses gamification to celebrate progress. For example, to help a customer complete an action plan, follow-ups might include:

  • Reminder to take action / check in
  • If action is not taken, reduce friction to act (e.g., if action was pulling credit, send a link to myfreecreditreport.com)
  • If action is taken, send celebratory note, badges, and a reminder of the next step

Why digital?

Consumer adoption of digital channels has been accelerated by COVID-19. Younger consumers always preferred digital channels and are demanding more from those touchpoints. Older customers are also going digital thanks to the availability of 24×7 self-service and the ease of use of modern digital customer service apps. And some holdouts are being forced to go digital due to fear of exposure to the virus. Also, digitally delivered advice empowers you to help the greatest number of customers at any given time.

With AI-driven solutions, you can create quick value.

  • Easiest to implement—requires no agent change management
  • Easier to test, learn, and optimize advice approaches—requires no retraining of team members
  • Fastest adoption through popular digital channels

Industry’s first Virtual Financial Coach

To deliver real value, any financial advice should be able to help customers solve their problems and achieve their goals. That’s why eGain, a leader in AI-powered customer engagement technologies, and GreenPath, a leading financial wellness nonprofit, have partnered to create a virtual financial coach that leverages best practices for financial coaching.

Personalization

Customers can get an action plan tailored to their financial goals and specific situation. They can also tell the coach what they’re interested in improving and learning more about.

Proven advice

Virtual financial coach delivers the caring advice that GreenPath has honed by successfully counseling millions of Americans for 60 years.

Plain language

Conversational AI tools enable you to digitally deliver advice in friendly, easy-to-understand language that’s free of bank jargon. You can create multiple personas for the virtual coach, such as cheerleader, traditional, tough love, and more, so that customers can choose a coach that fits their personality and preferred coaching style.

Bite-sized action steps

Advice is frequently refreshed with brief steps to gradually nurture customers. This approach ensures that customers are not overwhelmed, which gives them the confidence to continue on their long-term financial journey.

Behavioral nudges

The virtual coach includes an arsenal of A/B-tested best practice nudges that help customers make progress on their action plan. The virtual coach interacts much like a human coach, providing motivational reminders and celebrating progress. For example, it can hold the customer accountable to take an agreed action (e.g., reminder to pull their credit report), and make it easy to follow through by sending a quick access link.

Gamification

The virtual coach motivates customers to achieve their financial action plan with fun challenges and rewards like contests, badges, gift cards, and other strategies.

Empower customers and fuel your business

Long before the pandemic, customers had been demanding more personalized digital experiences. It has now become a business imperative. With millions of people impacted financially, there has never been a more important time for insurance carriers to ramp up their digital capabilities to deliver what their members and prospective customers need the most.

Our automated digital coaching solution combines the power of eGain’s award-winning AI-powered customer engagement automation technologies and GreenPath’s proven financial advice to deliver personalized financial advice at a scale that has never been achieved before!

About GreenPath Financial Wellness

GreenPath is a national nonprofit, focused on financial wellness for everyone. Since 1961, people have been turning to GreenPath for guidance through financial crises: overwhelming debt, foreclosure, bankruptcy, or credit challenges. Its counseling team handholds hundreds of thousands of people every year to improve their financial health. To learn more, visit www.GreenPath.com