Can We Tell Who Buys What?

Tip: read getting what we want by distorting our spending on Riscario Insider, which describes research into the new consumer as described in Treasure Hunt by Michael Silverstein of the Boston Consulting Group. Today's consumer trades up in a few categories (can't buy better) and trades down in many (can't buy cheaper). The middle market is toughest: you aren't the best and you aren't the cheapest.

Our clients are unique in what they're willing to spend their money on. They spend more in some categories and less in others. Here are examples:

• movies: some go to movie theatres, some buy movies on DVD or Blu-Ray, some rent, some watch for free on commercial tv
• dining out: some love this while others think what the same food would cost at home (e.g., $15 can buy pizza for one person at a restaurant but for a whole family --- assuming no teenagers --- at home)
• vacations: some go on extravagant vacations while others relax at home
• food: some pay extra for organic while others buy the cheapest
• family: (grand)parents may spend extra on their (grand)children and save on themselves

More Variety
Business gets tougher when we can't tell what a client wants. An owner of a Mr. Sub franchise reminded me that in the beginning there was only one type of bread and four types of subs. Now there's much more choice due to competition. Order a cream cheese bagel at Tim Horton's and slow down the line while you select the type of bagel and type of cream cheese.

More than choice, consumers want value. No one wants to overpay for anything, but that doesn't mean the cheapest price for those trading up. When reducing a client's financial risks, intangible factors matter. Your expertise matters but few charge separately for wisdom.

If choice can overwhelm when ordering a submarine sandwich, what of products like life insurance? There's probably too much choice already. Our fact finding helps narrow down the solutions but then our biases can get in the way of what we offer the client. For example, a leveraging strategy could be inside the client's comfort zone but not presented because it falls outside yours.

Links

• Getting What We Want By Distorting Our Spending (Riscario Insider)
• Dan Sullivan on Selling Your Wisdom
• We See As We Are
  

CALU 2008 - Sharing The Wisdom

70% of CALU members (Conference for Advanced Life Underwriting) attended the 17th annual event in Ottawa from April 27-30, 2008. The chair, Graham Carter, selected the theme of Sharing The Wisdom. We did. And more.

They're There
I still can't believe the calibre of government officials who chose to address us

• Monday morning: Deputy Liberal Leader Michael Ignatieff, who spoke impromptu and took questions
  
• Monday lunch: Governor of the Bank of Canada Mark Carney, who flew in after a morning meeting with bankers in Toronto, and also took questions
  
• Monday afternoon: Prime Minister Stephen Harper, who rearranged his schedule to speak at 2pm
  
• Tuesday morning: Finance Minister Jim Flaherty, who also attended the evening reception for Senators and Members of Parliament
  

In addition, a senior CRA official attended a roundtable discussion. He jokingly thanked CALU for keeping his department in business by asking ongoing questions. We also saw saw live recordings of the Senate hearings on Creditor Protection in which CALU representatives were thanked for helping Canadians with their constructive input.

Stephen Harper
Stephen Harper started his address with "My friends at CALU" and explained why he used those words. He's addressed CALU six times, the last three as Prime Minister. He called CALU unique because of political involvement and civic benefits.

Highlights
Here are the parts of the conference which stood out:

• best answers to audience questions: Michael Ignatieff
  
• most entertaining: Mike Mandel on the power of words
  
• most actuarial: Moshe Milevski, who spoke about longevity risk, the peril of outliving your savings
• most thought-provoking: Dan Hill (not the Canadian singer) on recent research into the role of emotions in selling
• most elusive goal: figuring out a fair price for buying/selling a block of business
  

Afterglow
Since so much takes place over the four days, the conference becomes a blur. You remember how good you felt, the people you met and a few tidbits of wisdom. I took notes which I'll turn into text with Dragon speech recognition for future posts.

Links

• Live - The Prime Minister and Others (CALU 2008)
  
• Conference for Advanced Underwriting (CALU) websites for members and the public
• The Prime Minister and the Producers (CALU 2007)
• The Cost of Low Reinsurance Rates (CALU 2007)
• Advisor Succession Planning (CALU 2007)