Investing in technology will cement an adviser’s legacy

There’s not only a digital transformation of industry going on, but also an information explosion — one that can have “huge positive impacts or devastating impacts,” said technology consultant Scott Klososky.

Addressing the Council of Insurance Agents & Brokers’ Employee Benefits Leadership Forum last week, the founder and chairman of the board at Alkami Technology works with organizations such as PEOs, insurance companies and hospitals to refine their technology use. “Technology completely reorders who the winners and losers are,” he told attendees, and for businesses, “it means customers can self-serve any information they want before they do a transaction.”

As Americans go from “mobile to wearable to implantable,” their digital acumen can mean big things for companies willing to capitalize on it. The Internet, Klososky said, adds the capability for companies to build trust with their clients in ways not seen before. For example, eHarmony boasts a 3.8% divorce rate — significantly below the national average of around 44%, according to the CDC.

What this means for brokerages in the digital age is they are going to see revenues per employee escalate, but will need less and less people to do the job, Klososky said. “Automation is changing the world,” he added.

“Humology,” or “the integration of humans and technology to get anything done,” Klososky said, relates to the Transhumanism movement that believes in fundamentally transforming the human condition through technology. Eventually, he said, “we’re so wired; we’re not the same species.”

‘Humological scale’

Advisers must pay attention to the “humological scale,” as “every process that you do is somewhere on the scale,” Klososky said. The scale runs from H5 down to H1 on the human side, and then crosses over to technology at a rate of T1-T5. A funeral home, for example, would be closer to H5 on the scale, whereas Amazon.com — where it’s nearly impossible to get in touch with a human being — is closer to T5, he explained.

There are benefits and setbacks to both sides of the scale, Klososky said. While humans are creative and have empathy, they can also be expensive and unpredictable. Meanwhile, technology is scalable and dependable, but also has no discretion and zero EQ, he said. “Everything today is an integration of humans and technology getting something done,” Klososky said.

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For businesses, marketing is going from a “spray and pray” position to one-to-one interaction, he said. When considering IT investments, it’s critical that advisers pay attention to how much they spend on systems of record versus systems of engagement, Klososky said. Forrester found that by 2017 — a year and a half away — 50% of all technology dollars will be spent on systems of engagement,” Klososky pointed out.

The dilemma, he said, is while technology changes exponentially, organizations change logarithmically. And, the older and bigger they get, the more they slow down. There’s a “gap when a leader doesn’t understand how to apply technology well” that leaves them vulnerable,” Klososky said, pointing to Kodak and Border’s as examples. “It’s a risk when you can’t stay up with the tools that technology is bringing to you.”

The last thing a brokerage should do, he said, is let multiple competitors take the next step first. “Your mantra can’t be, ‘We go sixth,’” he said.

Customer behaviors are changing, Klososky said, and the one-to-one digital marketing that is resulting from it can give businesses revenue control by allowing them to predict how much revenue they can bring in. Such changing customer behaviors include:

• being motivated by online recommendations — and being willing to share and comment about a company;
• integrating quickly with mobile and wearable devices;
• willingness to connect digitally with a brand and thus have an online relationship with the brand;
• wanting to self-serve — this is a “huge thing in the insurance space,” Klososky said, as with exchanges employees “can literally onboard themselves;”
• willingness to provide data — “if it improves their relationship with you,” he said.

So what does it take to win in this age of technology? There are three areas where an adviser must excel, Klososky said:
1)Build a digital revenue engine. It must be a CRM system bolted to customer management, auto mailing, customer portal, campaign management and policy system capabilities — to name a few.

2) Understand relationships in detail. It’s mandatory to map your journey with customers — who are the large groups and what are the personas within them? What will cause them to take action? What is their journey? What is every touch point they could have with us? How can I analyze that data?

3) Utilize technologies for influencing people, content and information to drive behavior, such as “crowdvertising.” Know how to use your centers of influence, he said.

Legacy status

The industry “needs leaders willing to write a legacy,” Klososky said, noting that many in the audience have five to 10 years left in their career. Use that time to integrate technology in unusual and clever ways, he urged them. “If you do that, you will be a huge blessing to your organization,” he said, but if the project is outsourced, that legacy will disappear.

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In a Q&A with Nancy Mellard, CIAB’s Council of Employee Benefit Executives board chair, Klososky added that as Millennials—who trust the Internet more than their parents — continue to saturate the workplace, “we’re going to see a shift toward, ‘I trust online resources as an adviser more than I trust a human being.’”

In order to work successfully with Millennials, Klososky reminded the audience that while our grandparents were just trying to survive at work, the youngest generation in the workforce is driven by how they feel. For example, he said, TOMS shoes are “ugly,” but have a good story to them, as a pair of shoes are donated for each one purchased.

 “Culture becomes so important to them,” he said, adding that they don’t want to work for an organization that doesn’t have a social mission.

One audience member asked Klososky how we are supposed to embrace technology when companies keep getting hacked. He predicted security will get worse before it gets better — the FBI has now classified cyber terrorism as the No. 1 threat — but we need technology to augment relationships, Klososky said. Driving a car is not as safe as walking, he said, “You gotta make a decision on what your risk level is.”

In response to a question about compliance concerns making it difficult to go digital, Klososky acknowledged, “regulatory differences make it very difficult between states.”

However, he said, there are two things that give him hope for the next five to 10 years:

1)      Regulators are getting together with state governments to streamline and standardize;

2)      Some companies are making investments to customize how data flow to each state. “It’s expensive,” he said, “but it has good payback.”