New York Life: Discovering the Bottom Line Benefits of Financial Education

Putting Customers First

Recently several major brokerage houses agreed to pony up $85 million to the SEC to help educate consumers about financial products and services. That money is part of a larger $1.4 billion payout to settle charges that these firms put their own interests ahead of their customers during the bull market that came to a crashing halt in 2000. Buffeted by accounting scandals, 401(k) meltdowns, and stock analysts talking out of both sides of their mouths, there is little doubt the public desperately needs to upgrade its financial literacy, as well as receive plan talk about the financial products they are buying. If companies are smart, they won’t leave the financial education of their customers to the SEC; they’ll begin to do it themselves.

One Company’s Solution-The Low Cost/High Benefits of Education

Financial services companies might be wise to take a page out of New York Life’s book. Since 1996, when it launched its Web site, newyorklife.com, the 157- year old New York City–based company has been providing customers and consumers with unbiased, objective information about financial products such as life insurance, annuities, and mutual funds, and concepts such as retirement and estate planning.

And consumers have responded. Over the past three years, New York Life has experienced double-digit growth in its core life insurance business. In the process, it has strengthened its relationship with customers and prospects, and bolstered its bottom line to become the leading life insurer in America. In short, the company has risen to the top by holding steadfast to a belief that an “educated consumer is our best customer.”

Indeed, over the past few years a tremendous explosion of new financial products has severely tested the knowledge of most consumers. Annuities and mutual funds, not too long ago considered simple investments, today come in all sorts of exotic flavors. Even life insurance, once the most plain vanilla of all financial products, has developed over 40 different hybrids. Consumers, confused and overwhelmed with choices, frequently purchase products ill suited for their needs. And companies that fail to educate their customers or disclose potential pitfalls discover that people who didn’t understand what they bought are more likely to become angry ex-policyholders.

New York Life launched its Web site with the mission to provide consumers with quality educational resources about financial products and services. The strategy was to provide accurate, engaging and unbiased information to help increase consumer confidence and trust, build a bond with prospects and customers, and enable people to quickly connect with a financial professional to help them answer any additional questions and find the right produt or service for them.

“Our thought was to serve as an educational resource with the belief that if we provided the education, people would establish a bond with New York Life and look to our agents when it came time to buy,” says Ken Hittel, vice president of the company’s internet department, who also developed much of the site’s original content. “Since we launched the site, we have remained committed to having the highest quality content possible. The credibility of our site — and the credibility of New York Life— is grounded in the quality of the content and services we provide.” And that quality has been recognized by Web site rating agencies, such as Dalbar, which consistently awards the site its top rating.

In addition to easy-to-understand product explanations, financial education material on the site is organized around life events (marriage, new baby, etc.), financial goals (saving for retirement, planning for a child’s education, etc.), and specific topics of interest (taxes, estate preservation, charitable giving etc.). In all, the site has over 800 pages of accurate, unbiased, and customer-friendlycontent.

“I think it’s fair to say most people don’t understand life insurance and what it can do for them,” says Hittel. “Thus, we have always been motivated to help educate people to understand the value of the financial products and services we provide.”

Partnering for Content

At first, New York Life created and published all of its own content. Hittel, however, soon discovered that developing, updating, and maintaining fresh content was no small task. As new tax laws passed, rules and regulations were amended; the breakneck pace of creating high-quality content became overwhelming.

As the company’s online educational efforts grew, it sought to augment its own efforts by including additional content from credible sources. In 2001, New York Life contracted with Precision Information (PI), of Madison, WI, a leading provider of interactive financial education materials, to supplement its own content. To date, PI has provided nearly 150 pages of additional content on time-sensitive topics such as estate planning, tax law changes, and retirement planning, complete with interactive quiz questions and answers.

“We liked what PI offered because they had NASD compliant material that matches the objective third–party style we consider our hallmark,” says Hittel. PI boasts a track record of serving such high-profile firms as Intuit, Ameritrade, and Morningstar, companies the public relies on for unbiased, objective, accurate and reliable information.

“We were intrigued by New York Life’s approach and believed it was a good match from the beginning,” says Joe Saari, president of PI. “We knew our learning materials would help New York Life continue to build consumer confidence and trust. We thought it was great that a company such as New York Life would want to provide visitors to their site with information to not to push products but to educate. I think it’s a trend you’ll see many more companies following in the future.”

Because of their extraordinary level of expertise, PI can deliver a wealth of high-quality information on a variety of complex topics. For example, PI recently submitted its estate planning, tax, and retirement planning content for review by New York Life’s compliance department. Normally, even with material written internally, this process can take several weeks with much back and forth between writers and reviewers before approval of final copy. Since PI’s material had already been reviewed by the NASD, the process was smooth, saving New York Life time, money and headaches. PI also worked with New York Life’s internet department to insure that such issues as hosting, format, platform, style and coding were resolved successfully, helping to free up scarce internal IT resources for other projects.

Extension of the Sales Force

The material provided by PI, as well as the company’s original material, complements and supports New York Life’s sales force. In many ways a consumer’s Web site experience sets the tone for their relationship with a New York Life agent. “The site is often the first step in the relationship-building process with clients,” says Senior Vice President Bob Smith, who is in charge Special Markets at New York Life. “The site is an extension of our agents’ commitment to professionalism and dedication to educating their clients.”

All New York Life agents attend NYLIC University where they receive rigorous training during their first three years and are taught a counselor approach to clients, including how to identify needs, develop solutions, and help businesses and families construct a strong foundation upon which they can build solid, long term financial plans.” We believe quality of our agents and the quality of training they receive are the best in the industry,” says Smith. “If we can help with a customer’s financial education, then by the time they meet with an agent, they are much better prepared to have a meaningful discussion and, equally important, much more aligned with the company.”

The Results

New York Life’s online educational efforts have been a resounding success. They have created a loyal online following, with traffic to site increasing over 25% in the last year alone. The site’s weekly e-newsletter, to which 20,000 people have already subscribed, helps drive thousands to the site every week, keeping “The Company You Keep”® uppermost in the minds of its customers and prospects.

Even better, New York Life believes that the total new business resulting from the thousands of new leads generated by prospects using the site’s “Consult an Agent” feature, will convert this portion of its Internet efforts from a cost center to a profit center.

Meanwhile, while the number of customer complaints at other financial service firms over the past few years have sky-rocketed, New York Life has actually experienced a decrease in customer complaints per customer account as a results of its commitment to education and customer service.

Whether or not many companies adopt New York Life’s strategy of consumer education, one thing is clear: Spending the time and resources up front to educate customers can have a positive impact on the bottom line.

More Testimonials