Advisors improve on education and qualifications as they compete with technological advances.
After the Korean War ended in 1953, South Korea experienced unprecedented growth, focused mainly on manufacturing. But in the half-century since then, things haven’t stayed quite as rosy. The country is now facing “an era of low growth, low interest rates and low birth rate,” said Sung Man Park, a 14-year MDRT member from Seoul, South Korea. As a result, the need for qualified financial advisors is greater than it has ever been in the country’s history.
Historically, the role of insurance agents in South Korea was primarily filled by women, who generally concentrated on selling to acquaintances or family members. But now, said Kyo Wook Son, CFP, a 15-year member from Busan, South Korea, “Through improved education, insurance agents are becoming an expert group equipped with expertise and professional pride.”
Chan Hyun Baek, a 15-year MDRT member from Seoul, said there is still room for growth, especially since many of the young financial professionals don’t stay in the industry long-term.
“The occupational status of financial professionals is still not very high in Korea,” Baek said. In fact, a pervasive misunderstanding of financial products remains. Some clients cancel their policies due to bad information, or can’t remember the details of their policies. That is why there is such a great need for knowledgeable advisors.
“We have agents with expertise in coverage and retirement planning,” Park said. “We are seeking consistent change and growth as we offer comprehensive financial management services covering the overall aspects of the client portfolio, as well as insurance policies.”
Park, who focuses on advising high-ranking executives and corporate CEOs, builds personal relationships with his clients so he can tailor his offerings to their unique needs. “I’ve come to think the most important thing to do is establish a relationship of trust with your client,” he said. “The foundation of this relationship is honesty and a diligent attitude.”
Through improved education, insurance agents are becoming an expert group.
— Kyo Wook Son
Similarly, Son’s goal is to secure 30 high-net-worth clients and then modify his services to meet their needs. With low marriage and birth rates in the country, not to mention a struggling economy, finding and securing new clients can be difficult. So Son wants to build on the existing relationships he has with clients to create long-term partnerships.
This type of relationship-building is becoming even more important as sales channels open up in South Korea, allowing for websites and other artificial intelligence to make sales. In fact, these advancements are even allowing some clients to plan for themselves, despite their lack of knowledge of the industry. But Park believes this shift actually represents an opportunity for financial advisors, not a weakness.
“As comprehensive financial experts, I expect MDRT members to play an important role by planning and executing solutions to the important and sensitive issues of our clients,” he said. “We can fully consider the minute details of our client’s future and reflect them in their planning, and we can also assist them in following their plans without straying.”
This expertise will also be helpful as South Korea faces additional regulation, including the implementation of the International Financial Reporting Standards (IFRS) 17 by the year 2021. This new insurance standard means all insurance companies must report their debts in terms of market value instead of book value, which puts pressure on the insurance companies themselves.
“Tension is high among insurance companies due to the introduction of the IFRS. Companies are focusing on selling protection products rather than annuities, some companies are even selling their assets, and others are expected to enter mergers and acquisitions,” Baek said. “The government is pushing insurance companies to lower their operating costs to bring forward principal reach time for the policyholders of annuities, but this is expected to lower income for advisors. When it comes to post-sales monitoring, policyholders are now aware of the operating costs, which is leading to increased dissatisfaction and pushing many clients to cancel their policies.”
Son agrees. “Insurance companies are now taking aggressive steps to reduce the sales of savings insurance products to comply with the new standard,” he said, citing reduced commissions and the launch of new protection insurance products such as whole life insurance.
Baek anticipates there will be some decline in the insurance industry in the coming years due to IFRS 17. But he advises that “it will be important to make the sales process more transparent to maintain trust and recommend the right products.”
In fact, all three men agree that despite the challenges, the future is bright for Korea’s financial services profession. And Park, in particular, believes MDRT members will be the ones leading the way toward positive development.
“Korea is expected to face active technological and systematic changes,” he said, “and I believe MDRT members will not only be able to deal with them, but also use them as opportunities for growth.”