The Department of Labor (DOL) recently finalized the rules that address conflicts of interest by financial advisers in providing retirement advice to consumers. The rule describes the kinds of communications that would constitute investment advice and types of relationships in which those communications would trigger fiduciary investment advice responsibilities. These communications are referred to as “covered investment advice.” But there are types of communications not covered that offer huge opportunity for innovation in capturing customer mind share.

The DOL rules have sent life insurance and retirement marketers into a panic to calculate where the line is drawn in their conversations that could trigger fiduciary responsibility. And the urgency is justified: The penalties for breaching fiduciary duty include restoring all losses incurred during the fiduciary relationship.

Green Light for Education

One of the types of communication that does not trigger fiduciary responsibilities is education, because ostensibly educational content does not provide recommendations, but only knowledge. The Department of Labor believes that “education about retirement savings and general financial and investment information is beneficial and helpful to plans, plan participants, and IRA owners, (as long as) the content doesn’t broach a level of recommendation as defined in the final rule.” So education sounds like the new champion of financial marketing, right?

There’s only one rub: Education doesn’t exactly sizzle with excitement or entice with engagement.

Edutainment: An Engaging Tool for Financial Marketing

Learning through entertainment dates back to Ben Franklin’s Poor Richard’s Almanack that amused and instructed colonists with its mix of maxims, weather forecasts, math lessons and puzzles.  The term “edutainment” was coined by The Walt Disney Company in 1948 to introduce the True Life Adventure series. In the 1990’s Bill Nye The Science Guy was immortalized by his quirky and fun TV show that became a modern-day model for edutainment. And in the 2000’s even brainiac physicists like Brian Greene were able to convey concepts as complex as String Theory to the masses with his “edutaining” mini-series.

Today, though edutainment is used widely in applications targeting early learners in kindergarten and elementary school, it isn’t fully leveraged in adult learning, especially in the financial industry. Maybe it’s because the financial industry has been driven to solemnity by regulation.  Maybe because it has a reputation for gravitas.  Maybe it’s time for a change.

Today, web video has opened up an insatiable channel for video on demand and programming limited only by the imagination. The convergence of this technology breakthrough, the DOL endorsement of education as a strategy to delay triggers, and the public’s growing appetite for “alternative” content, clearly cry for innovation.

The application of “edutainment” is one innovative and engaging way to leverage these trends. Creative content strategies such as this can help retirement product and service brands prosper throughout the DOL rule era by helping producers snap out of panic and get comfortable with doing business as usual, with a few modifications.

Adding interactive layers to entertaining videos enable a “create your own adventure” platform. Likewise, using guided path learning strategies with video and animation can provide deep engagement and effective learning.

A couple new video content formats along these lines include:

• Short-form video series focusing on individual typical consumer financial situations within various stage/life style segments. How do they deal with it? How would viewers differ in their approach. How are decisions made and what is the model for the adviser to act in the customer’s best interest?
• Brand sponsored dramatic comedy (“dramedy”) web video series starring life-stage specific cast with a central theme around financial crises, decisions, and resolution. Real life financial situations aren’t neatly bundled into categories. Instead, they are a complex combination of personalities, habits, early learnings, past behaviors, and events. A faux reality series like this could engage at the entertainment level, identify with consumers at the situational level, and provide real solutions by example of success.

Edutainment ideas for financial literacy are endless. In fact, this approach could be an entire cultural initiative for financial brands wanting to build intimate relationships with consumers before crossing the fiduciary threshold. The bottom line is getting your stakeholders to realize it’s pretty simple. They just have to do the right thing for the customer. Only now they’ll have a bit more “CYA” work to do in the process.

GroPartners Consulting video edutainment platform addresses these opportunities with subject matter expertise in financial products and services, relevant wit, and cinematic quality.

 

 

 

For more perspective on bridging strategy and execution, including practical tools and processes for brand operationalization, get a copy of Getting There From Here: Bridging Strategy and Execution, by Greg French, founder of GroPartners Consulting. E-book at iBooks or hard copy from Amazon.com.

http://amzn.to/1Jcli0A

Last week I asked a colleague familiar with the financial industry a simple question: What’s the difference between financial literacy and financial education? Her first reaction was, “Oh, that’s pretty clear…” Then after a few seconds of thought, she conceded that the distinction wasn’t so clear.

She’s not alone. The difference between the two is somewhat murky, though simple. Financial literacy is the level of understanding about basic financial concepts an individual has accumulated. Financial Education is intervention intended to boost the level of financial literacy.

The New Rule of Engagement

At the June meeting of the Financial Literacy and Education Commission (FLEC), a joint committee comprised of representatives from 19 government departments, Department of Labor Secretary Thomas Perez stated, “The onus has shifted to consumers to make critical decisions for retirement security. Education has not kept up.”

He went on to cite a global survey of financial literacy in which the US ranks 14^th behind Singapore and the Czech Republic. Even worse, a survey by George Washington University found that only 14% of Americans passed the test for basic financial literacy covering fundamental topics such as inflation, compound interest, and financial diversification. More than 70% passed the same test in Norway, Denmark, and Sweden…more than 60% in Canada.

Among people with self-directed plans, about half report not feeling very confident in their ability to make good investment decisions. Fewer than half of women report that they are mostly or very confident that they will make the right investment choices. Lew concluded, “This lack of confidence points to the need for both good financial education and sound investment advice.”

Meanwhile, the Department of Labor (DOL) is working on new rules to govern the unfair practices of many financial advisers in double-dipping fees and commissions. When you combine the pervasive, chronic financial ignorance in the US with the absence of standards and ethics for financial advisers, consumers lose.

Department of the Treasury Secretary Jack Lew addressed new DOL Conflict of Interest Rules directed at fiduciaries (financial advisers) calling them, “an important step towards ensuring…Americans who are increasingly responsible for their own retirement planning can get that advice and trust it, knowing it’s in their best interest.” The new Rule emphasizes the importance of education to help Americans manage their investments and plan for their futures.

Transforming Selling to Buying

Life and retirement brands have a great opportunity to gain consumer trust through educational intervention. If the focus is first placed on growing relationships though educating prospects, financial brands can postpone triggering fiduciary responsibilities until the prospect is ready to buy.  Smart life and retirement companies are becoming increasingly innovative with financial education that leads to elevated financial literacy. Sales results can be elevated by first intervening with consumer financial education at the critical point of category interest (AIDA model), helping consumers make informed buying decisions, rather than just being sold.

GroPartners Consulting Financial Marketing provides financial clients with expertise and guidance in producing highly engaging financial education programs. Our experience and scope includes interactive videos, life-stage targeted “edutainment” series, and web and digital tools and assets designed to elevate financial literacy.

 

 

 

 

For more perspective on bridging strategy and execution, including practical tools and processes for brand operationalization, get a copy of Getting There From Here: Bridging Strategy and Execution, by Greg French, founder of GroPartners Consulting. E-book at iBooks or hard copy from Amazon.com.

http://amzn.to/1Jcli0A