Changing of the Guard: Life Insurance in Asia

September 2024

As we speak of generational wealth, a major shift will occur in the next 10 years. The Baby Boomers, born from 1946 to 1964, will enter their 70s. These individuals dedicated much of their time to accumulating financial assets and real property.

They will hand over control or ownership of these accumulated assets to Generation X, who are now aged 44 to 59. Gen X carries the characteristics and attitudes of their parents as they have witnessed their unrelenting dedication to financial stability. They, however, possess a distinct advantage, as they reached adulthood just as the digital age was flourishing, enabling them to seamlessly integrate and adapt to the rapidly evolving technological landscape.

In the Beginning …

In the late 1990s and early 2000s, agents began retooling themselves with the introduction of financial planning in Asia. The Japanese became early adopters as insurance agents began acquiring advanced education in financial planning and formal associations were established by the mid-‘80s. In early 2000, Singapore, Hong Kong, Malaysia, Taiwan, the Philippines, Thailand, Indonesia and India followed suit. China began the push toward financial planning in 2006.

Although there have been attempts to create institutions that would provide education and certification to agents who wanted to be called financial planners or advisors, those efforts met with limited success as most were confined to country borders rather than across the region.

Today, the rapidly growing market of Gen Xers and Millennials is placing significant demands on the skills and knowledge of insurance professionals, requiring them to adapt and enhance their expertise to meet the unique needs and expectations of these tech-savvy, informed and increasingly discerning demographic groups. Those who have achieved the Million Dollar Round Table (MDRT) status are hard-pressed to provide more service in the form of financial advice to remain relevant to their clientele.

Today’s Life Insurance

The era of the charismatic yet superficial insurance professional is a thing of the past. In today's digital age, every interaction between agents or planners and their clients undergoes meticulous scrutiny, largely due to the wealth of information accessible online. Clients now have unprecedented access to reviews, comparisons and detailed information about insurance products and services. This transparency compels insurance professionals to uphold the highest standards of integrity and competence in their communications.

Those committed to longevity in the financial advisory business are increasingly recognizing the importance of ongoing education to enhance their ability to provide comprehensive and effective financial advice. This commitment should extend beyond initial qualifications to include continuous professional development and advanced certifications. This approach will be crucial for building enduring client relationships and achieving long-term success in this competitive field.

The curriculum for financial planners in Asia shares some similarities with North America, but there are key differences that need to be addressed in the educational framework. Tax laws, social security/retirement benefits and financial regulations can vary significantly across Asian countries, requiring specialized knowledge.

To address these differences, the curriculum for Asian financial planners should include:

• Modules on taxation, social security and retirement planning tailored to each major Asian market
• Case studies and simulations reflecting unique challenges faced in Asia
• Opportunities for hands-on experience with local regulations, compliance and product offerings
• Guest lectures and site visits to expose students to industry realities in their home countries

Adapting the curriculum to distinct Asian environments can better prepare students to serve local clientele effectively.

Regulations on advisor/planner behavior across Asia has been the jurisdiction of either the Central Bank, the Securities Exchange Commission or both. The insurance regulators in most countries have yet to step in. While each insurance commission’s role is mainly that of a watchdog over the insurance-investment products being sold, most have yet to set rules on the professional and ethical behavior of the agent, planner or advisor related to the sale of such products.

What’s Next?

Going forward, the upcoming generation of affluent individuals in Asian society will exercise greater scrutiny in selecting their advisors. They are likely to prioritize qualifications that reflect rigorous standards and contemporary expertise. The existing institutions that provide these certifications are relatively new.

Certifications for financial planners also vary widely across Asia, reflecting diverse regulatory landscapes. Key certifications include the global certified financial planner (CFP), chartered financial analyst (CFA), certified public accountant (CPA), and locally developed certifications.

This diversity creates issues around lack of standardization, portability/mobility and quality assurance. To address these:

• Promote greater harmonization and mutual recognition of certifications across Asia
• Establish common core competency frameworks and minimum standards
• Encourage adoption of globally recognized certifications like CFP, while allowing local certifications
• Implement robust auditing and oversight mechanisms to ensure certification quality

By addressing curriculum and certification differences, the Asian financial planning industry can work toward greater consistency, mobility and consumer trust — better serving diverse client needs across the region.

As wealth transitions from one generation to the next, a significant transformation in professional education is imminent. This shift will necessitate a timely overhaul of educational frameworks and curricula to better prepare professionals for the evolving needs and expectations of future generations. The urgency of this transformation cannot be overstated, as it will play a crucial role in equipping the next wave of professionals with the skills and knowledge required to navigate the complexities of an increasingly dynamic financial landscape.