'JUDGE JUDY' RULES ON BANKS, INSURANCE-
AND A CONSUMER PERSPECTIVE
by Mike Manes
Commentator: As we await the arrival of our hypothetical Judge Judy, let's set the stage for today's program.
Over the past few years the walls between the institutions of banking, insurance, and investment have come tumbling down. Today, a bank, insurance agent, or stockbroker can offer their customers full financial services-banking, insurance, and investment products. These industries are being forced to redefine themselves in the face of regulatory changes.
The result has been marketplace chaos-mergers, acquisitions, joint ventures, marketing alliances, and so on. This means that the traditional banks, agencies, and stockbrokers who have enjoyed such a lucrative past are scrambling to assure the same advantages in the future.
But the driving force behind this change isn't new legislation-it's competition. We're moving from a past controlled by institutions to a future owned by consumers.
In yesterday's world, banks were protected by regulation; agencies and stockbrokers were saved by information control. With regulation and the sameness it creates, profits were fixed. With knowledge control, the sales process was channeled to assure that distributors benefited first-consumer satisfaction was second.
The reason we're here today is simple: Technology, global competition, and consumer sophistication have shifted control from providers to consumers. This creates great change-opportunities for the underserved consumers of the past and peril for the overprotected providers of yesterday.
Consumers can now control their financial services. Institutional providers, in an effort to regain and/or perpetuate their historic control and profits, are alleging a commitment to the consumer. They've promised user-friendly, one-stop, and hassle-free shopping.
The questions are: Has this expectation been met? Are consumers better off today? Simply stated, today's program creates the opportunity for providers and consumers to tell their story to Judge Judy and to have her evaluate their concerns, opinions, and responsibilities.
Bailiff: All rise!
Judge Judy: Be seated. Let's get something straight right now. This hearing is going to be conducted in real time, the same way things happen in the real world, not at the snail's pace that has been the trademark of you bankers and insurance guys.
Each of you will get a chance to talk. Tell me your name, your interest, your problems and opportunities in this new world of financial services. And tell me fast. No bull, no puff-I want the facts, just the facts.
The providers will go first, and the consumers will speak last. Get used to it, because in this new world consumers will always have the last word! Let's get started. Who's representing the stockbrokers?'
Stockbroker: Your honor, I'm E. Z. Way with FFS. Before you ask about these names-it's really E.Z. at FFS-Full Fee Services. I help my customers buy, sell, invest, and churn, I mean, learn about their investments.
I've worked hard and done well. In the old days there were so few rich guys we had to work hard to find them. In the last decade or so, I've helped my customers make bunches of money. Now everyone wants to benefit from the skills of guys like me.
Times are starting to look good, so these bankers and agents want to get into my business. If that's not bad enough, we've got this darn technology and E-trade system. Now that I'm getting close to my goals, the game changes. It's not fair!
Judge Judy: Quit whining! Maybe FFS should stand for Fat Fee Sales. If the business was as difficult as you say and margins as thin as you suggest, competitors wouldn't be fighting to join you.
If the value you claim to add-relationship, knowledge, and information-is as good as you say, a stupid machine wouldn't be able to replace you. I bet you looked at the Y2K bug as a market opportunity-a savior from the threat of E-commerce. Well, it didn't happen, so get over it!
I'll tell you what-I believe guys like you can have a place in tomorrow's world, but rest assured that it will never be E.Z. and Fat again.
Next! Get me the insurance agent.
Insurance Agent: Judge Judy, I'm glad to be here. You certainly look good today. In fact, you're more dynamic in person than you are on TV. I 'd like to...
Judge Judy: Shut up! You may be selling, but I'm not buying. Stick to the facts. Start over.
Insurance Agent: O.K. I'm Richard Guy, CPCU, CLU, ARM, PIT. I'm also known as Rich or Dick. I'm an independent agent. I represent the customer, not just one company. I want to get into the banking and investment business so I can help my customers even more.
These other industries could use the consumer advocacy that I bring. I'll tell you this-these old dinosaurs could learn a few things about sales and marketing-you know, relationships-from my colleagues and me. I've just completed a venture with my local bank. You wouldn't believe it-it took them a year to make a decision to do this, and now they expect me to make it work in one day!
I can sympathize with E.Z. about this Internet and E-commerce stuff. Customers need me. They're not smart enough to buy this product direct. You should outlaw all this online shopping. Protect the customers from themselves!
I could go on for hours...'
Judge Judy: Shut up! I want to clarify some of the statements that you've made. For your information, Mr. Rich Guy, consumers like me don't think you're as valuable as you claim to be.
In fact, your comments make me furious! I might need an agent only because insurance companies are so inefficient and user-hostile and the products they sell are written in legalese. But you have withheld information I need to make sound decisions. The problem is not my intelligence, it's your manipulation.
As a consumer, I would gladly pay a fair price for the services of someone who could help me solve problems and manage my resources. Read my lips: I want less hassle, not more hassle, in my life!
I question if you've really been representing me. Do you have a contract with the companies or with me? Can you more easily afford to lose one company or one customer? Do you offer your clients shelf products, or do you ask us what we want and then find a product that addresses our needs?
As for the Internet and E-commerce, thank God! People like me are now able to learn the truth. We can see what our options are, the real pricing differences, and we'll soon find out how much you make on each sale. This will change your behavior more than if I put glass doors on your bathroom!
A wise old owl once told me that every policy sold will benefit someone. Some benefit the buyer, and others benefit the seller. The Internet will ensure that more buyers benefit. That's good!
As for your complaints about banks, I don't want to hear about it. All providers of financial services are bureaucratic institutions. Y'all were dumb, fat, and happy. But it's over-you're not in control anymore. Get over it!
Where's the Banker? Get up here. Don't keep me waiting like I'm in the teller's line!'
Banker: Your honor, I'm Anne L. Retentive, a lobbyist and attorney representing the banking industry. I'm ...
Judge Judy: Wait a minute, do my eyes deceive me? Did the ultimate Boy's Club send a lady to represent themselves? I bet there are more women in this courtroom today than there are on the boards of all the banks in America.
Another observation: I don't see any old white guys in this room. I guess that's because they're all at bank board meetings. Let me guess-your notes start with your expressing concern about the burden of regulation. Save your breath. The only important regulation you bankers need to comply with is simply the wants and needs of consumers!
Banker: Well, if you overrule my discussion of regulation, you upset all my plans! In banking, scripts, rules, procedures, and processes are all-important. We don't like to change!
Let me move to point two. Banks are the strength-the very cornerstone-of our communities! We've been under assault in recent years. First, we've had to start competing with each other. We're not used to that. Then, technology and full information made it possible for consumers to shop outside of the community-which really makes it tough for us.
Before I continue with my planned comments, let me address a remark made by the insurance agent, Dick. We may have taken a year to decide (compared to their one-day impulse), but I can assure you it will take them more than a year to implement the plan.
As a bank, we handle hundreds, if not thousands, of transactions every day and balance at 5:00 p.m. With an agent, every transaction is an exercise in process and balancing is not even a possibility. Everything is a challenge for them. If we can't handle transactions better than agents, I'm not Anne L. Retentive!
Then there is the issue of image and compensation. Bankers are about prestige, security, and seniority. These agents-you know, the used-car types-are so aggressive! They want us to turn over our customers so they can make more money than we do. I don't think so! I'll be honest.
Judge Judy: That's special.
Banker: We need help. This competition for deposits and loans, disintermediation, the cost of funds, narrowing margins, and so on are causing us serious problems. We need new sources of income. Our sacred cows of NSF charges, Credit Life, and ATM charges are even coming under scrutiny!
We want to work for our customers. We want to help them solve problems and capitalize on opportunities. Excellence in service and quality products-value is what we're all about! A few more points ...
Judge Judy: Stop already! I've heard enough. I can understand self-promotion. I can respect an attitude. But your last comments aren't in touch with reality. You talk about quality and value in the same breath with ATM fees, Credit Life, and NSF charges. Get a grip.
I know that people who don't need a loan can get one. But if you really need a loan, you're in trouble. People that fit into your processes can get service. Unfortunately, there are many square pegs, and your system is based on round holes.
The simple truth is that what you, the agent, and the stockbroker want, need, and say is moot. You guys are no longer in control. For the limited time remaining, the customer is going to talk. And as a matter of fact, the only words that will matter in the future are those of the customers. Listen-you might learn something.'
Customer Representative T. Ruth Seekur: Your honor, the world is being reshaped. As you said, we're in charge. For most consumer goods, selection has increased, quality has improved, and prices have dropped. Bankers, insurance industry types, and stockbrokers don't want to see these changes. They want to sneak their moldy old products and services through the doors of tomorrow. The good news is that the Internet has given us access to full information and control of our future.
Judge Judy: Tell the truth, Ruth.
Customer Representative R.D. Nari: 'My story is simple. For 40 years, I was a Joe Six- Pack type of guy. I worked and just got by. I didn't know much about full financial services, since I wasn't rich. Then, a year ago I won the lottery, and now everyone wants me as a customer. When I was poor the tellers were nice to me and the agent sent me refrigerator magnets. But products? Services? Forget it!'
Customer Representative Ms. Dee Manding: I have resources. I'm what most would call a 'target' customer. Here's my reality: My banker can handle all my transactions, but if I don't fit into their process, I'm in trouble. The stockbroker refers to our 'relationship,' but we only talk when a transaction is made-if I want to buy or he wants to sell something.
The agent is a problem solver. If I've got a dilemma that no one else will touch, she'll work with me. Unfortunately, if I just need an I.D. card for insurance, a policy delivered, or a question answered, it might take weeks for her to respond. She'll tell me it's under control and blame the insurance company for the inefficiencies.'
T. Ruth Seekur: Let me address the future. This is what my clients want-innovation, efficient delivery, effective results, and to be asked about their wants and needs. We'll pay a fair price for excellent service. We don't care about policies and products. We want our problems solved and assistance in capitalizing on opportunities. We want positive buying experiences.
We want excellent service as a minimum standard, and then we expect you to innovate to assure a future of better, simpler, and cheaper products and services. We want hassle in our lives removed or reduced. We want a relationship with someone who will use the Internet, technology, and any other tool available to help us-not themselves.
We want new PEOs, legal and accounting services, coordination in telecommunication purchases, and information, information, information! We don't want to be sold. We want you to facilitate our buying.'
Judge Judy: Excellent! Are you boys and girls listening? Did you hear what's been said? Your future doesn't rest in this court. Your future is in the hands of the customer. If any of you will abandon your own special interest long enough to reach out to the customers, you'll do fine. If you continue to perpetuate your own self-serving systems, the court of public opinion will find you guilty and your sentence will be severe-it will be capital punishment!
Court adjourned.
Bailiff: All rise.
Michael Manes can be reached at Square One Consulting, 625 Weeks Street, New Iberia, LA 70560, cell 337-577-3885, E-Mail: [email protected], Web site www.squareoneconsulting.com.