Articles - Products are for life, not just for Christmas

The other week I was asked to speak at a Society of Actuaries in Ireland meeting on the subject of product governance. Gone are the times when products could be designed, priced and forgotten about – unless of course sales weren’t hitting target or profit numbers looked terrible in which case the product became top of everyone’s agenda.

 By Duncan Robertson, Marketing Director at Aegon Ireland
 The transformation of product governance from the forgotten spoke of the product lifecycle to the central hub has been meteoric. The change can be seen as much as anywhere in the changing titles of myself, Duncan Robertson. When I started my career I was a Product Actuary (well Assistant Product Actuary to be exact). Then I became a Product Development Actuary reflecting the fact that my role was to develop products (and I was an actuary!) The next change was to become Head of Development, in the understanding that there is more to a proposition than the product alone. However, a few years ago I managed to acquire the title Director of Product Management. For the first time there was an acknowledgement that my role was not just to develop products but also to look after them in the future.
 Whilst my role and title has moved on since, the introduction of Product Management into my title a few years ago was consistent with the changing tide in the industry. Product governance has now become a hot topic at the moment and rightly so.
 At the Society of Actuaries in Ireland meeting a key theme from my talk was that in order to be able to monitor the extent to which a product is meeting the needs of a customer we need to be able to accurately describe our customers (i.e. who they are) and be able to clearly articulate what exactly their needs are. This may seem blatantly obvious but it can be so easily forgotten.
 There is much speculation and many questions being asked on what products will be the winners and losers in the new flexible pensions environment. The answer is obvious of course. If the industry is to have any long term credibility the winners will needs to those products that best meet the needs of customers. And note the plural – customers. Different customers are going to have different needs. There will be richer and poorer customers, those with large families and other with no dependents at all. I cautioned us all in last month’s blog on the dangers of “averaging” when it comes to describing customers and their needs. So whilst no-one is average that there will be those that are closer to the mainstream and those that have more unique requirements.
 Products designed for the more mainstream customers must meet the core needs that these customers tell us they have. Time and time again, whenever we ask them they say that there number one need is guaranteed income with a second need for flexibility.
 Those customers with more unique requirements may place guarantee income and/or flexibility further down their list of requirements and different product solutions may be suitable for these people.
 We also must consider whether the product has been designed to meet changing customer’s needs throughout retirement. From the needs in the first years of retirement when a customer’s priority may be in enjoying their new found independence from work, to the later years when the focus may be on quality of life.
 So my message to all the product designers out there is, know your customer, know what their needs are now and how those needs might change in the future. And fundamentally remember that a product may be for life and not just for Christmas.

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