Episode 14 with Pat Foley, COO at Ashton Thomas Private Wealth – Embracing Technology and Growing New Distribution Channels

Introduction

Beyond the Challenges is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts, Kevin and Sandy Dougherty, talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent. Beyond the Challenges podcast is sponsored by Exactuals, perfecting payments and the data driving them.

Welcome to Beyond the Challenges. Here are your hosts, Kevin and Sandy.

Kevin Dougherty:

Today, we’re talking with Pat Foley, COO at Ashton Thomas Private Wealth. Pat has over 40 years in the insurance industry, including executive roles with Genworth, OneAmerica, Allianz and Prudential. Pat, can you tell us a little bit about yourself and how you got into the insurance industry?

Pat Foley:

Sure. Well, I was a college intern agent for Prudential at the University of Iowa, between my junior and senior year. I have an older brother who talked to me about getting into the business. So I started with Prudential right out of college, full-time. Graduated on Saturday, went to work Monday full-time. And spent my first 18 years there in sales, sales management, built an agency there. And then, they convinced me to go to the dark side and go into corporate management. So I was a VP and then a departmental VP with Prudential. And with that company, of course, all roads lead to beautiful downtown Newark, New Jersey. And being a Midwest boy, I didn’t really want to do that. So I left Prudential and I went to Allianz in Minneapolis, and spent nine great years there. Started out heading distribution and marketing, and then ultimately was president of the individual insurance group and helped build the equity indexed annuity business. Then was chief marketing officer for North America. And bottom line was, realized I wasn’t having any fun anymore. So I took a step back from my corporate life.

Pat Foley:

I was flying to Germany all the time, and bought an unrelated business for a few years. Then got back in the game and became part of the turnaround team at Genworth, did that for about three years. And then was recruited to a OneAmerica in Indianapolis to help them become more of a national player. And so, I was a president of the individual insurance group as well as retirement services there. So I’ve really been blessed. It’s been a great career. I’ve seen the industry from the sales standpoint, from the sales management standpoint and from an executive standpoint. So I feel like this is an industry I know pretty well.

Sandy Dougherty:

Great. Thanks Pat. All sectors face challenges, but in the insurance industry, the list seems especially long. Many carriers seem to be struggling to stay relevant, but others are embracing new technology to help scale, cut costs and grow new distribution channels. What do you see as the main barrier to growth and innovation for carriers?

Pat Foley:

Well, to me, I’ve always said it’s pretty simple. Our industry just has to become easier to do business with. We are way behind the times overall, in being customer friendly and customer focused. I made a presentation to the board a few years ago and I said, “You can order a pizza from Domino’s and you can track it through the oven, to the driver, down the block, to your front door, but you send a million dollar life insurance application into an insurance company and it goes into a black hole. What is wrong with that picture?” And so, consequently, I know a lot of companies are moving to be more technology friendly, to have communication that’s instant access for our clients. But that along with modernizing the underwriting process, in my opinion, are the biggest things our industry needs to do to remain relevant.

Sandy Dougherty:

So how can carriers change from a traditional company to ensure the future?

Pat Foley:

Well, I think a couple of things. Number one, as I mentioned, we simply have to have the customer have access to information, values, education, all those things at their fingertips 24/7. In addition, especially for the higher end marketplace and the mass affluent, companies really have to partner with agents, financial planners, wealth advisors, to make sure that they’re seen by the people that have the customer contact, as partners in serving the clients. And too many times, I feel like there’s been kind of an adversarial relationship between the carriers and distribution. And that does not bode well for serving the customer. That simply has to be fixed.

Sandy Dougherty:

From your experience, how can insurance carriers embrace this innovation and transformation in order to improve performance and long-term growth?

Pat Foley:

Well, the challenge most companies have is technologically, they’re dealing with a lot of legacy systems. So they really need to make major investments to become more efficient, but also to be able to communicate with the consumer and with their distribution partners efficiently and quickly and accurately. And so, consequently, the big challenge is making a big investment, not only in the technology, but also making a big investment in education. So the distribution partners and the consumers understand how they can access the information and their values and those types of things in the products they own. It’s really, in my opinion, about revamping the whole customer experience and realizing, just putting quick fixes and band-aids on it is not going to work.

Kevin Dougherty:

Pat, how do you see carriers reshaping the product and distribution landscape?

Pat Foley:

Well, I think from a product standpoint, carriers are looking at innovations in their products, but it’s really different depending upon the marketplace. And the mass affluent marketplaces that need the longer term, more complex products, that with the agent of the baby boomers have a huge need for long-term care solutions, income planning solutions, as well as life insurance solutions, that’s things where innovation needs to again happen from a product design standpoint.

Pat Foley:

I think that our industry has lacked innovation the last 10 or 15 years, because we’ve been in a constant declining interest rate environment. So consequently, carriers have looked at, “How can I do things cheaper rather than making an investment and being innovative?” Now, on the middle market and the younger marketplaces dealing with the millennials, we simply have to be easier to do business with, we have to obtain them as customers, with inexpensive term insurance that they can buy quickly and easily and then grow them as customers as they grow their wealth. And so, it’s really two different marketplaces in my mind. You have the millennials and below, who we just have to get them as customers and educate them. You have the Gen X and baby boomers and they have to definitely have innovative products to solve their needs of today.

Kevin Dougherty:

What is it your opinion about the future of distribution as we know it today?

Pat Foley:

Well, I think it’s evolving and I think it is changing. Again, I think face-to-face distribution is not going away for the more complex, mass affluent and affluent marketplace, because those people want somebody to talk to and they have unique needs that they need custom tailored coverages for. On the other side of the coin, the younger marketplace, their needs are not as complex yet. And so, consequently, we need to be willing to serve them direct, if that’s what they want. And distribution can’t see that as a threat. Traditional, that’s face-to-face distribution, they need to, as I said earlier, see that they have to partner with companies to obtain new clients of all ages and to serve those clients the way they want to be treated. And that’s why I just think it’s absolutely critical that we see better relationships between the carriers and distribution. Because there’s plenty of business out there, but like a lot of things in our country right now, the consumer is kind of fed up with distribution and carriers being at odds. And I’ve seen too much of that.

Kevin Dougherty:

What type of strategic partnerships do you see working the best for carriers?

Pat Foley:

Well, again, it’s kind of specific to the different marketplaces. I do know that for the more commoditized marketplace and the younger age marketplace, forming strategic alliances with retail operations is working for some carriers. I also think in the more complex marketplaces, banks are going to continue to grow as opportunity areas, wealth advisors, registered investment advisors, warehouses, that people that have traditionally been asset gatherers and really haven’t addressed the insurance needs, all of those people know that to serve the client today, the client would like you to address all their needs. Not only the accumulation needs, but the income needs and the protection needs for down the road. And the income needs, many times can involve annuities. Protection needs can involve obviously life insurance, but also again, with the aging baby boomer versus the whole long-term care need. So I just can’t stress enough, the need for partnership.

Kevin Dougherty:

Do you see outsourcing becoming more prevalent or carriers keeping more in-house?

Pat Foley:

I think it needs to become more prevalent within home offices. Home offices are too tied to their legacy systems. They’re too tied to these massive IT teams to serve these legacy systems. And I think that’s holding the companies back. And I think carriers that really do embrace outsourcing cloud-based technology are the ones that are going to kind of leap frog some of the other ones on serving the client, serving the customer.

Sandy Dougherty:

What do you see as the biggest opportunity for the insurance industry over the next three to five years?

Pat Foley:

There’s all kinds of opportunities. I don’t know if I’ve ever seen a time where there’s more opportunity for the insurance industry. And I guess, I’d highlight three. Number one, with the aging of the baby boomers and the fact that everybody’s retiring and most people don’t have defined benefit pension plans anymore, the whole income planning marketplace is one that’s huge. And annuities can really serve as part of that income planning, which points to insurance companies.

Pat Foley:

The other thing is we’ve all taken care of our parents and realize that long-term care is a huge issue. We realize most of our kids now live all over the country or all over the world. It’s not like they live down the block anymore. So consequently, we have to make sure that we’re going to be able to be taken care of when the need arises for long-term care.

Pat Foley:

With the current administration, I think the writing’s on the wall. The other big area is that state tax rates are going up and taxable estates are going to be smaller and smaller. Well, that’s going to develop some significant life insurance needs for the mass affluent and even the upper middle marketplace. So life insurance needs, long-term care needs, annuity needs are all going to explode in that marketplace over the next three to five years.

Pat Foley:

And then, on the other side of the coin, you have the millennials who are now having families, are making money. And consequently, they have the basic planning needs and they don’t know really where to turn. So consequently, if we can obtain them as a client and earn the right to their future business, that’s going to be a great opportunity for our industry.

Kevin Dougherty:

What is the best decision you made that had a positive impact on your career?

Pat Foley:

I would say the best decision I made was when I entered management first in the field, and sales management, and agency management, but then increasing roles or responsibility in the corporate area, is I made the decision that if I were to handle the spans of control that I was given and increasing spans and control, I needed to work through other people and develop a great team. So I really started focusing on not building my core competencies in all the disciplines that I was responsible for, but building strong people and focusing on the attraction and development of those kinds of people. I mean, I’ve said many times, I advised adhere to the deal that if you hire people that are absolutely positively smarter and better than you, see where that takes you as a leader. And it served me pretty well.

Kevin Dougherty:

What advice would you give to someone looking to get into the financial services or insurance industry?

Pat Foley:

I think what I would tell them, I mean, I have two of my sons that are in the business, so I’ve recruited some people into it. But what I think is, get with an organization that’s going to invest in your development and your growth. I was very, very fortunate to have the first 18 years of my career with Prudential, back when Prudential is really known for its people development. And the education, and the learning, and the development that I got there allowed me to really grow beyond my wildest dreams. And not all organizations are investing in their people right now and investing in development. So I would say, find an organization, whether it’s a field organization or whether it’s a carrier, that is focused on developing its people, and that will help you grow and develop.

Kevin Dougherty:

Pat, thank you for your time today. It’s been great to hear your insights on how carriers can stay relevant and the opportunities you see for the industry in the next few years.

Pat Foley:

Well, it’s been great being with you guys too.

Sandy Dougherty:

Thank you.

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