Anthony: I'm Anthony O'Donnell and this is Life Accelerated, a podcast for life insurers striving to achieve digital transformation. Equitable combines a legacy of over 160 years with a fresh perspective that comes with itself reinvention, following inside PO in 2018. The company is a prominent provider of financial advice, protection and retirement strategies, with 2.8 million clients across the country. Equitable offers variable annuities, tax, deferred investment and retirement plans, employee benefits and protection solutions for individuals, families and small businesses. In this episode, Hector Martinez, Head of Life Insurance at Equitable, talks about how digital transformation is crucial not only for optimizing the life insurance buying experience, but for innovations in what he calls the ownership experience, where he sees AI as an important technology for achieving a higher level of self-service. Hector also discusses term intent, which leverages advanced underwriting and other technology-driven capabilities to quickly deliver insurance to a larger swath of the public at the right price. Here's my conversation with Hector. Let's begin by talking about who Equitable is. Its deep history, its current place in the market and its current strategic drivers.
Hector: Well, Equitable's an interesting company. I'll start by saying two things, I think. First, it's a 160-year-old company, but if you've had an opportunity to either be logged into our investor day that happened in May of this year, or even if you back up to 2018 when we went through our IPO, Equitable's 160-year-old company that in 2018 had an opportunity to redo itself, to remake itself. And, as Mark Pearson likes to say, "build the house that we want to live in." So, we're an organization that's full and ripe with people that are thinking about innovation, thinking about where the puck is going, and continue to strive to meet not just today's problems, but tomorrow's problems. And, we do it through the strength of our advisors, our wealth management team that's made up of about 4,300 financial professionals, and providing them with solutions through our individual retirement, group retirement and the business that I run, the life business, alongside with employee benefits.
Anthony: I call that a very propitious beginning, Hector. You're talking about how this 160-year-old company is embracing change. No doubt, yet again. Why don't we go from there and talk a little bit about your own professional background, how you got where you are today and when you took on your current role at Equitable.
Hector: My journey is an interesting one. It's been unique. I've been leading, whether it's sales distribution and now a manufacturer for just about 25 years and it's been a fantastic experience. It started with ADP, the payroll tax company, well before electronic tax filing was a thing. That started around 1995. I spent 10 years with ADP. They spun off a company called BISYS at that time, and BISYS was an organization that really focused on third party administration for 401k, but started to buy general agencies in the life insurance space. And I joined BISYS at that time in 2005 and that started my career in the individual life insurance realm. Essentially distribution and sales and how to partner with advisors. So, gave me really behind-the-fence view of what it was like to be a life insurance agent, what it was like to be a financial advisor, what it was like to be a financial professional and how they leveraged life insurance in providing a holistic solution for their clients.
I did that for about 15, just shy of 16 years. And, in that role I had an opportunity to partner with Equitable. I was one of Equitable's clients because we represented multiple carriers. So, knew Equitable as a client of theirs and also had the opportunity to work with the 4,300 advisors. So, those 4,300 advisors accessed products that were in Equitable through what they call the Equitable Network, and that was under Crump. So, I had an opportunity to be both client and also to serve as a partner to the Equitable advisors as they looked to deliver solutions to theirs.
Anthony: So, it seems like you had an opportunity to remake yourself just when Equitable was remaking itself?
Hector: I like to say I jumped on the surfboard that was already on a wave that got started well before me. But, it's been a whirlwind. I've been with Equitable now for two years running the life business. And, I will tell you this. Nothing short of positive momentum, positive energy, and again, when I think about the tone that Mark and that Nick and the entire management committee sets, including the board, related to innovation and related to solving and providing financial security for all of our clients, so that they can live long and fulfilling lives, it's not just words on a mission statement. These folks breathe it every single day. And, that was what attracted me and frankly what continues to fuel the fire as we keep going.
Anthony: Well, let's talk about that a little more. My next question was, how do you see technology as a tool in achieving your objectives and what does this mean for your interaction with Equitable's IT organization? Now, Hector, that's a huge question. I thought we might start off with a sub-question. You're not just a senior executive, you're a sales guy through and through. And, when it comes to life insurance sales, I wonder, do you see a parallel with the digital transformation that we talk about today and the discussion we had at the beginning of the 2000s about disintermediation by e-commerce?
Hector: If you think about technology, if you think about all the properties that exist today, if you rewind back just a few years ago, there was a lot of talk about whether it's robo-advisors, or it's other digital solutions. And again, a way to disintermediate what today the advisor does or the financial professional does for clients. And, if you think about some of the companies that existed out there that thought, "Boy! If we can change the curbside appeal to the acquisition of life insurance, we think we could get direct to consumer." And, outside of when the pandemic occurred, and obviously the pandemic brought about this sort of lens on mortality that everybody had to deal with. And because of that, you had some folks that woke up and thought, "Boy, I should have life insurance. And, that may have driven some energy around that. As a matter of fact, someone had mentioned that one of the most searched phrases was surrounding life insurance during that time. And part of that was again what the pandemic brought about with it.
But, besides that time, you don't really see a lot of energy around life insurance unless when you think about emotional products or complex products, unless there's somebody involved that shows you how to, first of all navigate the choices that exist, think about the complexities involved with each one of the products, and most importantly, help the client understand how that product fits into their plan and ultimately how that gets them closer to where they want to get, or narrow the range of outcomes for their goals and obtaining those goals. You really don't see a spike in sales. So, back to your point around disintermediation, those companies have started thinking that they could find a way to wedge a gap between manufacturer and consumer started to realize that they really needed to include the advisor back into the equation.
Anthony: If I could insert here, maybe I should have explained this when I made the allusion in the first place, especially for God knows, some of our younger listeners. But, when the internet first came about in the life insurance industry and the insurance industry in general, the great fear was that there would just be direct sales, that the internet would disintermediate the agent. But, what actually happened is that the internet itself became a great tool for the carrier-distributor relationship. And so, what I'm asking in essence and you've been answering already, is how digital transformation is taking us to a new level of the internet and of digital capabilities, helping to make the sales experience better for all the parties concerned.
Hector: If I could just fast forward from what I was talking about. When you went from trying to disintermediate the advisor, what you had now was curbside appeal to the way you could acquire a life insurance policy, but now an acknowledgement and a respect for what the advisor was doing with the consumer. And, the thought process of, "How do we weave best-in-class solutions from an acquisition standpoint?" So now, all of a sudden a consumer can buy life insurance in a way or a similar manner to which they buy other products and other services. But now, you give that and put that in the hands of an advisor, who's helping that client make that complex, make that emotional decision. So, that ability to take that innovation, that technology or platform that was once thought to disintermediate, and now putting it in the hands of the advisor so they could better leverage that in their process, so they could provide that solution to the client.
I also think one other under-researched item is that I wonder how much the education and the access to information helps us as manufacturers? So, if you think about the fact that before life insurance had to be advertised and marketed by a human advisor, getting out there, feet on the street. And, you think about the traditional marketing efforts. Boy, when you think about how information gets consumed and read daily just using, whether it's social media or whether it's the internet as you just described, that affords us as manufacturers, that affords advisors the ability to push information, allowing clients to pull information at their pace. And, that puts them in a position to at least have relevance when they're speaking to an advisor about the choices that are out there. Now, some of that could cross the line and they may think that they have knowledge of what products to choose, versus information, right? Information isn't always knowledge, but it does help to get the message out and to have an educated consumer on the other end.
Anthony: Well, as a way of discussing the full range of opportunities that are presented by digital transformation, I thought we might just step back a little bit and you could give us a look at the various ways Equitable distributes life insurance products.
Hector: Yeah. So we've got a few things that we've done. A few of them are relatively new. You think about the traditional way in which life insurance was sold, and or presented, and that's through our 4,300 advisors. And then you'll hear them called wealth management or you'll hear them called our retail advisors. Those 4,300 advisors access our products along with our annuities and 401k and brokerage products. They access all of that through our manufacturing set up. So, we've got retirement wealth management division, that's set up specifically to service them and third-party relationships. So, you think about traditional distribution, traditional sales, that way hasn't changed and we continue to provide it.
The way in which they access life insurance could be different. There was a world where they used to fill out applications and it's like, "Press hard. You're making seven copies," back in the day. And, today you've got 90% plus of our applications that come in electronically, which cuts out not just the inefficiencies and inaccuracies of a paper application, but also cuts down that cycle time, because the ability to do something online and take relevant information, pre-populate other documents, it just saves a ton of time. In addition to that, you also have the ability to have what they call "in good order," in our industry. Once an app is submitted, you can't proceed unless it's right. So, you're receiving a perfect application as a manufacturer. And, we're not unique in this, but our systems have evolved.
So, you've got advisors accessing our insurance in a new, slicker way than they have in the past. And then, we also have a few things that we've done where we took a process for term insurance under a million dollars that used to take weeks, could take a couple of weeks to get a case from when you first told a consumer and met with a client and they decided, "Hey, this is something for me," all the way through when they have a policy in force that used to take a couple of weeks. Now it takes 10 minutes. But, we call that product Term-in-10, where we took a best-in-class process from a consumer perspective and the way that people consumed products today and combined it with our products, the best-in-class products that provide promises for tomorrow. So, that Term-in-10 product is something that we just launched last year. We are excited. And that's not the end of it, right? We'll continue to innovate in ways in which we can streamline, not just the term process but the rest of our products as well.
Anthony: Yeah. So, Term-in-10. That's a 100% digital-term life insurance offering.
Hector: 100%. It takes 10 minutes from start to finish. And, when you're done, you have a policy.
Anthony: Listening to you describe these things, would it be fair to paraphrase you as saying that through all of these channels and these relationships, digital transformation has the capacity to enhance the sales process and Equitable is aggressively pursuing opportunities to do just that?
Hector: I think so. As a matter of fact, I just don't know that we as an industry will be able to make a dent in the underinsured population in the United States if we don't start to leverage the technology that's out there. And, leverage it in a big way, because I still think that on the top of the funnel, if you think about consumers waking up and they immediately know they need because it's a requirement to have car insurance, there's still this element of just a lack of awareness and why life insurance fits and how it can play a role in their ultimate ability to hit their goals.
And so, we have to continue to think about ways in which we can drive that message home so that consumers wake up and at least say, "I should speak to somebody about this." Today, I just don't know that we as an industry are in that position. I think if we don't take advantage of the digital properties that are out there today and start to think about how to best widen the net as an industry, I think we'll fall behind. And, I think we'll continue to have the under insurance problem we have today.
Anthony: Well, Hector, I do understand that you're a proponent of the old saying that, "life insurance is sold, not bought."
Hector: For sure. I think we're not unique. The life insurance industry is not unique. I think any emotional product, any emotional buy, any complex product where there's a myriad of choices ... And then, when you add to that, that the way that product works really is directly proportional to the rest of the assets that you have, or the rest of the properties that you own. All of a sudden it becomes something that even if you know enough about it, you pause right when you're about to hit the "buy" button because you want to know for sure, is this the right one? Is this worth the money? Is there another alternative? That's why I think human advisors matter so much, because they're at the intersection of that decision. They've got all the information, they know it seems to make sense. Why do I cross the line and say yes?
Anthony: Yeah. And, affirming the importance of the human advisor is by no means diminishing the value of digital transformation. Correct? And, especially when you consider that one of the underinsured groups are young people, and it's a very good idea for young people to get a life insurance policy while they're young. And, one has to think that digital technology will make that easier. It may never be easy. There may always be under insurance, but digital can only help it seems to me.
Hector: It's a fact that if you secure your insurability earlier, meaning if you get insurance when you're younger, obviously you have a higher likelihood of being healthier. The rates are probably commensurate to your health and your age. And so, you've now locked in your insurability by purchasing the insurance at an earlier age. To your point, you've got to get them at a point where they understand why insurance makes sense. So, I think the world of social media will continue to evolve. And I think that's a place that as an industry, we have to think about how to play better. So, from an education perspective, because I think when you look at demographics, people are accessing information ... They're starting to think about what I should be thinking about. "People like me are doing this right now, if they're in my situation," that social media may play a significant role in the way that we get the message out there around the importance of insurance and the importance to your point around securing that early.
Anthony: Well, let's go back to the theme of the opportunity to remake oneself. You've been talking about Equitable, this 160-year-old company as a platform for change initiatives. Could you shed light on some of the advantages you've been seeing and some of the challenges that you and your colleagues have been navigating?
Hector: I think as 160-year-old company And again, I keep saying we're not unique, because a life insurance industry is similar in a lot of ways. You've got to straddle the line between innovation ... You think about that Horizon Three thinking and the things that you need to do today. Our platforms are platforms that we've built infrastructure around, that do the job. These platforms perform and they deliver on the promises that we made to our advisors. As we say that, though, we have to think about how to start evolving. Like, we as an organization have shifted to cloud-based systems, where in the past that wasn't the case.
But, understanding when the crossover point is understanding how to straddle the line between what was necessary to make sure you deliver on what you need to today, Horizon One and what perhaps you need to think about Horizon Three. Like I mentioned, cloud and AI will be the next frontier, these sort of things. So, straddling the line between what needs to happen for future growth and for longevity, and what has to happen right now to make sure that we deliver on the promises that we've made to our clients. And, I think about old technology as an example, old platforms as an example, and ensuring that you invest enough in both doing what needs to happen today but investing in the future.
Anthony: Hector, in a previous conversation you spoke about digital transformation as "fixing the buying experience." And, I think you've talked a little bit about that already, but I wanted to ask you directly how you think of digital transformation as a competitive imperative. How important is digital transformation to maintaining a competitive position in the market?
Hector: I think it's critical for a couple of reasons. There's a thought here if you walk the hallways here at Equitable, that from a life insurance perspective, we've got to fix the way people buy life insurance, which we've spoken a lot about. You think about Term-in-10, you think about some of the things that I talked about with electronic application. So, fixing the way that people consume our products. Right? Got to make it more relevant and more current to what they do today. And, I think about even if Amazon didn't get into the life insurance business, even if some of these huge behemoth that's go to digital companies don't get into the life insurance business, they are definitely changing the way consumers expect to get products. So, we've got to adapt to that. So, I think fixing the buying process is critical. And, to remain even relevant, we've got to stay competitive there and understand where the puck is going.
But, I also think fixing the ownership experience. One of the things that happens with a life insurance policy is that especially those that are bought for protection only is that people used to buy it, set it and forget it. And, that's no longer real. Right? To understand that just like your 401k, or just like any other financial instrument, the idea of reviewing that to ensure that why you purchased it before? Is it still meeting the objective that you intended it to? Is it the very best option for you, based on your current financial outlook and your current financial plan? The ability to review that, to ensure that it's still doing what it's supposed to in the best way possible is critical. As an industry, as a company, we continue to think about ways in which we can fix that ownership process to provide the advisors and the client the ability to go do that. If we don't do that, we don't stay competitive amongst each other and we also don't stay relevant to consumers today.
Anthony: Yeah. And, you just don't do what's possible to be done to make it better. The industry has historically sold products in a fire-and-forget mode. So, there's much to be done there. You talk about fixing the buying experience, then fixing the ownership experience, which I think that's got to be a really important area of innovation, because we've always been working on the selling experience, the buying experience, not so much on the ownership experience. But, I also remembered something you said to me in another conversation, and that could be paraphrased as fixing or at least optimizing the selling experience. You've talked about empowering advisors to be their very best.
Hector: Yeah. So I think it's critical as the foundation of our strategy. And, whenever I have an opportunity to speak to anybody, they talk to us about, "Why do you feel good about where you're heading as a life business within Equitable and as a life business overall?" And, I think about one thing. And, part of the reason why I was attracted here is we have started to think about life insurance, not just as for what it was originally intended for protection, but we think about it as an asset class. And, when you think about it that way, you start to become a lot more relevant to more than just a life insurance agent. But, you also start to think about how do you make the advisor better? You bet on advisors, you bet on financial professionals and stringing together the best-in-class digital properties to enhance their ability to include life insurance as part of the plan that they're recommending to their client, as an extension to what they do for that client.
So, every single time we wake up, we put advisors first. Now, we think about digital first. We think about all the things that other companies think about to remain current. But, we think about how does that fit into what financial professionals are doing today for their consumers? And, that's why I think when I think about solving tomorrow's problems, it's trying to think about what are advisors facing with their consumers? What are consumers facing tomorrow? And, what are financial advisors going to be doing at that intersection? And do we have the products? Do we have the way for them to be able to include our products into that potential solution? And, you'll hear me say a lot, "It's not do this or do that." In a lot of cases it could be, "Do this and do that." And, how do you best facilitate that conversation from advisor to client in a way that they could do that in a readily available way.
Anthony: Perhaps we could talk about your view of some of the most important technologies that are reshaping the insurance value chain for life insurance?
Hector: So, there's a lot to the life insurance process that will probably evolve over time. But, I think at the crux of it, we'll continue to have the same sort of need, which is underwriting. Right? The idea of insurance is pricing and insurance product, commensurate to what the risk is that the carrier is taking on. That's really what it's all about. So, when you think about that, there's always going to be a need to have underwriting of some sort to assess what the risk is and price it correctly. When I think about some of what is required to do that today, a lot of it is manual efforts.
You still have an electronic health record world that's continuing to evolve. It's still in its infancy, believe it or not. But, the idea of advancing in that world where you can take a myriad of data from different places and teach ... Maybe perhaps it's AI. I suspect that AI will play a big role here. To be able to teach it, to assess that and route those cases, based on what they should be. "This is an easy underwriting, easy to approve, because of the data that we've just identified." "This one here is probably one that will be a standard risk, but here are the three things you might want to check on."
Now, all of a sudden you've got some mechanism that's doing this wide-net underwriting and helping re-skilled humans to be able to then address the needs of the policies commensurate to the needs that are determined through this ... I call it this mechanism. So, I do think that a lot of the digital transformation will occur on how do you take the mundane tasks that are critical to our business, that are the essence of underwriting and try to streamline that data, and try to teach something to identify it, route it, and then let our very skilled underwriters in this industry make a determination, based on that data. Today, we have too many humans, too many hands. And, not that it's not being done well, it's just they could be spending their time looking at the risk versus putting together information to assess the risk.
Anthony: Sure. If it's steering very highly skilled and expensive professionals away from mundane administrative tasks and using their talents for what they're best able to do. It seems like there are opportunities for that, obviously in underwriting, but in other places as well. And, that AI might be a technology that could be very useful.
Hector: Without a doubt. I think when you think about customer service, right ... So, you think about folks that own a policy today, there's so much when they call in that either A, could be self-service, or B, there's a way to route that in a way that today we don't have the ability to do. I think it's going to play a critical role in making sure that the ownership experience ... Forget about how the product is working, but just making sure that the consumer is satisfied with what they have, that I think AI will play a role in.
I also think about, we left out some of the stuff around the buying experience and the ownership experience, because that's sort of customer facing and I already spoke about it. But, the way the apps are received and what's done with that app and how you route that app and our new business associates that are spending time keying data, or not, just transposing data, checking data, there's some sort of what I would categorize boring, but important pieces of work, that should we digitize them are going to allow our associates to be re-skilled and have really meaningful rich contributions to the process, that are going to aid in creating an experience for the advisor, creating an experience for the client, that they wake up and say, "I'm not just happy I got a life insurance policy. I'm really happy I got it from Equitable, because..." Fill in the blank.
Anthony: Let's conclude our conversation with how you would summarize where digital transformation is taking Equitable as a provider of products and services to consumers, what kind of company it's been historically, where it is today, what company it will be in five to 10 years. And, I'm just reflecting on some of the things that you've said. You affirmed that life insurance is sold, not bought. And, we can say that's still true, but you've described it as being sold, but also bought, and not only bought but also owned. So, maybe that's a good starting point for reflecting on how the life insurance industry is being transformed by digital technology.
Hector: I think if you were to ask me to fast forward where we view ourselves being and the difference that we hope to make, there's an underinsured population in the United States. That's been something that's not new, it's been talked about, and we want to play a significant role in closing that gap. And, we won't do that by trading clients with another carrier. We certainly can grow if we did that, but we have not done what our mission is, which is to provide financial security for our clients, so they can live long and fulfilling lives. We won't help Americans do that in a real way if we trade clients with Pru, if we trade clients with Lincoln, if we trade clients with PacLife. So, the idea of us becoming a solution that is easy to consume for an advisor, easy to leverage, understanding the off-ramp you have to get off, in order to include our products in their financial plan, that holistic financial plan they're providing their client ...
If we do that in a successful way, then we will make insurance more accessible to the thousands of financial professionals that exist, and they in turn will make that accessible to more Americans. And, that doesn't mean the ultra-high net worth, that means all Americans. And so, making it easy to consume, making it easy to be part of their practice allows you to penetrate markets that today are just too difficult for them to penetrate. And, we will make a difference in the insurance acquisition, the insurance ownership in the United States of America. So, where do I see us in the future? Leading the way. And, hopefully other carriers follow, so that all of a sudden rising tide lifts all ships and hopefully Equitable's number one.
Anthony: Well said, Hector. Well, thank you so much for being on Life Accelerator.
Hector: Thank you. Thank you for having me. I should have started by saying this, but I appreciate the opportunity.
Anthony: This was a fun episode, partly because Hector is such a charming and positive guy. Also because Hector is a sales guy through and through. He has the perspective of someone who has seen how technology affects the perennial proposition that life insurance is sold, not bought. It was also an inspirational conversation, because of Hector's and Equitable's commitment to its mission of reaching the underinsured. In Hector's view, even if life insurance must still be sold, how and to whom it is sold is rapidly evolving. And, digital transformation is a crucial tool for achieving that objective. Thank you for joining us for the Life Accelerated Podcast. For more relevant content to help you achieve digital transformation, visit equisoft.com/life accelerated.
