Product Design 101:
Developing Products That Cater to Client’s Needs
Calvin Foo CFP
Asia Regional Head
Financial Advisory & High-Net-Worth Development
Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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Objective
Discuss the strategy behind
designing products for the client
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Developing Products That Cater to Client’s Needs
First issue
 most clients don’t know what they need
Second issue
 some insurance companies are weak at marketing
Third issue
 some insurance companies have reverse strategies
Fourth issue
 some insurance companies don’t tend to align the interests of clients,
distributors and the finance/actuarial operations…..each may have their
own personal agendas
Fifth issue
 regulation is not embraced
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Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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Strategy
 Starts and finishes with the customer
 Is aligned to product (differentiated where possible)
 Distribution and the who’s, the where’s, the how’s and the when’s, is
how you execute the strategy
 The definition of marketing: "the management process that seeks to
maximize returns to shareholders by developing relationships with
valued customers and creating a competitive advantage.“
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Product→Solution
Promotion→Information
Price→Value
Place→Access
Constructive criticism helps marketers adapt
offerings to meet changing customer needs.
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Product Positioning
Influencing Factors for Product Design
Sales Competence
of Distributor
Profitability Fee
Income
Product
(Up-front and trail)
Persistency
Positioning
Marketing / Aftersales Service
Facilities
Competition
Clients’ Needs /
Target Group
(Tax System, ILAS)
(Insurers and Fund
Houses)
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Technology
Existing
Product Range
(Clients)
(POS, Underwriting,
MI, Web-site)
Regulation
Product Strategy
from Cradle to Grave…….
Starts with the Client
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Ends with the Client
Life expectancy when state pensions were first
introduced…matching needs to expectation!!
“ WHEN Otto von Bismarck introduced the first pension for workers
over 70 in 1889, the life expectancy of a Prussian was 45.
In 1908, when Lloyd George bullied through a payment of five
shillings a week for poor men who had reached 70, Britons,
especially poor ones, were lucky to survive much past 50.
By 1935, when America set up its Social Security system, the official
pension age was 65 - three years beyond the lifespan of the typical
American.
State-sponsored retirement was designed to be a brief sunset to life,
for a few hardy souls.”
- “The End of Retirement”, The Economist, Jun 25th 2009
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Singapore philosophy…
“ A universal problem we had to resolve was retirement
benefits or pensions when a worker became too old to
work. In Europe and America, the government provided
these pensions, paid by taxpayers. We decided that every
worker should accumulate his own savings in the CPF for
old age”
- Minister Mentor Lee Kuan Yew, in his
memoir “From Third World to First”
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Product Strategy
Actuary’s Role
Deals with the financial impact of risk & uncertainty
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Product Strategy
Distributor’s Role
Sells, solicits & negotiates for compensation
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Product Strategy
Client’s Role
Achieve financial security & independence for self & dependents
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Product Strategy
Different Stakeholder’s Point of View
Actuary
•
Risks, Pricing, Experience, Profit
Distributor
•
Features & Benefits, Market
Competitiveness
Client
•
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Funds for Major Illness Protection, Peace
of Mind
Product Strategy
Different Stakeholder’s Point of View
Actuary
•Risks, Pricing, Experience, Sustainability of
Future Bonuses
Distributor
• Features & Benefits, Market Competitiveness
Client
•Funds for retirement, Peace of Mind
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The Customer Franchise
Understanding the customers’ product and service preferences drives the creation
of offers and needs-based approaches that are relevant and seamlessly integrated
Secure my future
& reduce my risks
• Lifestyle needs
• Security
• Life-stage needs
• Long-term
relationship
• Household
budgeting
• Financial planning
• Asset management
• Tailored products
• Financing
Give me
peace of mind
• Retirement
planning
• Emergency
planning
• Disaster planning
• Best of breed
product
• Charges
transparency
• Fair choices
• Trust and integrity
• Demystified
guidance
Save time
for me
• Convenience
• Non-financial help
• Complete
delegation for
managing assets
and liabilities
• One-stop shop
• Anytime, anywhere
• Prompt service
Help me enjoy
my life
• Flexible options
• Non-financial
needs
• Innovation
• Financial planning
• Prestige &
exclusivity
• Performance
• Value for money
Simplify
my life
• Account
aggregation
• Entrepreneur
management
• Long term
relationship
• Simple
administration
• Integrated services
• E-payments
• Product
aggregators
• Automated
optimisers
Long term products require an ongoing relationship with the distributor and insurer
and may require specialised servicing.
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Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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Client Segmentation
Client Life Stages
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Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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Singapore Population:
Growing, ageing, increasing longevity and wealth
Chart 1: Resident Population
Chart 2: Population Age Pyramid
Chart 3: Life Expectancy
Chart 4: Per Capita GDP (US$)
40000
30000
20000
10000
0
1970
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Source: Department of Statistics, Singapore
1980
1990
2000
2008
High Net Worth Market
Global HNW wealth will grow at an annual rate of 6%
By 2010, Asia’s HNW assets expected to
reach US$10.6 trillion, close to the European
wealth market
•Singapore has the highest rate of growth of HNWIs of 21%!
•There are 67,000 of HNWIs in Singapore with US$323b in total assets!
•This is 2.5% of the adult population!
•This also means 5 out of every 200 adults in Singapore are
millionaires, with very real Estate Planning needs !!
World Wealth Report 2007 by Capgemini and Merrill Lynch
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High Net Worth Market
Asia-Pacific HNWI Wealth Distribution, by Market,2006
Australia, 6.00%
HNWI Wealth,2006
(US$ Billions)
China, 20.60%
Hong Kong, 5.50%
India, 4.20%
Singapore, 3.80%
South Korea, 3.20%
Taiwan, 2.60%
Indonesia, 0.80%
Other, 9.60%
Comprised of 9 countries namely
Kazakhstan, Malaysia, Myanmar,
New Zealand, Pakistan,
Philippines, Sri Lanka, Thailand
and Vietnam
Japan, 43.70%
Source: Asia-Pacific Wealth Report 2007 by Capgemini and Merrill Lynch
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• Others
• Indonesia
• Taiwan
• South Korea
• Singapore
• India
• Hong Kong
• Australia
• China
• Japan
US$810
US$70
US$220
US$270
US$320
US$350
US$460
US$510
US$1730
US$3680
Total HNWI Wealth in
Asia-Pacific Region = US$8.42 Trillion
Asia-Pacific HNWI’s financial wealth
forecasted to reach US$12.7 trillion
by 2011
Mass Market
Singapore will be among the world leaders when it comes to increasing the
number of mass affluent people.
The number of mass affluent residents (individuals with > USD60,000 in liquid assets) in
Singapore will grow from 410,000 last year to more than 600,000 by 2011
(close to 20% of resident adult population)!
Wealth
Additionally, Singapore is likely to benefit
from greater inflows of wealth from regional
(e.g. Indonesia, Malaysia & Thailand) and global
market (e.g. Middle-East), as investors look
to diversify portfolios in safe havens such
as Singapore.
Hence, the number of mass affluent
non-residents adults in Singapore will
also grow!
* Wealth Management in Singapore 2007 by Datamonitor
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Client Segmentation
Assets Under Management
UHNW
HNW
> USD20mio
USD1mio to < USD20mio
Affluent
USD500k to < USD1mio
Emerging
USD100k to < USD500k
Mass
< USD100k
Based on AUM
Sources: Credit Suisse Global Wealth Databook 2011, Cap Gemini & Merrill Lynch World Wealth Report
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Client Segmentation
Life Stages Needs & Products
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Life Stage
Primary Need
Life Insurance Product
Young & Single
Asset Creation
Wealth Creation plans
Young & Just
Married
Asset Creation & Protection
Wealth Creation
Mortgage Protection
Married with Kids
Children’s Education
Asset Creation
Asset Protection
Education Insurance
Mortgage Protection
Wealth Creation
Middle Aged with
Grown Up Kids
Retirement Planning
Asset Protection
Retirement Solutions
Mortgage Protection
Across All Life
Stages
Health
Health Insurance
Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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Product Positioning
Alignment by Client Segmentation
Multi-Channel Distribution Model
Corporate
(SME)
RMs/ISs
HNW
RMs/ISs
Retail Br
Managers
/RMs
Retail RMs/ISs
Telemarketing
Employee
Benefits
Key-men
Insurance
Universal Life
WM Products
Investment
Linked & WM
Products
Need-based
Products
Low premium,
high perceived
value products
Privileged
High Net Worth
Youth
Strivers
Achievers
Life Stage /
Value Segment
Mature
Manulife’s product and distribution expertise positions us to support
RHB in realizing its full financial services potential
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Product Range of Retail Banks
Equities
Funds
Foreign
Exchange
Credit Cards
Mortgage
Bonds
Savings
Accounts
Investment
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Business
Financing
Current
Accounts
Consumer
Loan
Loan
Insurance Offers a Third Dimension: Protection
Business
Financing
Equities
Funds
Bonds
Savings
Accounts
Investment
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Mortgage
Credit Cards
Current Accounts
Consumer
Loan
Loan
Insurance Offers a Third Dimension: Protection
Guaranteed Products
with LA
Equities
Funds
Bonds
Unit Linked
Assurance
ULA + Riders
Endowment
Assurance
EA + Riders
Savings
Accounts
Investment
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Term
Assurance
Protection
Insurance Offers a Third Dimension: Protection
Term Ass.
Business
Financing
Home Ins.
Motor Ins.
Mortgage
Group Life Ass.
Pensions
Mortgage
Assurance
Credit Life
Consumer
Loan
Investment
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Loan Protection
Travelers Ins
Protection
Product Positioning
Case Study - Bancassurance Channel
Product / SBU
Credit Life (Shield)
Fix SI or variable type
Credit Cards
POS
TM/DM
Reducing or Level
Segment specific with or without ROP
Critical Illness
Covering 1-5 Specific illnesses
Term Life
With or without ROP
Unsecured
Loans
POS
TM/DM
POS
TM/DM
Deposits
CA/SA/TD
High Net Worth
Income
SME
POS
TM/DM
MRTA / MLTA
PA and HIP
Mortgage / Motor
Loan
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
TM/DM
In Branch (offered)
RM/PB
Insurance
specialist
Endowment
Par or Non Par
Whole of Life
TM/DM
In Branch (offered)
TM/DM
In Branch
Insurance Specialist
RM/PB
Insurance
In Branch
Insurance Specialist
RM/PB
Insurance
specialist
specialist
Annuities
In Branch
Insurance Specialist
RM/PB
Insurance
specialist
RM/PB
Insurance
Universal Life
specialist
RPUL / SPUL
Link to MAM or 3rd party funds with top
up options
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In Branch
Insurance specialist
RM/PB
Insurance
specialist
Business Insurance
Insurance
Directors and Key Man policies
Specialist
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Direct and Telemarketing Model
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Basic Marketing Style Follows Up On Value Proposition:
Value-for-money, Simplicity and Convenience
Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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FMCG Approach in Stores
• 20,000 units in 650 stores
• Permanently displayed
Instant Products For Sale in Stores
Agenda
 Product Strategy
 Different Stakeholders’ Roles & Points of View
 Client Segmentation
 Client Life Cycle
 Case Studies
 Singapore – ASEAN Wealth Management Hub
 Bancassurance – Multiple products for multi-channel distribution
 The FMCG Approach – to simplified product marketing
 Micro-insurance – one countries success
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Manulife Vietnam
 Manulife Vietnam Life Insurance (MVL) began its operations in September 1999 as the
first foreign life insurance company in Vietnam since the country opened its insurance
market to foreign companies
 MVL operates in 12 cities through a network of 7,000 agents, serving 300,000 urban
middle class customer
 We also partner with selected banks to distribute life insurance in major urban cities
 In 2007, Manulife established Manulife
Vietnam Fund Management Company
(MVFM) to enter the wealth management
business. MVFM managed third party
institutional asset and is one of the three
companies in Vietnam offering local retail
mutual fund.
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Vietnam Women’s Union (VWU)
 Established in 1930
 A political mass-based national organization aiming to promote the welfare of Vietnamese
women in all aspects: economic, political, health and education
 VWU has 13 million women members nation wide, through an extensive administration
network at national, provincial and district level
 Since 2003 the VWU acts as the main partner of the Vietnam Bank for Social Policies for
disbursing their loans to low income families
 VWU manages about 40 microfinance and credit programs
 Vietnam is considered one of the most
successful countries in reducing poverty,
the percentage of the population living under
the poverty line has reduced from 58% in
1993 to 14.87% at the end of 2007 and VWU
plays an important role in Vietnam’s
poverty reduction efforts
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Micro-Insurance Project Background
 The rural market in Vietnam is a large market with approximately fifteen million
households and around sixty million people. This market largely remains under-served
due to the remoteness of the locations and the lack of accessibility to financial services
 In 2008/2009 the Vietnam Ministry of Finance (MoF) started to look into rural area
insurance needs and encouraged commercial insurance companies to develop
commercially viable micro-insurance for the mass rural market
 Manulife went through an extensive distribution partner selection process with the
following criteria:
 NGO & non-profit organisation focusing on low income families
 Nationwide network with administration capability – Vietnam Post Office & Banks
 Experience with micro-finance or micro-insurance projects
 Identified VWU as an ideal partner for the micro-insurance project and signed an MOU in
early 2009. Project officially launched in Sept 2009.
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Partnership – Manulife & Vietnam Women Union’s
Signing of MOU
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Product & Benefit Coverage
 Premium: VND300,000 (US$17, THB510) annual premium
 7 year Term Coverage
 Death Benefit: VND 10 million (US$560, THB16,800)
 Accidental Death: Additional VND 10 million (US$560, THB16,800)
 Accidental Dismemberment: VND4 million (THB6,720) to VND6 million
(THB10,080) depending on the type of dismemberment
 Hospital Benefit: VND180k (US$10 THB300) first policy year
VND360k (US$20 THB200) 2nd – 7th policy year onwards
 No claim bonus: 100% refund of premium if no claim during benefit
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period
Engagement Process
 Presentations of micro-insurance via pre-scheduled seminars at the commune level
organized by VWU commune and district leaders
 Over 1,000 seminars held during 12 months period
 About 50 to 200 attendees per seminar, sign up rate over 70% and signed up 60,000
micro-insurance customers so far
 Product introduction and fulfillment conducted by Manulife employees
 Simplified business process at the end of the seminar
 Pre-scheduled sales seminar to avoid anti-selection
 The seminars also serve as an introduction to the concept of insurance and protecting
family welfare to the rural mass
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A Typical Engagement Seminar
The meeting house was too small so some
sat outside along the corridor
There was not enough seats so VWU members
had to stand or sit on the ladder on the right
hand side of the house.
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Customer Visits
At a customer's
house..
On the way to a customer's house…
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Claim Cheque Delivery
 We are really bringing hope to a family that is so much in need of money.
Source: Saturday's Globe and Mail, published on Friday, Feb. 19, 2010
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Vietnam Post Pilot Project
Lessons learnt
 The wealthy rural market offers real potential and there is a continual need to explore
options to penetrate this market segment.
 Must build strong relationships with Postal workers and Post Office management at
different levels
 Micro-insurance advisors must have positive attitudes and must be suitable for the work
to be undertaken.
 The range of micro-insurance products offered should be comprehensive and offer many
choices.
 Mode of payment must be flexible or at least allow various modes of payment.
Restriction to annual mode only is a distinct disadvantage.
 All the engagement processes must be simple, especially premium collection and
policyholder services.
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“The human being needs a challenge, and my advice to every person
in Singapore and elsewhere, keep yourself interested, have a
challenge. If you're not interested in the world and the world is not
interested in you, the biggest punishment a man can receive is total
isolation, black...complete withdrawal of all stimuli, that's real torture.
So when I read that our people believe in retiring at 62, I said to
them: "You really want to die quickly?" If you want to see sunrise
tomorrow or sunset, you must have a reason, you must have the
stimuli to keep going."
Minister Mentor Lee Kuan Yew at age 85 shared his own experiences of
active ageing at the Silver Industry Conference and Exhibition, 12 Jan 2008
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ABOUT MANULIFE
Manulife Financial
Strong & Diversified Businesses
Asia
Canada
• Individual Insurance
• Individual Wealth Management
• Group Benefits
• Group Pensions
United States
• Insurance
• Long Term Care
• Annuities
• Group Pensions
• Mutual Funds
Hong Kong, Philippines, Singapore,
Indonesia, Vietnam, Malaysia, Thailand,
Taiwan, China, Cambodia
• Individual Life Insurance
• Group Life & Health Insurance
• Pension Products
• Mutual Funds
Reinsurance
• United States
• Canada
• Europe
• Asia
Investments
United States, Canada,
United Kingdom, Japan,
Australia, Hong Kong,
Southeast Asia
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Japan
• Individual Insurance
• Variable Annuities
Manulife Financial
Competitive Strength

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




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Excellent brand recognition and reputation
Strong claims paying ability / financial strength ratings
Strong capital position - C$28.9 billion @ June 30, 2011
Significant scale
Product diversity
Strong, multi-channel distribution
Superior asset quality
Manulife Financial
Strong Multi-Channel Distribution
Advisors
In-house Agents
Financial
Planners
Independent
Agents
Brokers
Banks
Wire-houses
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• Deep & growing relationships across
multiple channels worldwide
Dealers
• Over 110 Bank partnerships across
Insurance and Mutual Funds
distribution in Asia
• Meet varying needs of our
international base of customers,
regardless of their chosen distribution
channel.