EP47 - Why a Bank Account Is Not Enough to Keep a Client
I want to talk about how we solve problems for insurance company partners. By partners, I mean distribution partners, banks, asset managers, family offices, and independent insurance intermediaries and brokers. They are all important to this industry, and there are many more than the list suggests.
In this Episode:
François Jacquemin on how insurance contracts help banks, asset managers, and family offices keep clients for the long term, told through a story from early in his career with a bank in Luxembourg.
When I started my career, and really throughout most of it, I worked a lot in partnerships with institutional partners. We approached those relationships straightforwardly. We explained what an insurer can actually do for them and for their clients, whether individual or corporate. Let me take investment insurance as an example, because it shows the logic clearly. It is an insurance contract that wraps an investment, built to run over the long term.
The problem for banks and asset managers is that they make money by keeping a client long term, not by closing a single deal. There are deals, and some banks lean in that direction, but most of the money in that industry comes from a relationship that lasts. A bank account is one instrument, but it is a commodity. People can change banks very quickly. So these institutions and asset managers look for a structure that binds clients longer.
An insurance contract is one tool that does that. Nobody invests in an insurance contract for a short period; it is too expensive, and the underlying investment is not built for a short horizon. On top of that, the real benefit of these contracts, whether it is tax relief, a pension, or a relief on returns, is usually tied by legislation to a minimum duration. In Germany, that duration is twelve years or longer. That length of time becomes a strong incentive to stay in the relationship.
But partners are not only looking to bind the client. They also want to offer something more. A bank might say, I have my banking product, I have my asset management product, but I also have something on top. A family office might say the same about long-term strategy. A partnership with an insurance company gives them exactly that: an additional layer of service and structuring for the client. It shows research and intelligence on the partner's side, and it also secures the long-term relationship they were after in the first place.
I learned all of this early in my career, when I was talking to potential partners. I was young, fresh, and probably not very experienced, but I learned it by talking with them and watching how they reacted to what we could put on the table.
I still remember one meeting clearly, with a bank here in Luxembourg. I had built a good relationship with three people from the structuring office and the tax department. The first meeting was in their office, where I explained what we could do. The conversation quickly moved to how an insurance contract and the bank's own services could be linked for the client's benefit. It became a very client-centric discussion, built around partnership and product arguments meant to convince the client this was a good investment.
The second meeting was in a restaurant, over a good meal and a good bottle of wine. After that first meeting, the bank went into its own client database and found someone who needed exactly that kind of structure. So after a single meeting, and before the partnership itself was even formally established, our contract had already been developed and sold to that client.
I found that first experience valuable, not because I could tell my boss it worked, but because it proved something more lasting. When you build a partnership on solid foundations and think long term, partners see the value quickly and move fast, pushing the product straight into their own client base.
That was one of the most exhilarating experiences of my early career.
Timecode:
00:00 Partners Overview
01:01 Investment Insurance Basics
01:20 Partner Problem Retention
02:03 Insurance Contract Incentives
03:25 Added Value Services
04:15 Early Career Lessons
04:35 Luxembourg Bank Case
05:22 Fast First Deal
05:53 Closing Takeaways
François Links:
Apple Podcast
Transcript:
So here we go back again I'd like to speak a little bit about how we solve problems for, partners of insurance companies. And I speak about partners as distribution partners that are banks, asset managers, family office, for instance. of course, distributors like, indepen- independent insurance intermediaries, brokers, are certainly in the, in the scope as well.
They're very important for the industry and, and, and there's many more. but when, when, when I started my career and, and throughout the, the, the whole, of, of, of it, I've worked, a, a lot in partnerships with institution partners as I, as I mentioned just now. And the way we, we stepped into the relationship was, of course, by explaining what as, an, an insurer can, can do for them and for their client.
That works for individual clients. That works for corporate clients as well. And but let's take the example of investment insurance. So it's an insurance contract that's wrapping an investment. and those contracts, they use in in the long term normally, and, I will get to the point why it helps, the problems of our client.
But let's discuss about, the problem first. So banks, asset managers, they earn money when clients are kept with them for a long time. They don't earn money on a one shot. there are deals of course, and some banks sometimes, go in that direction, but most of, the, money is made in that industry is made by keeping the relationship in the long term.
There are various instrument for that. I mean, a bank account obviously, is, one of those instrument, but it's very... It's a commodity, so you can, change very quickly. So those institutions and asset managers, they, want to, establish a structure where they can keep their client in the long term.
And, one of the tools they can use for that is, an insurance contract. A, person will not invest in an insurance contract for a short period of time. That's basically too expensive, and the investment underlying it is not geared towards a very short-term investment. Second the whole benefit of an insurance contract, whether it's a, tax relief or a pension in the long term or a a tax relief on the, investment or sometimes also in a returns tax, relief they are, usually in set of legislation in, Europe, Belgium, France, Germany especially also linked to a certain duration of a contract Germany's, you know, 12 years for instance, or longer.
And this duration is, a very strong incentive long term in, the insurance contract. So if a bank, through their service to clients, can also offer that type of insurance contract, they bind their client for a long-term, a long-term relationship.
Of course, this is what they're looking for, but they're not only looking for the whole long-term relationship. They want to provide additional service to clients. So that's why they offer a special something. Look, I have my banking product, I have my asset management product. Or a family office says, "You know, I have my investment product and can, we can discuss about long-term strategy.
But also, I have something on top." So a partnership with an insurance company will offer a additional service, additional element of structuring for a client. it demonstrated added value in research and intelligence by the, partner. and then, also it benefits the partner by ensuring that there's a long-term relationship.
So when talking to those potential partners at the beginning of my career, although I was very young and, and very fresh and probably not very experienced, that was something that I've learned, by talking with them and to them and by seeing their reaction to the offer we could put on the, on the, on, on the table.
And I remember, working with a, a bank here in Luxembourg a long, long time ago, where I established a very good relationship with three of the structuring office, the tax department. And, we had our first meeting was in, in, in the office where I explained what we could do, and the conversation developed very, very quickly into how can an insurance contract and, and the bank services be linked together to the benefit of the client.
So it was a very, very client-centric view that we developed and, and, and, and, and partnership and, and product arguments around the product to, to sell the product and to, to, to convince client that this is good investment for them. And We had the second meeting in a restaurant eating a very nice meal and sharing a good bottle of wine because after that first meeting, they had gone into their client database and found a client who was in need for that type of structure.
And then after a single meeting, although the partnership was not established yet, our contract had already been developed and sold for the
client. So I found that first excellent for my career, not because I could tell my boss, look, that works, but also because it's a proof that when we discuss with partners or potential partners that we build on very solid foundation and we look in the long term that the partners, they see a value in that relationship and they therefore execute or very quickly the sale or the pushing for the product towards their own client database. So that was a very exhilarating experience, I must say.