Consumer understanding precedes financial planning

By John Wylie

ING Korea

While they were going through the 1997 financial crisis, Koreans had personal or indirect experiences in managing their finances.

Some Koreans could accumulate wealth by utilizing successful investment techniques, while others were troubled with financial hardship or even bankruptcy.

Perhaps all of those experiences together with subsequent extensive quality media coverage have led to the significant improvement in the knowledge of Koreans of finance, economics and investments.

Many financial firms try to focus on providing high standards of products and services to Korean consumers.

However, according to the results of a recent survey conducted by ING, they don’t adequately satisfy their clients.

Last November, ING Group performed the financial quotient (FQ) Survey to estimate the FQ of 5,000 clients in its 10 most significant markets.

Countries included Korea, the U.S., Mexico, Netherland, Rumania, Poland, Belgium, Spain, India and Japan.

According to the result of this study, 97 percent of Korean respondents have a "basic" level of finance knowledge or above, out of 4 different levels such as "poor," "basic," "good" and "excellent."

It is the highest result among the nations surveyed. When considering the number of respondents a "good" level of FQ or better, Korea takes third position behind Japan and India.

Ninety-five percent of Koreans answered, "I want to improve my financial management skill," which is above the global average of 89 percent, while the respondents with little interest in asset management were just 3 percent, which is the lowest among the nations surveyed.

These two numbers demonstrate that Koreans are the most actively interested in asset management.

Nevertheless, the important implications for Korea in this research can be found in the following parts.

A surprising 43 percent of Korean clients answered they had trouble in finding the way to get started with their wealth management and 42 percent responded that the asset management system in Korea is too complicated, seven times higher than in India with 6 percent.

Considering these answers, local insurers and financial firms should take time for self-examination.

Korea ranked the lowest in people’s satisfaction with their own finance management with just 28 percent saying they are satisfied with the current status.

When searching through Korean newspaper articles on the Internet with the keyword "financial planning," about 3,000 stories are retrieved every year.

It is simple evidence that, in Korea, various types of financial services are already offered in a variety of ways through different channels.

Then, why do those clients still find it difficult to manage their assets? Maybe, it’s because, as the Korean saying implies, financial firms provide their clients with "strawberries" and "grapes" with the assumption that they just want any fruit, while the clients clearly express that they want "apples."

The most important factor in financial planning is not to just compute data by figuring the client’s current status, needs and future plan but to understand the dream of each client. Each month when talking to new financial consultants (FCs) I

ask them, “What do you think insurance is?”

The answers are always varied and interesting. However, in the end, it is concluded that insurance is to make the intangible dream tangible and achievable.

That’s right. It is natural that everyone has different dreams, isn’t it?

Understanding the needs and desire of individual clients and their dreams must be the basis of an FC’s personal financial planning for them.

When this personal financial plan is combined with expertise in finance, the FC can deliver easy-to-understand, satisfactory and stable services to each client.

For clients who feel a headache as soon as they hear the word, "finance," ING Life Insurance offers opportunities to easily familiarize themselves with what "financial planning" is through a "simple financial planning" system that has received a favorable response in the market.

However, a system is just a supplementary tool. The proper consulting service to cooperatively prepare for a solid future for each client can be provided when financial consultants first have a face-to-face meeting with their clients and form a bond of empathy with them to comprehend their current reality and dream.

The survey result mentioned above illustrates the high level of financial knowledge of Koreans and their determination to be well-organized in asset management, in addition to their thirst for easy-to-understand, accessible financial planning and a management service perfectly matched with their life goal and needs.

As Korea has over 100 years of modern finance history (since 1902 when the first central bank was established), it is likely that as the market continues to mature more customer needs will be considered and their participation in both the market and their own financial planning will increasingly grow.

The mission and vision of ING Life Insurance is to help our clients fulfill their dreams. We try to stabilize their lives by managing their financial risks while helping them earn attractive earnings on their hard earned savings.

In combination we can indeed help them achieve their dreams.

All financial companies in Korea need to assist their clients in the same way. Such a strong customer orientation will lay the groundwork in fulfilling the bigger dream of many Koreans of creating an international financial hub.