Are You Ready? Convergence of Financial Services John J. Kollar

1. Are You Ready? Convergence of Financial Services John J. Kollar

2. Paper Purposes • JK Vision • What is YOUR vision of the financial services industry? • How should the CAS meet the needs of members and clients in the future marketplace?

3. Some Comments • Specifics are not that important. • All risks are not the same. • Risk is risk. • Beware of tradition! • Change

4. Some Key Issues • Retain good clients • package discounts • longevity discounts • confidentiality of information • (client requested financial strength rating • comprehensive client financial records • integrated financial plan • comprehensive financial solutions • Homegeneous group of clients • better client understanding/advice/service

5. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe

6. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe

7. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe

8. Risk Management Pricing • Diversity of services/risks • risk concentration by client • comprehensive client financial information/ single database • multi-disciplinary team • cost of capital analysis • risk securitization • reduced client fraud

9. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe 5. Cash flow Management (banking services) • Checking • bill payment • Credit card • Debit card • product discounts • Line of credit • Savings

10. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe 6. Budget Plan Debt financing Cash expenses Credit cards Capital development Home Career development College tuition Premature death Retirement Estate planning

11. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe

12. Utopia FinanicalPersonal Financial Management Program For John Q. & Mary H. Public Account Information as of March 31, 2022Client Representative: John Doe 7. Capital Plans 401(k) savings plan • Investment options Estate planning 8. Service Fee - March $1,000

13. Making of a Financial Services Company • Overlapping services • contingent cash flows • investments • credit • Cross-selling of services • Responding to customer needs • process changes • tradition? NO • technology

14. Making of a Financial Services Company (cont’d) • Market segmentation • Securitization of risk • better risk measurement tools • greater standardizataion of different risks • basis risk managers • risk aggregators • reduced insurer capital • better margins • Mutual insurers

15. Some Observations • Small commercial market • No fix for heath insurance • 24 X 7 (all perils)

16. Some Observations • Risk Management/Pricing • diversity of services/risk • risk concentration by client • comprehensive client financial information/single database • multi-disciplinary team • cost of capital analysis • risk securitization • reduced client fraud

17. Enterprise Risk Management (ERM) • Large commercial risk • International • Integrated services • large commercial banks • financial reinsurers • Alternative Risk Transfer Mechanisms • Self insurance • captive insurers • pools • risk retention groups • risk purchasing groups

18. ERM Risk Types • Hazard Risk • Financial Risk • Operational Risk • Strategic Risk

19. ERM Process • Holistic view of Risk • Integrated treatment of risk

20. Meeting Market Needs • Skills Acquisitions • Market-segment focused • Risk integration • Beware of tradition!