Death of Preneed?

The largest impact with to our delimma for our industry with regard to funded pre-arrangement services is the continued growth with cremation disposition. No longer do we have attractive, higher dollar arrangements to fund within a trust or life insurance plan as we have in past with a burial as a disposition. These lower averages make it virtually impossible to develop an attractive compensation plan for those we employ. Add to this the continued growth of discounters within our market areas. A full, “traditional” funeral home has much difficulty in competing with these ‘bottom feeders’ who continually promote price as the major or only concern to our potential consumers. It is foolish to guarantee our cremation services at such low prices for those anticipated deaths in future. Our expense growth in operating our establishments exceeds the growth of those monies prefunded. There exists few opportunities today for our traditional funeral homes to combat this. Yes, we are seeking to promote value through other offerings such as catered receptions, etc. But many of those making pre-arrangements see little value in these services for themselves. They do not involve the family in the decision making. Secondly, our mobile society (dispersed family) decreases their perception of value accordingly.

The picture is much larger than the avenue of how and with whom we engage our funding with. There lies an exorbitant need for positive change within our industry. Shame on our forefathers for not having a clear vision with strategies developed. It is not only the pre-arrangement services that is in jeapordy. We can only hang on for so long.

It seems as though here in Australia we are mostly seeing changes being brought about by current world financial circumstances, opportunism by Insurance companies as they tackle another income stream, rather than any fall in Pre-Need sales.

While our PN contracts appear to have the same components as those mentioned above – Prof. Fees + Coffn/Casket + Disbursements + Cremation – we also include transportation (transfers) within a certain radius – the real difference between ourselves and the current flood of insurance company offers is the need we have to collect a minimum up front payment for anyone wishing to pay off the balance over 3 years, or, payment in full on signing of the contract. Naturally insurance companies talk about ‘for the price of a cup of coffee a day’ you can take out Funeral insurance. This can’t yet be matched by any PN contract we enter into.

What uninformed consumers fail to digest is that Funeral Insurance is a life long payment plan – as against a once off, or, a short term installment plan. When comparing to Insurance schemes, if people no longer have the available funds for a one off payment we need to make it easier for them to make the right choices. We believe this is about education – if we can get the benefits message across then that’s half the battle. Having the flexibility of customising a service outcome is easy compared to counteracting the deep pockets of insurance company marketing budgets.

Is it that PN funds are not getting the returns on their investments at present? Optimistically this will change, however, I’m not so sure that it means pre-need is dead and buried, does it?

As a baby boomer I know I’m about to lose my parents now and I also know I’m not alone. My friends, and no doubt others, are very capable of seeing the benefit of locking down costs. For mine it’s a matter of reaching our potential PN clients in different ways than before.

I agree with the proposition that to survive we have to adjust the PN equation, as you can see from my ramblings, and without fully understanding your circumstances in Canada, I believe for us the challenge is about our proposition.

I disagree, as a matter of fact my organization has seen steady increases in pre-need funeral and cemetery accounts (profit as well). Once demographics are factored out, we can arrive at only one conclusion, pre-need is becoming more mainstream than ever before. If your staff is not creating pre-need accounts, then you need new staff. I have heard the argument of the cremation market for years and have always given the same advice, you sell what you present. Assuming of course that staff know HOW to present. As far as issues such as profit and pricing, these drill down to basic business practice and unfortunately for those who can’t make it work, will simply leave the market.