Allianz CEO Explains 'Suitability'

What's a chief suitability officer? Allianz CEO Gary Bhojwani says his new CSO will advocate for consumers

A new acronym entered corporate-speak when Allianz Life Insurance Company of North America appointed its first—and probably the first, anywhere—CSO, or chief suitability officer.

The creation of the new job "underlines our commitment to meeting and exceeding the expectations of our customers," said Gary C. Bhojwani, president and CEO at Allianz, when he announced Patrick L. Nelson, a former deputy commissioner at the Minnesota Commerce Dept., would be taking the job.

But what does "suitability" really mean? To find out,'s Rebecca Reisner had a talk with Bhojwani, who is based in the Minneapolis headquarters of the company, which sells annuities, insurance policies, and other financial products.

When you say you offer your customers "suitability," are you talking about the way your customer service reps talk to consumers on the phone?

No. Suitability is different from customer service. Our chief suitability officer's job is one of consumer advocacy. When we have a new offering, he makes sure it's good for our consumers, that it meets their needs.

How does your CSO advocate for consumers?

We have a team that looks at consumers and determines that a new product is truly right for them. Pat leads that team. When they meet, he goes into that meeting having reviewed the application for a new product.

What are some of your criteria for meeting consumers' needs?

Age, net income, assets, monthly expenses, and beneficiaries. Before the CSO, we had suitability processes that were more compliance-related, making sure we met the letter of the law in new products. Our goal is to do more than simply comply with the law and insurance regulators. The decision to create a CSO role at Allianz was meant to set the bar much higher than commonly found in our industry. Pat makes sure all the departments come together and do the right thing for our consumer.

What's an example of when you would determine a product doesn't meet your suitability standards?

Annuities. We think a consumer should have a certain amount of liquidity before buying an annuity. You don't want 100% of anything in an annuity.

Isn't it the consumer's job to figure out whether he or she can afford an annuity?

A lot of regulators make the assumptions that the consumer understands it. We found that not to be true. You need a process where people can stand back and look at it.

What's a simple test for a product's suitability?

If you'd want your mother to use it, it's suitable.

Before it's here, it's on the Bloomberg Terminal.