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Categories:Protection

Le Beau: Why protection advisers must stay on their toes

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I had the pleasure of chairing an interesting debate at a research launch recently. We had a fairly passionate discussion about the degree of public engagement with protection and how consumer need-focused we are as an industry. You know the sort of thing, you have heard it hundreds of times before, which is part of the problem.

I was amused that there was such optimism over an industry that probably has to put its prices up by around 25 per cent next year. Some business groups would be terrified at this prospect but I detected a note of euphoria based I think on the “sales bonanza” that would ensue as people rush to buy before the expected price rises next year caused by repricing for the effects of the gender directive and the demise of the I-E tax system. I am not sure how much thought there has been about what happens after all these people have bought and the prices go up.

Around the same time, I read that this year in London, the tourist industry expects a maximum of 80 per cent occupancy in London hotel rooms, mainly caused by tourists avoiding London because of the Olympics. Pardon my mental lethargy here but don’t I remember lots of politicians suggesting that the Olympics would be a once-in-a-lifetime opportunity for the tourist industry?

On the other hand, I remember the predictions of the demise of the cinema when video and DVD were developed. Cinema attendances went up for the first time in decades. TV was going to kill Premier League attendances, which are rising as new, bigger stadia are being built.

And wasn’t commission disclosure going to force com-mission down? I think we all know what happened. Business is nowhere near as predictable as you might think and emerging technology normally changes the rules of the game but it does not all work in unexpected ways.

Look at the sad story of Kodak if you want to see how businesses can be caught out by technology.

Could this happen to our business? I don’t think so in the foreseeable future but a very slick technology play in an era of simple products priced fundamentally differ-ently from products norm- ally sold in an adviser market might change the game radically. It has not happened before but then the technology to do it has not existed before.

If you are a provider which rules out this prospect, I admire your sangfroid but deplore your complacency. The annals of business lore are littered with examples of businesses that lost their mojo or failed to read the future competitive landscape correctly. If you do not think it can happen to you, it probably will.

Peter Le Beau is managing director of Le Beau Visage

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