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INDEPENDENT VIEW

It is obvious that standards of advice are linked to the competence of the adviser.

Greater financial knowledge gained by consumers results in higher quality meetings with their advisers bec ause such consumers know the questions to ask and the options available to them. This is welcomed.

The role of the press in educating the public is also welcomed. Many newspapers, various specialist magazines together with radio and television have improved consumers&#39 understanding of fin ancial planning. The Money Management Council and the Consumer Panel of our regulator play a significant role in consumer education.

Practitioners themselves can play an important role in consumer education. I know of advisers who voluntarily talk to schools, youth clubs and other groups.

Advisers can and should ensure those influencing public opinion have views from experienced practitioners. Journalists do not have two heads and nor do we. We both surely have an interest in consumers&#39 welfare and prosperity.

While welcoming the massive contribution of the press in educating the public, if it publishes inaccuracies, we owe it to ourselves and our clients to comment.

The assertion in a recent newspaper article that: “We now know that at least 6.4 million out of 11 million endowment policyholders will have a shortfall.” It would have left many of us wanting to trade in our laptops for the crystal ball of the writer. We, of course, do not know anything of the sort. What we know is that the proj ected rates have changed.

We need to be on guard bec ause this kind of comment is dangerous. There is little point in the industry and the regulators endeavouring to improve public confidence if inaccurate statements are left unchecked.

Another recent article ref erred to the Consumers&#39 Association, saying it regularly comes across examples of mortgage borrowers without dependants being sold life insurance.

The article said this is unnecessary because they have no family to protect and often they are given free death in service cover from their employer. The implication was the cover was sold for commission reasons. Not for one minute did I believe the CA would intend such a sweeping statement. As an organisation representing the very people we deal with daily (consu mers), I respect that they could not think such a comment might be in the interests of all single people without dependants. You can see how myths become folklore.

Young people without dep endants may not need immediate life cover but who can say which ones need the guarantee of future insur ability which a low-premium convertible renewable term insurance or other life policy brings?

After 38 years in this business, I have seen the benefits to consumers of recognising, as an adviser, the fact that no one, however young, knows when their health will decline.

I have seen young, single people glad they had effected life insurance when they did not “need” the cover but nee ded future insurabilty when they developed cancer, mul tiple sclerosis or tetraplegia.

We are regularly told of the credit explosion in the UK, particularly among young adults. While some loans might be cancellable on death, credit card debts, overdrafts, HP arrangements, etc, are not. Having witnessed periods of negative equity as a result of reductions in house values, I would expect any person to plan that their debts are cleared on death or critical illness.

These two articles forced me to question whether we, who have seen client situations over many years, are doing enough to put practitioner opinion into the system. It is the industry&#39s fault and therefore its responsibility if the experience we have is not considered.

Consumer satisfaction is a common goal of regulators, professional bodies, the press and practitioners. Dissatisfied consumers are no good for any of us.

We do not want a young widow with children to point to the good intentions of her late husband as evidenced by terms of business letters, a business card and a suitability letter regarding the mortgage if she is now living in a mortgaged house without appropriate cover and without the breadwinner.

Before anyone says, “He would say that, wouldn&#39t he. Some people get too emot ional about life insurance,” I agree that I do. It seems such quotes are often criticisms of advisers, whereas I have seen many more consumers and settled more claims than those who do not have to take professional responsibility for their opposite view.

Leonard Warwick is managing director at Warwick Butchart Associates

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