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Peter Chadborn: How to solve the ‘reluctant sell’ protection dilemma

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You would be forgiven for thinking protection has got nothing to do with the RDR. Forgiven but wrong. The protection industry needs to understand how the RDR has shaped adviser firms in terms of their business and advice models. I say this from the point of view of someone who has long championed the importance of protection as the cornerstone of the advice process but has increasingly found the business involved with it frustrating.

The RDR made us get a better grip on the parts of our processes that were not as efficient as they could be and how to better align client expectations, processes, workloads and value to all parties. And this is where protection sticks out like a sore thumb, primarily because the remuneration rarely matches the work and the client outcome is a lottery.

With non-protection-related work I am very confident I can identify the client’s requirements, present an acceptable solution and articulate the process and work to be undertaken. I can put an exact cost to the stages of work and be sufficiently confident the fees reflect that work.

I am not for one second suggesting the commission model does not work or is inappropriate but the reality of the commission being linked to the premium, not the complexity of the work, means the work/remuneration anomaly exists.

The other problem is underwriting but that is, of course, an integral part of protection work. The adviser can do an excellent job of positioning the need and researching a compre-hensive solution, only to find the underwriting outcome means the customer cannot have what they want. Let’s not forget protection is a reluctant purchase in the first place, so after being told “we don’t really want you” it should surprise no one the customer gives up.

So picture the IFA with five pieces of client work to do, one of which is protection. Arguably, they should be putting protection at the top of the pile, yet the lottery in terms of client outcome, workload and remuneration means it is increasingly likely to be put at the bottom.

The protection industry needs to understand this if it wants more effective adviser engagement. You can mess about with “simple products”, add critical illness definitions that no one understands and get all the star ratings you like. The bottom line is protection is a reluctant purchase and, by comparison to other lines of advice, it has become a reluctant sell.

The best resolution to this dilemma for advisers and clients is a “buy now” solution. The likes of iPipeline, with its XRAE software, has enabled advisers to better manage client expectations by gathering health information as part of the research process to give indicative premiums: effectively a decision in principal. This certainly helps streamline the sales process.

A step beyond that is the launch of UnderwriteMe, which will mean clients providing medical information in advance so its portal can provide fully underwritten quotes. Click and Buy will be a game-changer for sellers and buyers of protection insurance. If any provider is not on the UnderwriteMe portal, we will not be considering them.

Peter Chadborn is director and adviser at Plan Money

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Whilst I would agree that protection is an important, if not integral part, of anyone’s financial construct I do feel that it is not our place to cajole, coerce or otherwise persuade the reluctant or the stupid. Our job is to assess the possible quantum and spell out the logic – after that it is up to the client. The word ‘sell’ should not appear. This is one particular word which in my opinion has given our profession a bad name. Double glazing is sold.

    You may see a doctor and he may recommend a course of treatment – you take it or not. It isn’t sold to you.

    Much as it may be to people’s benefit, it is not our place to put the word to rights or protect the stupid from themselves.

  2. @ Harry Katz.

    As Harry would anticipate, I disagree with his view.

    Any adviser confronted with a reluctant client has a social duty to convince him that protecting his income and his family is the first and most important step in the planning process.

    Sure, there are stupid people out there – one of my clients told me that he didn’t want any life assurance because his wife’s next husband would get all his money – nonetheless selling/advising is part education. Many consumers do not know what their problem is or what the solutions are.

    This is our job.

  3. Considering that most providers aren’t signed up to underwriteme, you are seriously limiting your scope there.

  4. Alan

    Of course I know you take the opposite view. Your words ‘social duty’ says it all.

    Much to my everlasting shame I read Sociology, which if nothing else taught me that I was not cut out to be a social worker.

  5. I totally agree that “buy now” offers huge advantages over “indicative decisions when you can get hold of us on the phone that we might change our minds about” that you have had to put up with for too long.

    I think working only with companies that offer Buy Now is reasonable, but I think that will be more than just UnderwriteMe in the future. In this context the last statement seems more about a company than the process that you’ve described will help you and your customers.

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