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Better online services, with a product comparison function not based solely on price, could have a transformative effect on the protection industry says Royal London distribution technology manager David Law

Advisers need to be able to compare the full range of protection products online and to view all the features without the focus being solely on price.

The industry portals have a key role to play and by working closely with product providers and using product research tools, they can help advisers make the right choice for their clients.

Research by Royal London found that advisers and consumers see product features as more important than price when choosing a protection policy, dispelling the myth that cheapest is best.

The fundamental principle of any comparison service is to compare like with like, which means that portals have to set rules on the features they compare.

They are also constrained by the results’ screen, which can become overly cluttered if too much detail is presented.

If a product has a unique feature, then it becomes difficult to compare, meaning this often valuable feature may get lost behind tabs or links. This can be time-consuming for advisers to trawl through, even if they know where to look.

In most other walks of life, there is an acceptance that you pay more for quality. Why should the same principle not apply to protection?

Most protection products offer core benefits but many have additional valuable features that need to be brought out and considered as part of the research.
Often, these products may be slightly more expensive as the extra features have to be paid for. But are advisers always aware this is the reason they are not the cheapest?

In most other walks of life, there is an acceptance that you pay more for quality. Why should the same principle not apply to protection?

One way to overcome this and move the emphasis away from price would be to introduce a research tool linked to the comparison service. This would provide ratings based on product features, meaning advisers could rank products not just on the cost to their client but also on quality of cover. They would be able to take into account the features most important to their client, such as support services or the depth of critical-illness cover.

Another area in which the portals can greatly support the advice process is the ability to compare multi-benefit plans.

With only one portal offering this service, there is a big gap in the market. And given that most product providers offer menu plans, and that many customers’ needs involve more than one benefit, this is an area where portals can really add value.

This is a more complex service to deliver but most of the individual benefits already exist on the portals. A move to combine them under one view, with all the multi-benefit discounts that providers apply, would save advisers time and cut costs by providing a single access point for menu quotes.

It would also drive more traffic through the portals and demonstrate commitment to advisers looking to provide a more specialist level of protection cover.

Business protection and whole of life are other areas in which the portals can make a difference and assist the more complex areas of protection such as estate planning.

There is growing demand for access to more specialist products in a comparison area. Business protection is an area where it is widely acknowledged there is a protection shortfall. Despite recent devel-opments that have increased attention on this product area, more can be done.

The B2B2C market, via internet intermediaries and aggregators, is growing rapidly and this presents opportunities and challenges to financial advisers.

The vast majority of these direct propositions use portal technology to power their quote engines and the products displayed are those that can be accessed via the traditional portals.

In this respect, the domain of the adviser has been opened up to the end-consumer and IFAs are no longer the gatekeepers of these financial products. The pricing and commission terms will be different between the advised and non-advised channels. However, again, this focuses on price as the key criteria for product selection.

The growing B2B2C market is not a negative development. It reflects the change in the distribution landscape as we move towards the retail distribution review and as more consumers use the internet to transact business. However, it present challenges to advisers in terms of how they shape future business.

It is widely expected that more and more consumers will self-service online on a non-advised basis, accessing simplified products where the online experience and brand will be key in the decision-making process.

As mentioned, this can be seen as both an opportunity and a challenge for advisers. The opportunity is for those advisers segmenting their customers according to need.

For “lighter-touch” clients, a web-based operation that allows them to access products and self-service online can provide a valuable revenue stream. It also ensures advisers still engage with the clients using the web as the primary method of communication.

For customers requiring more in-depth advice, the challenge for advisers is to demonstrate they can add value by having access to products and services that are not in the public domain.

Technology is key in this respect and it is where portals really add value. By offering access to the more specialist products and comparison services, such as multi-benefit quotes, business protection and whole of life, they can greatly assist the advice process and provide advisers with the tools they need.

This is also a clear differentiator between the solutions available in the direct market.

The majority of financial advisers use portals to source quotes for their clients’ most common protection needs but will still go directly to product providers for the more complex requirements and to refine quotes and apply.

Portals have an opportunity to retain advisers throughout the business process and beyond by offering additional products and services and expanding on current functionality. This would reduce the focus on price, save advisers time and ensure they are well placed to offer their clients the best product.

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There is one comment at the moment, we would love to hear your opinion too.

  1. At last – some sense on the value for money aspect of protection. So many manufacturers/retailers seem to be driven by price that the quality of the product gets lost. The customer should be educated to recognise that ‘you get what you pay for’ and that, when the chips are down, there may not be a safety net to bail you out if you buy a cheap product. Cheap is NOT cheerful!

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