The 21st Century consumer is a busy person. When it comes to buying products, we want simplicity and speed.
Brand and price are key differentiating factors between products and these are two of the easiest ways to narrow down what could be a long search process.
More and more people have access to the internet and the ability to compare brands and prices online in a short time. Take car and home insurance, for example. These products have become largely direct purchases with online sites able to compare these products in seconds.
But what if the product you are after is of the financial services variety and can affect your life more than what stands in the corner of your living room? What if you need actual one-on-one advice?
Let us take two products as examples – private medical insurance and protection products. Their value and suitability are difficult to judge on brand and price alone and, given the serious implications of choosing the wrong product, they really should not be. They need explanation to ensure the consumer understands the value of what they are buying and has the information necessary to make an informed choice on a product which can be tailored specifically to them.
The pressure is on for advisers to add value to the buying process. The technical nature – some might say complexity – of protection and PMI products makes them well suited to an advised sales process and perfect for brokers who want to offer their clients more than just a price-comparison service.
Prices need to be compet-itive and products must offer excellent value at affordable levels for customers. Personal circum-stances differ and not everyone will need the same products. When an advice-based sale is done well, customers are happier and continue to buy.
What to say to the adviser who focuses purely on price? By focusing on price, they are missing out a differentiating factor – advice. We have become an increasingly technologically savvy society but this does not necessarily mean we are financially savvy which is where the expertise of advisers can come into play.
Recent figures released by the Association of British Insurers show that after a decade of decline, the number of people covered by PMI has risen in the last year. This can be attributed at least partly to the efforts made by insurers to provide products that are affordable and attractive for customers. The healthcare market is changing, there are more innovative products and brokers can capitalise on this change.
IFAs and insurers need to work together to develop products and sales processes which focus on advising customers on products which offer value to them rather than just the lowest price. If a PMI or protection product fully meets the customer’s needs, but they perceive it to be expensive, this is a prime opportunity for advisers to add explain the suitability of the product and what it will do for them.
I would argue that lower lapse rates for PMI and protection business written through the adviser channel show it is better quality. If a customer buys an insurance product direct, it is possible they have thought about what they need but have they really thought through all their options?
An adviser can provide an holistic perspective because not they understand the market and their clients’ individual needs, giving them the ability to tailor products much more effectively.
Brokers should be supported by insurers. Many innovative providers now have schemes to support brokers with training, marketing support and account management.
Insurers and advisers need to work together, not just to create new insurance products and sales processes to reinvigorate the market but also to re-engage with customers and show them how to evaluate what products they need and why.
Customers should not be swayed by brand and price, least of all for products as crucial as PMI and protection. They should seek the advice of their broker and strength of the products their broker offers them.