At a recent industry event I was approached by someone from the ABI who began by saying how much he enjoyed my letters (or should that be rants?) and then went on to say that he thought my previous criticisms of his august organisation were misinformed and probably ill advised. Maybe so, but I see from latest reports that only 6 per cent of his own members think he is doing a good job, so perhaps I have not been so wide of the mark.
Unfortunately, because I have been given the opportunity to express my views in various publications such as this, many automatically think I am a spokesman for the IFA community.
I can’t claim to have that privilege. I speak mainly for myself as a great believer in and an advocate of independent financial advice. My main issue with a body such as the ABI is that I have often felt it concentrates more on telling IFAs what they should or should not be doing rather than concentrating on advising their own members where they can improve.
I think I strike a chord when I say that it seems a little perverse to be lectured by an organisation whose members are a constant cause of complaint to those it seeks to lecture.
If I had decent service and administration from the life insurance industry I would probably be able to have half a day off a week. Service standards are the great bug-bear and have been for the 20 years I have been in the business.
When one sees the changes of policy, the U-turns, prevarications and failings that these very large companies make, it is hardly surprising that one springs to the conclusion that their management is somewhat substandard.
If you look at their share prices over the 10 years to March 2008, the major life offices have dropped by well over 30 per cent during that period, some by more than 45 per cent and some by even more than that. Since launch in July 2006, Standard Life’s share price stands at minus -13 per cent – doesn’t that tell you something?
The unpalatable truth is that, in the main, the life offices industry has completely lost the respect of those expected to distribute its products – and is it surprising?
Now, through its ABI mouthpiece, we have it inventing things like customer-agreed remuneration, which may or may not be a panacea, but the fact is that high commissions were its own invention and no one else’s.
What will the marketing departments come up with next in order to differentiate one another once this so-called level playing field has been achieved?
For too long life offices have hidden behind opacity. After TER charges have become clear, their margins attacked, products have been rendered unsaleable against the competition from Oeics within wraps or platforms and they have sought to distance themselves (in some cases) from protection products, what is left for them?
It is not that I don’t have sympathy, but it is difficult to be conciliatory when they appear to be behaving in such an irritating manner. We do need insurance companies but we need them for their prime purpose – for life assurance, for annuities, for medical cover, and even then we use the wrong terminology. It isn’t life assurance at all, it’s death assurance. It isn’t long-term care, it’s short-term care.
The greatest insurance executive in the world, bar none I would contend, is Warren Buffet and it’s just a great pity that his way of doing business and his ethos hasn’t percolated through more generally.
Perhaps if it did the life industry would be able to rub along with its distribution channels with a lot more facility.