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Online to advice

Protection advice faces many hurdles over the coming years. Leaving aside the recession, three main issues stand out as challenges which, untackled, will see Swiss Re’s often quoted protection gap figure of £2.3 trillion continue to grow with little chance of being reversed.

First, the RDR will kill advice if it moves into the protection area. Unnecessary adviser exams and talk of banning commission will finish advice for all but the wealthiest who can afford to have their own financial planner. The RDR must not enter protection. If it does, disaster will follow, so we should prepare for the worst.

Second, advisers also need to tackle a general lack of understanding about the importance of financial protection among the public. Consumers continue to make purchasing mistakes by assuming a bit of life cover will take care of their protection needs and many people buy their policies without taking advice, especially online. On the one hand, the recession has made people, both consumers and brokers, consider financial protection more seriously, which is one bright spot. However, it should not take a recession for people to understand the importance of protection advice when it is such a central plank of good financial planning. Something more must be done to ensure consumers take advice by developing and expanding new and engaging mediums.

Third, it is inevitable that as technology changes, so will consumer buying habits. Many people, used to buying flights and car insurance online, turn to the internet for financial protection too. Yet, for the vast majority, it is something which should be bought with advice, both because of the pitfalls that the unwary and inexperienced can fall into and because the wrong purchase will often only come to light at the moment of crisis when disaster has struck. Nothing on the internet so far has offered genuine consumer-friendly protection advice.

It is crucial to develop online protection advice. Face-to-face and phone-based advice is irreplaceable but whether we like it or not, a growing number of people are reluctant to do their shopping, financial or other, away from the web. The sooner we meet consumer needs by offering a quality protection advice website, the sooner we can ensure protection sales improve and the protection gap closes., launched by Lifesearch on May 11, is a major step forward as it offers protection advice in a quick and simple consumer- friendly format for the first time ever. It is something the industry should embrace because, without innovation, the tough challenges of the future will be causing us all sleepless nights long after the recession is over.

Matt Morris is senior policy adviser at Lifesearch


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