Simplified advice is just what the protection market needs. This is not because it is going to replace advisers – quite the opposite. Far from being a threat, it will bring more and better informed customers to your door.
Why is that? I believe the majority of those needing protection do not understand the value of advice. In fact, they do not understand the concept and tend to see us all as people who sell insurance. When they call us up they want a quote and want to know what they should buy.
An adviser would obviously interpret this as them needing advice, which is true. But the customer does not see it that way – they just want answers to their questions, whatever they may be. They do not understand this dividing line between “advice” and “information”.
Customers have no idea of the regulatory landscape that we operate under and the implication it has on the way we deliver responses.
Generally, people operate in an environment where if you want some life insurance and know little about what is available or what exactly you need, they end up looking on the web. Here, you can get a quote easily and I bet most people would expect to find the right information along whatever journey they choose.
Simplified advice will allow distributors access to them at this point and to start building the customer’s knowledge and confidence until they feel like seeking additional advice. It should allow us to go beyond having a website full of information and give them some personal information based on their position, bridging the gap between information and advice.
What it will not do is give them full advice. However, it allows the customer to find out what options are available to them and what could be suitable, so they can decide on their next steps.
When done well, consumers will be armed with some information and confidence to be able to appreciate the value that advice can give them.
It does not mean the advice contained in simplified advice is invalid, merely that it is a starting point. Without this level of interaction, many will not find out enough and will either plunge into buying the wrong product or shy away from advisers at all costs. I must add that a good, automated simplified advice model will also allow some customers to buy appropriate products to meet their needs.
We work hard to build websites that are interesting, convey the right level of information and allow an informed customer to buy a particular solution. It is difficult to achieve the right level of information for all customers but a simplified advice process delivered online, over the phone, or face to face will and should give them a good idea of their requirements. The caveats, such as built-in signposting, are what will encourage people to take the process to the next stage. Instead of buying online, many should engage with an adviser.
Rob Quayle is managing director of Direct Life & Pension Services