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Simplified advice is just what the protection market needs

Simplified advice can represent a good beginning point

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

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Yes of course, simplified advice. A panacea.

  2. Well a direct seller would say that!

    Joe Public wants £150,000 cover and I sell it to him, marking the file “no adivce given.” 2 years later he dies. His children then (egged on by some ambulance chasing firm) want to know what I did to mitigate the £60,000 IHT they now have to pay and tie me up in litigation and FOS for how long sorting it out.

    Simples! (not!)

  3. “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.”
    In Mr Quayle’s case, would they be far wrong? And if so does his argument not prove that simplified advice should not be part of the future landscape for firms wishing participate in this market beyond the RDR. If you want in, do it properly, don’t just cherry pick on the bits you see as providing you with an opportunity to line your own pockets.

  4. Simple Simon says! 12th April 2011 at 9:34 pm

    Dying too soon creates the need for cash – that’s already quite simple but they are not queuing at my door to buy the solution.

    Living too long creates the need for cash but they are not queuing to buy pensions

    Dying a bit creates the need for critical illness but they are not queuing to buy critical illness.

    So here we are being told that the reason for not buying is because they don’t understand! A few years back the same people were telling us that that the reason for not buying was because of pension charges, remove the charges and they will buy – but still they are not buying!

    Perhaps the reason for not buying is because the consumers have never bought but always been sold. Intangible products for events yet to occur are always sold and never bought!
    Now that is simple!

  5. If it’s simplified it isn’t adivce – it’s a sale.

    As long as it there is a ‘caveat emptor’ provision (i.e. no comeback if the product doesn’t meet the needs of the client) I’m all for it.

  6. we could have an Ebay type system for simplified advice.
    Simple enough and if you do not like the product or it does not live up to your expectations you can leave bad feedback.
    If only everything in life were this simple.

  7. Surely this is all about giving the consumer choice………

    As long as its clearly signposted to a client – eg this is non advice, this is simplified advice, this is full advice………..then it is no different to a retailer offering ready salted, salt & vinegar, or prawn cocktail crisps.

  8. The assumption with the idea of ‘simplified advice’ is that there are hordes of slavering consumers champing at the bit to engage with the industry yet scared by the process or adviser.

    Weere this true the idea of ‘simplified advice’ would be sound.

    The reality is that some consumers are dubiousd about interacting. Others are lazy or apathetic. Others do interact but believe they can do it themselves and end up with an inappropriate product.

    There is no panacea because even intelligent people can be hard to convince and there remains a fair percentage who believe that cost is the determinant and follow that rocky road.

    The success of many businesses, and indeed the RDR experiment, is predicated on the assumption that simple and cheap will encourage engagement.

    I say to these people….stakeholder pensions?

  9. @Sean | 13 Apr 2011 8:21 am

    Whats wrong with a sale Sean? All transactions are sales even advice. If you ask me the sale is the purest form of advice because it links remuneration with outcome. Surely to god the ranks of highly paid solicitors, barristers and accountants can teach us nothing about democratising their service to a wider public. The public that I talk to loath paying fees to these people! The reason the UK is going down the toilet is due the the culture that disengages remuneration from outcome.

  10. It is quite simple to get motor insurance online.
    Thousands do not bother

  11. @Simon. You are spot on – there is absolutely nothing wrong with sales – the major part of our role is selling the solution once we have identified it. And I totally agree with your comments regarding solicitors etc as the FSA is trying to get us to be more ‘professional’ by forcing fees on us when they have a major advantage over us – you usually have no choice when you use these professions or they are paid for by the state (legal aid).

  12. Will simplified advice be cheaper than proper advice? If not, then although more product will get shifted, the job won’t be done properly with, for example, advice on the importance of effecting most life policies in Trust. So where will be the benefit to consumers about which the FSA is so fond of harping on?

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