That’s right, sell. There is nothing dirty about that word once we appreciate that the delivery of top quality advice requires knowledge and expertise in professional sales ideas and techniques.
Prudential Singapore has designed a tremendous product, combining the benefits of a whole-of-life policy with unitised funds charged at normal mutual fund prices. This results in fantastic surrender values and very fair remuneration for the adviser comprising normal commission (for those that work that way) on the insurance part of the premium and unit trust commission on the investment part, addressing concerns about up-front charges.
Then last week, we heard that Prudential UK had a flat year for new business while its Asian outlets boomed.
Arguably, UK insurers should also be vibrant and adviser numbers should be increasing. We have a qualified adviser base and a fairly well-educated, knowledgeable marketplace but things are getting worse. The number of advisers has collapsed and is still reducing, the average age of 54 is relatively high and rising, insurers are not growing and famous names are closed to new business. How proud the FSA must be of such achievements.
Over-regulation would be a glib and predictable response from many quarters although it certainly carries a large element of truth. Singapore probably has just as strict regulation, with other countries not too far behind, yet it is very buoyant.
The difference between regimes is that its regulator provides the framework for the advisory environment and actively encourages product innovation while our regulator does not understand the marketplace or products, interferes with the delivery of products and service and adversely influences product design.
Insurers do not help. Some have so few remaining protection products that they no longer deserve the right to describe themselves as insurance companies. They remove excellent products because they do not sell enough of them. Half the time, they do not even know how good their products are or how to help IFAs sell them. At least in Singapore they do something positive about it.
For example, Standard Life lost credibility when it closed its superb whole-of-life contract. Scottish Widows’ regular savings plan used to be one of the best products ever designed, until it changed the terms. A little lateral thinking and better informed broker consultants could have prevented this. Misguided and ignorant FSA attacks on both these products did not help.
For those of you who are aghast at endorsement of whole-of-life and maximum investment plans in the same sentence, all I can say is that you never really understood these products and what they could do for clients.
Organisations such as the Personal Finance Society and the Institute of Financial Planners are too focused on developing technical skills and knowledge, alongside jousting for position over the relevance of each other’s qualifications, when what is needed is joined-up thinking about how that expertise is delivered to the marketplace.
Since the demise of the Life Insurance Association, there is no organisation teaching basic, let alone sophisticated, sales and marketing techniques.
So, Prudential UK, why not snack on some humble pie and find out what other parts of your organisation are up to. It may improve your new business figures.
Bhupinder Anand is managing director of Anand Associates