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Strong case for a protection qualification

Politics and humour have a long relationship and the results are mixed.

From the immortal Churchill line: “Mr Attlee is a very modest man. Indeed he has a lot to be modest about” through to playground gibes about hair colour as attempted by Harriet Harman, humour is frequently the best device for getting politics on the agenda of the man in the street.

Recently, however, the man in the street has ceased looking to the political elite for reasoned thinking, as was shown in the US last week when over 200,000 marched in Washington, demanding an end to debate based on name-calling and manufactured ire. The catchy motto: “I support reasonable conclusions based on supported facts” was among the best emblazoned on their placards.

Therefore we should not worry about Mark Hoban’s lame comparison of IFAs and McDonalds’ workers. Quite apart from anything else, as Tom Baigrie’s tongue in cheek article pointed out, we have reason to be envious of our friends on the other side of the fast food counter and their equivalent FSA.

There remains a need for a specific protection exam since, apart from those specialising, product knowledge and advice standards can be woefully inadequate.

Even those who consider themselves keen protection sellers can display a worryingly tenuous grasp of the topic, as evidenced at a recent industry conference wherein, during a debate on multi-benefit plans, an audience member asserted he would not sell such a product until one was designed which allowed his clients to amend aspects of the policy as required in future.

Training will help us to reduce this knowledge gap but there will always be a danger it will preach to the converted and those doing the most damage to our reputation as an industry will stay at home, content in misconceptions that income protection is too complicated for people to understand, critical illness should be sold on cost alone and multi-benefit contracts are a neat idea but poorly designed and hard to arrange.

Add to this the growing swathe of non-advised protection sellers and the case for a compulsory qualification becomes stronger. A vast majority of these firms will be compliant, efficient and profitable but some will simply be out to make a killing and will do so, unaware of the regulatory requirements.

We know from experience these smaller firms will get less than the requisite attention from the regulator, which is galling for those of us spending time and money understanding and complying with superfluous rules such as total premium disclosure.

I suppose though, to refer to Churchill again: “If you have 10,000 regulations you destroy all respect for the law.”

Phil Jeynes is head of new business at LifeQuote, Direct Life and Pension Services


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. Well put. PHI and PMI are two protection products which can be very complex and in the worst cases can leave a client underinsured or indeed uninsured. Critical illness plans are also very difficult to get right and then of course how many plans are written in trust let alone correctly? It is one reason why I still feel protection requires personalised advice and should not be sold directly.

  2. It vexes me, I am vexed.

    Why does the RDR not cover mortgages and insurance?

  3. Dear Mr Exasperated, the asnwer is simple and straight-forward.

    The RDR should encompass all retail financial services but, as we know, it is a mish-mash of nonsense, theory and downright cretinistic tosh.

    There should be a protection examination and, whilst this seems to go against my views on qualifications, I say this because all new entrants should have capability.

    All existing advisers should have a robust CPD programme and a protection exam would fulfill a good portion of this.

  4. Alan

    I asked the FSA why this is so, they passed.

    Mr Hoban and Mr Cameron, are you proud of your regulators?

  5. I ,(encourages by my network), have decided to take ‘gardening leave’ whilst waiting to see how this whole RDR mess develops. As an ex IFA with 21 years experience and with 50 hours per month of CPD over that period (seminars, exams, tests, courses and technical reading-which amounts to well over 10,000 hours of study), I am no longer allowed to provide advice. During that period, I never had a complaint, nor suffered any ‘clawback’. So who looks after my clients now?- just average people, who tell me that they cannot find an IFA WHO CHARGES LESS THAN £250 PER HOUR. And that is now, not 1st January 2013. Of course, I’m not allowed to recommend one. What a joke this business is. As a Chartered Engineer, I am considering returning to a REAL PROFESSION.

  6. Great article Phil, couldn’t have put it better myself!

  7. I have always considered protection to be the foundation stone of good financial planning. Many IFAs have viewed protection as a side line to pensions and investments – indeed, many simply don’t get involved. The FSA allows Tesco and Aviva to flog their wares on-line knowing that most policies have been selected by clients with no real understanding of major issues (e.g. the importance of making policies subject to Trust provisions, the serious potential drawbacks of joint-life policies, why CIC policies are like having an umbrella with holes etc). At last, someone has decided that it is important to get protection right – but still the emphasis will be on declaring commission so as to dissuade Joe public from seeking advice. Joe Public loses out, the government loses out when poor Joe comes to grief and the banks, Tesco, Aviva et al continue to make execution-only money without having to worry about complaints.

    If the FSA would stop their obsession about how an adviser gets paid, perhaps they would be able to start concentrating on the important issues.

  8. Just from comments you can tell who are experienced and those who are new comers. What the new comers seem to fail in understanding is the imprtance of CPD and the ability to properly research.
    Research is for our new comers much easier and quicker when interest is taken in product changes and legislation – when this is being read and attendance at seminars etc this is then recorded and hopefully taken in.
    Exams are needed for the new incumbants to understand better what many of us have been practising and recording for decades.

  9. What next, let’s hit Protection now for more money making exercises. I have been an Adviser for over 35 years with various insurance companies eg. Pearl Scottish Friendly Axa Zurich and have achieved FPC 1 2 3 + CEMAP.I keep my knowledge up to date by CPD and also by experience and never once received any complaints. I am now 58 years old and don’t need any further exams to prove I am a good and honest adviser. When you pass your driving test they don’t ask you to sit further tests to prove you are a good driver. Let’s have some common sense in this industry for a change.

  10. Very good point, and I agree, but aren’t there protection qualifications already (CF3 and equivalent) which are pre-requisites to your Certificate, never mind your Diploma IFA status?

    However as a Mortgage & Protection Advisor, I must admit I have learned my protection knowledge essentially through years of self learning and CPD. When I sat the CF3, to me it was essentially a box ticking exercise.

    Something could be said about incorporating protection knowledge within the CeMAP and equivalent qualifications.

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