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Take steps to sales

A simple plan can raise public confidence in protection insurance

The world of protection distribution is, I fear, too fragmented and under- resourced to ever deliver a consistently reliable service to consumers.

I will try to explain why I think that and how we could change it if we wanted to. Except that “we” is hard to define. I suspect it starts in Whitehall with Ed Balls and ends in a dining room in, say, Penzance where labours a one-man-band adviser.

That huge diversity of stakeholders is the first reason why consistent reliability is impossible. Add to it the following.

For most sellers, it is a secondary sale. They earn from mortgages, pensions, investment or banking but add a little bonus by popping a bit of protection into the main sale. Few of us do secondary things as well as we do primary, so the add-on sale is normally a sloppy one.

For many, even where protection is the only thing being discussed with the client that meeting, it is a sideline area of knowledge which is only occasionally used so they are not fully up to date with underwriting issues, not skilled in customer need assessment and resolution and not up to date with product developmentIt is shocking how out of date is much of the protection advice given by advisers who I know to be seriously good in other markets.

Of course, for the fastest- growing sector of the market, it is a commodity sale to be made with no real reference to suitability. It is about the same as pet insurance in their eyes – a revenue stream into which they can leverage their brand or process.

Those are the reasons why so few people buy protection properly and because the customer senses that is true, they buy less and less.

Until we can show that most people buy wisely, we cannot grow our market, we can but squabble for a share as it declines.

How do we change this? Well how about this four-step plan?

Non-advisers should be clear about the pitfalls of their route as well as the advantages so that customers are not fooled into thinking that protection is a commodity purchase and those that buy without advice are those who truly do not need it.

Secondary selling of protection should automatically trigger close regulatory inspection, as seems to have happened with, so that those who do it either do it properly or stop doing it.

Advisers must be(come) up to date with the market. Improved examinations are needed, but the swiftest remedy lies with the FSA’s TCF requirement of product providers that they assess a distributor’s capability in specific product areas. If you run a life company, you know which advisers do good and bad work.

And finally, those secondary and out-of-date sellers need to be able nonetheless to profit from protection sales by routinely referring customers to specialists who are focused on protection and can thus invest enough to stay on top of the game.

In short then, non-advice and advice both need to get their houses in order and the key to this, as nowadays in all financial services markets, is focus. We will never grow sales until we are really good at what it takes to help customers make the right decision, and for the vast majority of sellers, that is a part-time issue at best. If you know,a protection part-timer – and any provider can spot them a mile off – then tell them to stop and profit ethically by referral to a specialist.

Tom Baigrie is managing director of Lifesearch


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