Kevin Carr is head of protection strategy at Lifesearch
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To what extent, if at all, do we agree with this? Today’s customers bring with them unprecedented levels of debt, lifestyle and even medical expectations, yet too often our industry responds to them, whether it is advised or non-advised, with cheap term life cover dressed up as comprehensive family protection. We know that consumers are not preoccupied by the need for life protection and they are confused by our products. Many just want to buy only one product, from a trusted salesperson or brand, feel they have done the right thing, move on and forget about it. Invariably, they are forced to confront the issue when arranging their mortgage – the very time when their budget is most stretched. Price is an integral part of value and a good adviser should always seek value for his customer so the issue of price should be raised. Furthermore, no matter the quality of the advice, one lives in a world where price is made an issue by many, many others. The less deep and valued the relationship with the customer, the more one must respect the fact that they will be considering alternatives that may be cheaper. And if not now, then anytime soon. Perhaps the price of regulation has led to intermediaries playing it safe in providing advice and, not surprisingly, it also caused an upswing in non-advised sales. Either way, as far as the consumer is concerned we overfocus on the remote possibility of dying rather than the riskier business of living. Term life cover is the cheapest form of protection for a reason of course – it is the least likely of the insurable events to happen. As I see it, too many advisers, whether they are bank staff, mortgage brokers or IFA, have sold protection on price for far too long. How many advisers have specialist protection paraplanners? And there’s the rub – if the advice is not much cop then, why bother taking it, or, as most consumers (often wrongly) think, why pay more for it? Once an adviser is in front of a potential client, it is quite rightly their job to demonstrate both the client’s need for a solution as well as their own value above and beyond other sellers,and if the adviser fails in this, they do not deserve the relationship with the client. However, the issue that we face in protection is that the number of consumers who want protection advice is falling by the day – just as the protection gap grows. The more that price becomes an issue in the consumer’s mindset, driven aggressively by shrewd marketing and prime-time television advertising, the fewer that will seek advice. Why pay more for something that hundreds of famous brand internet pages state – wrongly – that you do not need. Demonstrating the value of good advice in protection is not that difficult but what do you do when you cannot get in front of new clients to talk about protection because they have all already bought what they were led to believe was right from one of those very price-driven websites? So, instead of saying that a good adviser will never need to compete on price, I would say this – a good adviser should ensure that by the end of their advice the customer understands both the price versus value equation and that the adviser has recommended what is most suitable for their needs. Good advisers are already competing on price, they just haven’t realised it yet.