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Tom Baigrie: I’m sold on salespeople

Martin Werth recently reminded the Protection Review conference that ABI statistics show that new protection premiums in 2011 stood at 56 per cent of their 2003 level in real terms. That is a serious contraction, especially when I believe this includes a lot of cases that have been rebroked as rates have declined.

Linking that sobering thought to the predicted upheavals to be caused by the RDR got me searching for examples from history of free markets that have seen a serious supply side boost with no corresponding demand-led enthusiasm. After all, we are told to expect many more protection advisers after RDR has weeded out the investment and pensions markets. Who are they going to sell things to if ever fewer consumers are buying?

I could not find any success stories but got to thinking about a point that two men I respect enormously have made several times and very emphatically recently. Ian McKenna and Lucian Camp are seldom wrong and both regularly rubbish the old saying that “life insurance is sold, not bought”.

Their point is that consumer behaviours are changing fast and that self-serve is ever-increasingly the norm and that it is silly to expect one market to defy that trend. They can call in support the rapidly growing market share achieved by price comparison sites and those who just give quotes rather than identifying clients’ individual needs and resolving them as an adviser would.

Instinctively I disagree with the two gurus but that is dangerous. A 50-something’s instinct is not worth much in a world changing as fast as this one so I began to scratch around for proof and logic to support a contrary view.

How about this? In the 21st century, marketing has replaced the salesman. If you want to shift your product, you tell the world about it on TV or through banner ads or virally or any old way you can. Or you make sure that it is prominently displayed in supermarkets, online and off, that consumers are likely to visit. All of that is marketing, not selling.

There has been no marketing of protection to speak of since 2003 and sales have almost halved in value. The one product that has been marketed heavily, over-50s cover, is the only one where sales have grown. So I do not think my two gurus would argue if I said that if protection is not marketed, it will not be asked for very much.

And when they learn of the relatively low conversion rate at which online quotations turn into policies sold and families protected, the gurus may well think that some supplementary incentive to buy is needed when the product is one you fervently hope will be a waste of money and one that ever fewer of your peers are buying routinely.

But what if a well-meaning bunch of newly converted salespeople began to ask everyone they can find: “What happens to your family if you die and what happens to you if you are disabled?” I would hold it self-evident that more people will get quotes and buy if challenged about their needs than will buy if that never happens.

So it may be that a boom in people needing to sell protection to live will prove true this updated version of the old saw, “Protection is not much bought unless marketers or salespeople remind consumers that they really need it.”

As there is no chance of much marketing, our best chance as an industry is the salespeople. Go for it.

Tom Baigrie is chief executive of Lifesearch


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Neil F Liversidge 7th August 2012 at 10:51 am

    Well said Tom. The reckless dissing of salespeople has to stop. I’ve always sold protection with a clear conscience and will continue to do so. The millions paid in claims on the policies I’ve sold over the years is all the vindication I need. I’ve never yet been berated by the bereaved for the policies I sold their loved ones.

  2. Derek Bradley ceo 7th August 2012 at 12:49 pm

    So RDR is a little over 145 days away. There is growing concern about what consumer reaction will be to what has been done in their name by the FSA. There are only so many high net worth clients out there, what will happen to the mass market advice model, what will happen to the “orphan clients”, will we see the return of the “Man from the Pru” and provider sales forces?

    “Pinks” readers will recall the then quite astonishing admission by the FSA’s now ex Head of Investment Policy Peter Smith.

    It reported that when speaking at a Chartered Institute for Securities and Investment Private Wealth Management Conference in London, he spoke about the potential for consumers rejecting the big idea about adviser charging and confessed, “If consumers still do not want to engage with it then we probably will have to do something else.”

    This simply beggars belief.

    The various discussion and consultation documents have thrown up numerous proposals, many of which have been dropped, reformed or deformed and it is absolutely clear that much RDR directional thinking has been navigation at sea with only a world atlas to chart the way- something that will give a general idea of what landmass is where but zero detail about the hazards presented by the ocean the vessel is travelling on.

    This may be acceptable behaviour in regulation-world but let’s not forget that it is the advisers and consumers whose boats could be heading for the rocks.

    It was clear back in 2010 that the regulator failed to understand the psychology of adviser/client interaction. In 2012 it is the same but it has no intention of listening to the responses from experienced industry navigation professionals, providers, lawyers, MPs, trade bodies and of course advisers.

    Not content with being the body that was asleep at the helm when Northern Rock slammed into the rocks followed by the rest of the UK banking “Armada” it seems the FSA also wants to be remembered as the quango responsble for the decimation of retail financial services.

    With all this in mind, perhaps we should look back to 17th June 1999 and the Commons 1st reading of the FSMA 2000 bill and ask the question, why does nobody in regulation ever learn from it’s past mistakes. The transcript of the debate from 1999, flags so many issues of concern that were expressed then with the seemingly strange phenomenon of foresight!

    Nobody listened then and I am reminded of the quote from the late Bob Monkhouse when thinking about the impact of poorly thought out regulation upon the consumer of tomorrow – “They laughed when I said I was going to be a comedian. Well, they’re not laughing now”.

    The industry is not laughing now, neither will the consumer on the 1st January 2013.

  3. Absolutely right – you cant re-invent the wheel !!

    No salesman equals no sales – now just wait for RDR and as I have said many times before the total collapse of provider balance sheets and see what happens !!

    Pay for Distribution ??? whatever next !!!!

  4. The FSA believes that it can change human behaviour by mandating change. Something that generations of dictators have tried to their ultimate cost.

    The nirvana of consumers willingly intereacting with the industry is a wonderful dream but wake up, this is reality and we are stuck with the reality.

    The funny thing is, the more clients I speak to about protection the more of it I sell. However, if I wasn’t paid by results I wouldn’t take the time to do this.

    Every business has to determine how it will work and commercial logic dictates that only the successful will survive. In short, the FSA should leave firms and consumers to decide the relationship they wish to have and focus on the real areas of detriment that their mates and cronies are currently devising.

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