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Tom baigrie on protection

To reproduce a quote from a client in The Sunday Times recently: “I wanted to pay the lowest possible premiums but get the best possible cover. I felt it was a much better option to ask the experts than try and search the market myself. I would now always advise my friends and family to take advice. Any rules that lift the standard of advice available when you buy insurance policies can only be a good thing for consumers.”

Good stuff, eh?What can the regulator do to improve the standard of advice given, because only if it is pretty uniformly decent can we genuinely make the case that customers are better off taking it? This case is always hard to make. Customers who do not take advice and mess things up cannot go to the ombudsman and complain (not so far), they just have to live with their errors in silence. It is the sensible ones who take advice but do not get good advice who are able to make much noise. So all the cases we hear about are those relative few where advice has failed.

The rapid expansion of web-based non-advice will in due course throw up plenty of disgruntled complainants who ask why the website did not guide them to a proper decision but left them believing that, say, critical illness was the only cover against disability, by never mentioning income protection.

The website’s reasonable solution to this would be to build a decision tree. I guess the reason why we do not see these is because any website that tries to take customers through a decision tree ends up leaving them in no doubt that they really need to speak to an expert, which does not suit their case.

My one real worry is whether the majority of people giving advice are genuine experts. In accepting the need for advice, the consumer needs to ensure that he gets good advice. Are IFAs up to it?I am quite sure that almost all experienced IFAs will be experts in client need analysis and product selection. Using quote engines gives us comfort that we are giving cost-effective recommendations as well. But there is an area where very few are experts – provider and underwriter selection. No matter how skilled you are, you need to be dealing in this area every day if you are to make the right decisions. Provider selection and contract terms are absolutely vital in CI and IP policy selection but, in even the most simple term insurance case, your chosen underwriter’s attitude to various conditions is just as important.

We have a large number of case histories where clients have been loaded, excluded or rejected by one mainstream insurer, only to be taken on at standard terms by another.

This leads me to suggest that IFAs need to develop into a layer of generalist customer-facing advisers supported by a layer of specialists bringing genuine expertise to clients. Many are on the way there. Is your firm? I would welcome your views.

Tom Baigrie is managing director of Lifesearch


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