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Tom Baigrie on protection

It is possible to learn quite a bit about the advice that consumers get if one samples the advice being given to around 2,000 of them a week.

However, the interesting bit is not what is currently being recommended but what has gone before – the mishmash of past advice and buying that most of us have in our past and that lead us to ask for yet more.

You would not believe some of it but IFA readers will be pleased to hear that, generally, former IFA clients have far fewer flaws in their protection planning structures than those who have dealt with tied agents, bancassurers and non-advisers.

Without doubt, the worst of the worst are the non-advisers. Now, you might expect an adviser to say that but don’t believe me, just try tapping income protection or mortgage protection into Google and then buying what is recommended under those names – without qualification – from some of those big spending websites.

Many sell mortgage payment protection insurance (aka accident, sickness and unemployment) insurance as if it is equivalent to income protection (aka permanent health insurance) and at least one even calls it just that.

That is a bit like asking for a car and being sold a bicycle, with the important difference that in financial services you only realise that it is a bicycle not a car when you are already in the fast lane of the M1 at midnight.

Of course, the way that our regulated world works, these ridiculous abuses are dealt with on a caveat emptor basis because the consumer is making a mug of themselves but as soon as they get clever and take your advice they move onto a caveat vendor basis, which is slowly but surely putting advisers out of business. Well done that regulator.

So when the forthcoming great MPPI/ASU scandal arrives, would all the unsuccessful claimants who would have been paid out by income protection but never got to hear about it, form an orderly line to the Docklands please? Oh, and could the fearless journalists exposing this one please also remember to leave IFAs out of it or at least to not use those dread words “the financial services industry”? There really is no such thing. There are non-advisers, tied advisers, IFAs and a regulator. Find the right bit to blame each time and the better bits might just start to flourish.

But, let us get back to the review of past advice in protection. If the non-advisers are the worst, the tied agents and bancassurers come in second in the hall of shame, but for very different reasons. Here, we often see advice that seems good enough but, on closer inspection, we find all sorts of key points missed out, almost always because pointing it out would stop a sale.

Try, for example, buying guaranteed-rate, own-occupation critical-illness cover from Nationwide or Halifaxe.

The trick as a tied agent, of course, is the same as with non-advisers. You have to get your customer to think that he understands the market as well as he needs to and then feel sure that your solution is the best one.

I suppose that, provided that your product range is complete and decent, and your training likewise, then you should be in business but I cannot find a bancassurer with the first two bits complete and I cannot comment on the training side, other than to say that very few bancassurers sell income protection as, by and large, critical-illness cover and MPPI/ASU are what they push. And that is as sure a sign of ignorance as our industry can offer. The ignorant always prefer what is simple over what is right.

I see that the key IFA protection advice failings will have to wait until next time.

Tom Baigrie is managing director of Lifesearch

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