To say we have a protection gap in the UK is something of an understatement. It certainly exists in relation to personal protection.
One of the main reasons for this is the assumption by those who have corporate cover that it will be enough. In some cases it will be but more often than not it will not.
Rather like the underestimation of just how much is needed in a pension fund or otherwise invested to produce an aspired-to level of income, we underestimate how much our families would need to financially replace us.
So we Brits are not that good at maths. And with the understandable concentration on wealth management and pension planning over the years, it is hardly surprising protection gets left off the agenda. A far cry from how it was back in the day, when providing sufficient cover was always the first on the financial to do list. We need to find a way to integrate protection into the wealth management discussion.
Business protection suffers the same level of attention deficit. So, what would the perfect advice approach be?
Start with reminding yourself of the business protection fundamentals: the challenges, the potential solutions and the tax and legal effects of those solutions. There is lots of extensive and useful information out there from providers specialising in the field.
Next to start the conversations. Take a thorough look at your client bank. Which would benefit from a business protection discussion? We are talking keyperson, share succession and/or employee cover. A relevant life plan and all of its attractive tax benefits is a great conversation starter for the latter.
For prospective new clients, an excellent source of referral would be the business’s accountants or lawyers. As for trustee investment business, these two professions operate as powerful gatekeepers to the market.
Suggest your accountant and solicitor connections carry out a business protection audit on themselves. You could even help them with it.
Once they realise the deficiency of their own business protection arrangements and do something about it, they are much more likely to proactively suggest their business-owner clients do too.
There is a lot financial planners can do to increase awareness of the need for business protection. Raising this important issue will increase a planner’s reputation with their professional connections, being seen as one who cares about detail and about reducing risk.
Tony Wickenden is joint managing director of Technical Connection. You can find him Tweeting @tecconn