What’s stopping advisers selling protection?

Leading financial planners have given a host of tips for advisers looking to bridge the protection gap with clients.

In the latest episode of the Money Marketing podcast, this week in association with Royal London, Addidi Wealth financial planner Anna Sofat, Richmond House director Ian Jenkins and Royal London business development manager Vincent O’Connor sounded a bullish note on advisers’ ability to overcome hurdles to protection sales.

Sofat said her firm’s decision to remove charges for protection advice and conduct a comprehensive assessment of protection needs had been key in ensuring clients take up its recommendations for cover.

She says: “We do a financial plan for every single client that comes through the door. A big chunk of that is what you call your security blanket. We systematically go through every single type of protection and what cover the client currently has, from sickness benefits to life cover, to critical illness and income protection. What are the gaps? What should they have?

“I actually dovetail it to their lifestyle and appetite for risk. Some people don’t worry at all about what might happen but when you take them through things they may worry about it.

“We’ve taken literally all hurdles out. We don’t charge for protection at all, even processing it, so clients don’t actually have any reason not to. We don’t take any commissions, so its very much an add value thing. We are doing it because we think they need it, so we are in a strong position to twist their arms a bit if they are reluctant.

“We’ve found its so much easier from an adviser point of view in terms of not being conflicted but also sitting on their side of the table and saying we really do think you need it.”

Jenkins added that linking the value of protection to overall life goals in a financial plan had helped convince some of his clients it was worth paying for.

He said: “It’s very much part of the financial planning process; you can’t really do financial planning without considering people’s protection needs as part of that…Most financial planners these days aren’t just selling products we are working with clients on an ongoing basis, building relationships, and that financial planning involves ensuring people are adequately protected.”

Asking “what if” questions and using case studies had also helped illuminate the need for protection, he added.

O’Connor said that with improved data in recent years, clients can now get a clearer understanding of the potential risks to their health and financial goals and the probability of them incurring, allowing them to better understand the real need for protection.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Providing protection advice and even implementing it FOC is all very well in the context of a comprehensive (and charged-for) review of ALL the client’s provisions but for most, if not almost all, small to medium sized IFA’s who deal primarily with clients of modest to average means this simply wouldn’t be a commercially viable proposition. Add to that issues with underwriting, non-disclosure and persistence and, after a while, most intermediaries consider protection for the average client to be more bother than it’s worth. Examples:-

    1. I advised on and arranged MPTA for a couple who absolutely needed it, no question whatsoever but, after a few months, they just cancelled the DDM. And the premium was only about £12 p.m.

    2. I advised on and put forward a proposal for a woman who needed MPTA but it foundered because she lied on her application form and her GP just sat on her MHR for weeks on end.

    3. Some existing clients came to be asking me to arrange life cover. It took over an hour to complete the application forms and the terms offered were hopelessly loaded and riddled with exclusions. I realised then that they’d already tried a number of providers direct but thought that somehow or other I might be able to get them affordable and acceptable terms. It was a complete waste of time.

    4. I advised on and arranged family and mortgage protection insurance cover for a couple who obviously needed it but, after a few months, they went online to save about 15% on the premiums.

    Protection is all very well for specialists dealing primarily with HNW clients who need and are prepared to pay for sizeable levels of cover but, for the rest of us, it’s just not worth going after.

  2. Andrew Cartlidge 28th January 2019 at 1:00 pm

    To apply for a General Accident (now part of Aviva) for £Ms of level/convertible term assurance used to involve an application form over two sides of A4 paper – including the direct debiting mandate. Nowadays clients/advisers are faced with in. 20 page application forms containing every form of cover offered by the life assurance companies concerned – and every underwriting question relating to each type. These forms are daunting for professionals and impossible for clients. The accompanying key features documents add pages more. This an inexperienced, unhelpful pre-underwriting departments working off scripts will lead many clients and their advisers to the view that it is all too much effort. If life assurance companies wish to enthuse customers and their advisers they need to become much more user friendly – at the application form stage. Given the miracles of the internet there is no excuse for over-complicated multi-risk application forms. The problem is those designing ‘forms and procedures’ do so without bothering to consult those whom they expect to adhere to them.

  3. The problem lies in the title. Advisers no longer ‘sell’ (or shouldn’t do) they advise (or should do).

    Unfortunately RDR was incomplete as life assurance still attracts commission. There are those that only charge fees. The fee is for the advice. If the client decides not to take the advice the fee is still payable.

    • I agree with you in principle, Harry, but the reality is that most people aren’t prepared pay a fee for protection advice (and some still aren’t prepared to pay a fee for advice on anything). This, I suspect, is largely because they think there’s no more to it than gathering a few quotes. Not even Alan Lakey, arguably the country’s leading expert in this field, doesn’t charge fees for advice on protection. Fortunately, his knowledge, powers of persuasion and high persistency rates are such that he can afford not to.

      Personally, for all but existing clients and referrals from existing clients, I require a nominal fee of £100, if only as a declaration of serious intent. Those who won’t pay are politely advised to go elsewhere.

      • Well Julian all I can say is that when I was practicing I charged fees for protection.

        A little imagination is all that’s needed.

        Microsoft XL is your friend. As an example take the best quote look at it with commission and then with no commission. Multiply the monthly premium by the number of years cover in both cases. On the nil commission illustration add your fee. Subtract one from the other and I’ll bet the nil option (with your fee) is miles cheaper. Show that to the client and if they have half a brain it’s a ‘No brainer’. (And no clawback concerns). Of course if you are looking at ‘penny numbers’ it is a different matter, but then this type of business is often not very long lived.

  4. Christopher Petrie 28th January 2019 at 6:47 pm

    I agree with Andrew, the whole application process is far too complicated. You have to spend over an hour, face to face, just to fill the form in. Then your office has to type it in online, to save the insurance company the cost!

    I really don’t think commission is the big issue here…it typically adds about 15% to a premium. The other 85% is obviously much more the significant factor. Indeed, an IFA can fully clear his fee by finding the competitive quote. I’m bewildered by the firm in the article doing everything for free. Seems unprofessional to me and I just can’t see it changing the price sufficiently to turn a “no” into a “yes”.

    The other issue is many IFAs deal with older people nowadays as they have greater wealth on which to advise. With mortgages long paid and children grown, there’s less need for life cover (and probably too expensive for them now anyway).

    Finally, i think JS’s examples are an excellent reminder of how important it is for us all to be careful and selective about the clients we take on.

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