In sickness and in health

Financial advisers are moving ever closer to D-Day – the retail distribution review – which is likely to radically change the landscape of financial advice. We are still unsure of the exact impact this will have upon IFAs and the way in which they will work but educated speculation abounds.

Many pundits seem to believe that they will not only have to work harder to prove to clients that their advice is worth paying for, but also undertake further training and qualifications to continue practising. This could take both time and resources away from pursuing new business leads and working with existing clients, possibly prompting some intermediaries to reconsider their role in financial services.

The protection market has been afforded an exemption from RDR and so advisers who are keen to maintain their earning potential while working towards necessary qualifications could do well to investigate the opportunities open to them.

Furthermore, the group protection market – which allows advisers to sell protection products to businesses on a larger scale – could enable them to write a greater volume of business in a timely and cost efficient way. The challenge will be to convert individual clients into corporate clients but group risk benefits can provide a lever to help achieve this and, with annual renewal commissions of up to 30 per cent of premiums at one provider, this may help mitigate financial concerns resulting from RDR remuneration changes.

The group market can be broken down into three core product areas: group income protection, group critical illness and group life assurance. In essence these offer the same protection as individual products; they provide cover for an income in the event of long-term absence, a lump-sum on the diagnosis of one of a pre-defined set of serious conditions, and death in service. However, one of the big differences is that many of them come with additional benefits that will be welcomed by employees and employers alike.

In a difficult economic climate, where people are concerned about their finances, job security and increasing workloads, employers should make sure that they monitor the health and wellbeing of their employees. On the one hand, they must make sure that they comply with health and safety legislation, and support systems go hand-in-hand with this. Also, they have a responsibility to their employees – to demonstrate the value they place on each of them through the benefits and support they provide through the workplace.

Group income protection provides an income for employees who cannot work because of illness or injury. A period of employee absence can be costly for both the employee, who may lose out on their earned income, and for the employer, who may lose out on a productive worker while still needing to meet their objectives.