Your IndustryJun 23 2016

Advisers must protect their clients’ wealth

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Advisers must protect their clients’ wealth

Advisers who eschew protection and focus instead on pension and investment needs could be doing a huge disservice to their clients.

This is the view of Alan Lakey, founder of CI Expert, who believes advisers in general have put protecting wealth so low down the pecking order of priorities it often does not get discussed at all.

Mr Lakey explains: “When I first started in this industry it was drummed into me protecting your income and assets was the very first step, and increasing wealth and pensions was subservient.

“We now seem to have a two-tier advisory landscape where many advisers eschew protection and focus on the more glamorous investment/pension areas.”

He also claims network models seem to promote protection only as an ‘afterthought’ in many cases, so advisers belonging to networks are not actively encouraged to sell protection products.

Mr Lakey adds: “When I talk to networks they often tell me their mortgage advisers sell one protection plan for every four mortgages they arrange.

“One network told me approximately 25 per cent of their appointed representatives never sell protection, while only 20 per cent regularly sell it.

When I first started in this industry it was drummed into me protecting your income and assets was the very first step Alan Lakey

“I believe this is a big part of the problem. Add to this the relative complexity of critical illness and income protection and you can see why many limit their advice to life cover only.”

Face to face

It appears consumers believe face-to-face communication supercedes social media or print communication in terms of priority when it comes to getting information from the financial services industry.

Andy Nicholls, adviser for Beaufort Asset Management, says: “Advertising increases awareness but individual advice is key.

“That said, early education in the potential policyholder’s life will be the major contributor.”

At an investment conference last year, employee benefits consultancy Lemonade Reward conducted a poll among attendees on how they wanted the financial services industry to communicate with them.

The poll found 45 per cent of 108 total respondents polled preferred face-to-face communication.

Even when broken down among age group, most people young and old wanted facetime with an adviser.

How would you like to be communicated to?
Group Young, free and single Young family Mature familyPre-retirement
Face to face48% 33% 44% 76%
Seminar 23% 18% 12%12%
Digital 26% 45% 44% 12%
Print 3% 4% 0% 0%
Total

Digital communication was also important to the ‘middle earners’ - those with young or maturing families - who are computer literate and social media savvy.

Phil Jeynes, head of sales and marketing for UnderwriteMe, says: “Everyone should stop hiding behind compliance as a reason not to adopt 21st-Century approaches to marketing.

“Engage with digital technology to speed up business and cut down expense.”

Denise Wond, marketing manager for Royal London, says: “Much more has to be done to raise awareness with consumers. And that probably needs to start with advisers.

“There is plenty of convincing material out there and loads of reliable statistics which could help you open the income protection conversation. Most providers also have a stacked toolbox you can dip into.

“It helps if you have a solid understanding of the limits of state support, because it is limited. And unfortunately most of your clients will only be vaguely aware of what kind of support they could expect to receive.”

Yet it is not just about starting conversations with existing customers, but reminding current clients, as Emma Thomson, head of customer care for Lifesearch, explains: “People buy cover, forget what it is for and then cancel valuable protection to save a few pounds.

“Sometimes they even don’t claim for things they could, as they’ve forgotten what their policies do.

“Therefore we need to do more to communicate with existing clients.”

Steve Bryan, director of intermediary at Legal & General, adds language and the way in which the whole industry describes protection needs to be made simpler.

This should help conversations, he explains. “Perhaps we should look at the UK’s protection gap in terms of the number of people who are insured, rather than the amount of money which makes up the gap, as this language may resonate with customers and make the topic more personal.

“The strategy to ultimately encourage as many people as possible to protect themselves will be long-term; in the meantime, we will continue to provide high-quality products to customers who can rely on us in their time of need.”

Unfortunately most of your clients will only be vaguely aware of what kind of support they could expect to receive Denise Wond

Keeping things simple is also a key factor when advising corporate clients. Nicola Mohns, head of intermediary marketing for Axa PPP, says: “Keep it simple and let the facts speak for themselves.

“Show employers the perfect storm they are facing - show them the evidence base for the business case for protection employee health and wellbeing, such as the pressure on the NHS, the increasing age of the working population and the fact the consequences of ill health can be calamitous for businesses.

“More needs to be done to help small firms understand the link between the health of their employees and the health of their business. We need to convince SMEs prevention and early intervention are an investment - not just an optional extra - for safeguarding their business.”

For advisers looking to get into the protection sphere, there is a new group set up called the Protection Distributors Group, which aims to help consumers and advisers engage with protection.

According to Lifesearch’s Emma Thomson, “These 10 firms will be using their knowledge and influence to get insurers to promote what they offer more clearly, and to improve areas such as methodes of communication.”