Get some of them talking about adviser networks and they can sound a little schizophrenic.
One minute networks are being praised for providing impressive training programmes and technical support and for steering advisers in the direction of quality providers, but the next they are being lambasted for restricting the ability of advisers to offer truly independent advice and, in some cases, even for making insurers pay for being on their panels.
Let us start with the positives. It is an unfortunate fact that many independent financial advisers and mortgage brokers know as much about protection as Eskimos do about sunbathing, and they are unlikely to make much contribution towards closing our well-documented protection gap unless they are offered significant assistance. The ability of networks to provide this is therefore surely to be welcomed.
In addition to providing generic education, they can through restricted panels help identify protection insurers with high-quality cover, good service and claims paying records and possibly also enable members to benefit from superior service level agreements and exclusive products. The Tenet Group has even proved progressive enough to offer members discounted terms on the highly-acclaimed new CIExpert tool.
Nevertheless believers in the virtues of whole of market advice are quick to criticise restricted panels for only providing access to around half a dozen providers. Although some networks also offer an option to go whole of market, the fact that restricted panels usually offer slightly higher commission levels does little to curb their popularity.
A restricted panel tends to represent a reasonable cross section of major players. At the Sesame network, for example, it consists of Aegon, Aviva, Bright Grey, Friends Life, PruProtect and Zurich. But there are always likely to be cases when a client could benefit from being with another provider.
Some insurers tend to be far more lenient to those with adverse family medical histories and dangerous pastimes than others, and the fact that Exeter Family Friendly and other friendly societies that offer ‘day one cover’ are not on restricted panels can be a real barrier to finding the most appropriate income protection policy.
Sarah Fullaway is a director of Oviso, a Derby-based intermediary specialising in protection, which is a member of FYB Network’s whole of market panel.
She said: “I would never allow my firm to be a member of a network that did not allow the whole of market option. A restricted panel is no good for the client as there is a lack of choice when it comes to fitting exact needs. For example, an ‘own occupation’ income protection definition may not be available for a class three or four risk, so the client gets an inadequate policy.”
James Caplan, managing director of London-based adviser firm First Financial – which is not a member of any network – is particularly concerned about the lack of choice of critical illness cover providers that restricted panels can impose. He highlighted in particular how wordings can differ on partial payment facilities for early-stage cancers and other conditions not covered by the core policy. For this reason Mr Caplan often splits clients’ cover between two different CI providers.