Death is the great taboo subject – one that many advisers still find difficult broaching with clients.
Yet, over the past four years, there has been an explosion in the number of prepaid funeral plans, driven by direct marketing from providers and an increase in distribution through third parties.
Such growth is concerning, as it is a market that deals with money but remains largely unregulated.
This is why Mark Moran, director of intermediary sales at funeral planning firm Golden Charter, is on a mission to help clear up “misconceptions” about the sector. He wants to demonstrate that funeral planning can be a key part of an IFA’s financial planning tool.
Mr Moran said: “If you are an IFA, you will plan every part of your client’s life: inheritance tax, life insurance etc, but the one place [advisers] stop at is that end point – death.
“Funeral planning is just a further stage in the planning process.”
Prepaid funeral plans, which allow people to pay in advance, can be bought directly from a funeral company, or sold via funeral directors, will writers or financial advisers.
The average cost of a funeral is now around £4,000, while the firms that introduce or sign the client up to the funeral planning firm can be paid as much as £800 in commission, in some cases.
According to Funeral Planning Authority (FPA) figures, since 2010 the number of plans sold more than doubled to 210,700 in 2016 from 104,364 in 2010.
And these are just the companies that have registered voluntarily with the FPA, meaning in theory that they hold themselves to a higher set of standards. For those that do not, it becomes a worrying prospect, considering how easy it is to set up a funeral planning business.
Compaines are only regulated by the Financial Conduct Authority (FCA) when the money they receive is paid into a bank, otherwise, if it is in a trust, it falls outside of the regulatory eye.
Mr Moran said: “[You and I] could go and set up a funeral planning firm, set up a trust, a trust bank account, a limited account and get some brochures – and to a certain extent you are up and running. It’s not that difficult.”
MPs have also raised concern about this lack of oversight. During a reading of the Financial Regulation of Funeral Services Bill last December, SNP minister Neil Gray, said: “A debate is necessary on whether the current system is the best to ensure consumer confidence in what is going to be an ever more important area of the market in coming years.”
To support his concerns he pointed to a report from Citizens Advice Scotland, which found evidence of apparent mis-selling by some funeral plan salespeople.
Some funeral plans cover all associated costs for the funeral, but others cover only basic funeral director costs.