Protection is - and should always be - the foundation stone of financial advice.
This was the message Alan Lakey, founder and director of CI Expert, gave to delegates at the inaugural FTAdviser Financial Advice Forum in London yesterday (September 11).
He said: "Those advisers focusing on wealth generation need to consider protection."
He gave several examples of cases where people had been encouraged to prioritise pensions and investments to the detriment of protecting their income.
Mr Lakey pointed out that several of these people and their families were left financially crippled following serious illnesses and death because their advisers had failed to ensure they had adequate life insurance or income protection policies.
"Why are protection policies undersold?" he asked. Mr Lakey gave various reasons, such as a lack of knowledge, advisers claiming they were too busy or the fact some policies can look complicated to explain.
However, he stressed the importance of putting adequate protection into place, stating: "The ombudsman may soon find someone guilty of failing to provide proper advice because they have failed to implement a protection plan.
"Basically, if you place someone into debt by helping them get a mortgage, there is a duty of care to ensure the debt can be repaid on death or ill-health."
Advisers in the room spent some time discussing the point that income protection was the best plan and the most important one, but the problem is that it's often badly designed and IP may not be available to everyone.
For example, for some self-employed people insurers may find IP too complex to underwrite, particularly if they need to review it and reduce premiums in line with their profits.
Mr Lakey agreed and discussed some IP options relating to specific client cases, while stressing the importance of advice and really understanding both the product and the client.
One delegate made the point that presenting protection policies as "financial independence that is in the client's control" is one way of making it appeal more widely to clients, rather than using scare statistics.
Mr Lakey showed statistics which indicated a rise in sales of IP.
"Whether this is down to more advisers recommending it, or the publicity around the Seven Families campaign, I don't know. But I do hope this uptick is not a blip," he said.