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How can protection fit alongside wealth advice?

This article is part of
Guide to innovation in protection

How can protection fit alongside wealth advice?
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Ever since the Retail Distribution Review, investment advisers and wealth managers have predominantly focused on growing investment and retirement assets. But the pandemic has shone a sharp light on why protection really should be at the core of financial planning. 

Paul Shearman, proposition director at The Openwork Partnership, says: “There is little doubt that the volatility of stock markets over the last 12 months has meant wealth advisers have prioritised focusing on supporting their clients’ investment and pensions needs. 

 “The fact that it has also been increasingly difficult to get larger, medically complex cases through underwriting has compounded the issue and led to a move away from protection. 

“Thankfully, the impact of Covid-19 is starting to recede, but awareness of the consequences of illness on the ability of clients to support their lifestyles and save for their retirement can surely never have been greater.”

All of this provides an opportune time for investment advisers to re-engage with protection.  

Shearman adds: “Protection is the bedrock of sound financial planning, so it is every adviser's responsibility - whether they are mortgage or wealth focused - to ensure protection is an integral part of their advice process.”

Ian McKenna, founder of FTRC and Protection Guru, says it is "essential" for all wealth advisers to recognise that most financial plans fail without an ongoing income. 

He says: “You can set up the best investment and retirement planning in the world for a client, but if their income ceases and they cannot afford the contributions, how will that impact their income in retirement?

“After setting up an emergency fund, [protection] should be the next priority but all too often it gets missed from the planning.”


McKenna explains that the challenge of getting more IFAs to provide advice on protection has not been helped by the way many insurer systems are now structured, which directly conflicts with the way most financial planning firms work.

He adds: “Invariably insurers' new business systems do not talk to the practice management systems which most advisers put at the heart of their business, or the cashflow planning systems that are a key part of many advice processes. 

“If an organisation expects the customer, in this case the adviser, to change the way they work to enable them to recommend their product, they should not be surprised if advisers ignore them.

“Equally, insurers fail to provide the information electronically that advisers increasingly want to put into their online client portals and other client reports; this makes it hard for wealth advisers to deliver the level of service on life insurance products that their clients have come to expect.” 

“There are many actions insurers could take to make it easier for wealth advisers to give protection advice, but there are few signs insurers are willing to change. Until they do, we are unlikely to see the protection gap addressed as well as it could be.”