As financial advisers transition with their clients back to relative normality, lessons from the pandemic will influence the discussions held and decisions made for years to come.
One of the prominent areas rising to the fore of both client and adviser interest is how best to cope with the unexpected. For advisers, this may mean raising the topic of protection with clients.
A lack of information and reluctance surrounding the cost of protection can inhibit these discussions. The onus is on advisers to initiate, but in a way that prioritises the benefits while being frank and open about the price tag.
Vikki Jefferies, proposition director at Primis Mortgage Network, admits that these upfront and accessible discussions are not synonymous with the jargon associated with the protection sector.
Protection in the real world
“Putting the cost of protection into context is often a useful way that brokers can illustrate how affordable it is – a fact they might otherwise be unaware of,” Jefferies says.
“The cost of income protection, for example, can start from as little as £10 a month, equivalent to the price of a streaming service like Netflix. By comparing the cost of protection with the price of a product the customer already has, brokers can effectively discuss this point and help clients realise how affordable cover can be.”
She adds that the single most effective way of framing this discussion is to integrate real life examples, explaining to a client how a policy has made an impact on a person or family in their time of need.
“Sharing the stories of willing case studies allows borrowers to better relate to the products and see how cover can mitigate very real risks for them and their families, which can make this a hugely beneficial exercise for advisers,” Jefferies says.
Steve Bryan, director of distribution and marketing at The Exeter, says that protection should become a more prominent discussion in advice businesses, helping mitigate and contextualise the discussion around cost.
“If Covid-19 has taught us anything, it’s that we are all vulnerable to a change in circumstance almost overnight,” Bryan explains.
Research from The Exeter revealed that 70 per cent of the working population consider the pandemic to have made income security a bigger financial priority. Yet substantially fewer have been encouraged to take out an IP policy: only 22 per cent said that Covid-19 prompted them to consider taking out an IP policy.
“There is a clear disconnect between the financial fragility of the nation and customer attitudes towards turning to the insurance industry for protection,” Bryan says.
“Unfortunately, while the pandemic has financially impacted millions across the nation, the reality is that few protect their most valuable asset: an income. Advisers must take the opportunity presented by the pandemic to highlight the importance of IP and the dangers they face without it.”