The financial services industry has never really been good at advertising its wares.
The Association of Investment Trust Companies (now, the Association of Investment Companies) had a bash at it in the late 1990s, but the “its” campaign was truncated (and then binned) after the boardrooms of some trusts thought they were not getting enough bang for their buck.
Individual investment companies also had a field day in the late 1990s promoting investment fund-based Isas as the stock market roared like a Christmas log fire. Yet most sales, based around technology funds, led to detriment as the tech bubble exploded in early 2000 like a water-filled balloon, leaving investors seriously out of pocket.
While the banks prefer to blind us with images such as silky horses in an attempt to convince us they are customer-centric, the financial protection industry does the square root of nothing.
Maybe, it feels its important wares, like household essentials such as Domestos or Dove soap, will sell themselves, but I am not quite sure the world works like that. Most households do not have the financial nous to realise that a panoply of products — the likes of income protection, critical illness and life cover — exist to help them out when serious illness strikes and finances come under pressure.
Damp squid
Nine years ago, a bunch of financial protection product providers did launch the Seven Families Campaign, which attracted great media interest. It was clever and personal as it highlighted the transformative impact of income protection on the lives (and families) of those impacted by life-changing illness.
Yet it was not built on. Although the campaign was revived in 2020, revisiting the seven families featured in the original 2015 version, it was something of a damp squib.
Today, financial protection insurance remains a minority purchase, despite the fact that it should be a foundation stone upon which most families’ finances are built.
The latest data on financial protection sales, assembled by Gen Re, can be interpreted in many ways. The optimists can point to the 2 per cent growth in annual premiums recorded last year. The pessimists can argue that the number of policies sold overall in 2023 fell by 5 per cent to just over 2.1mn, with more than half being straightforward life insurance.
My view is that the financial protection industry can — and should — do better and I am not a lone voice. Last month’s “Critical thinking report”, published by CIExpert, said as much.
It concluded that misconceptions about critical illness are rife, with many people believing the cover is only appropriate for those who have mortgages.
Buyers are also put off by the fact that they mistakenly think a financial adviser will charge them an arm and a leg for arranging cover. Others are unaware of some of the additional benefits that come with the product, such as access to a second medical opinion or health screening.
