The need for advisers to have protection conversations with their clients has never been greater.
Products such as life, critical illness and income protection cover have long been fundamental to good financial planning and key to ensuring people safeguard their home, income and family should the unexpected happen.
However, the implementation of the Financial Conduct Authority's consumer duty has been a game changer and placed an even greater emphasis on protecting customers from foreseeable harm.
For advisers this means that protection simply has to be front and centre of every client interaction, raising awareness of the full range of protection offers available and the benefits they offer.
Talking to advisers on this subject, they often tell us that a core stumbling block to achieving this is understanding how they embed protection advice into their business, particularly for those who are new to protection.
At Sesame Bankhall Group, we strongly believe that protection should be part of every conversation an adviser has with their client.
But as part of our protection pledge campaign in 2022 we found that nearly half (48 per cent) of the 424 firms we surveyed said they needed more support on how to advise clients on their protection needs.
This is where signposting advisers to the many sources of valuable industry information and practical support becomes so important and can be critical in helping them overcome some of the challenges they face, namely:
- Customer communication: The need to be able to present and outline the options to customers in plain and easy-to-understand language.
- Making a recommendation: Helping advisers to understand the key factors that are central to making a protection recommendation, most notably product, price, underwriting and service.
- Underwriting: Helping advisers navigate the protection underwriting process and providing useful hints and tips that can potentially speed up the process.
Protection help desks are available from some adviser networks and support services providers for example, offering advisers access to specialists who can give market insight, product information and even practical support with complex cases.
Guides are also available from distributors and providers covering tools and the know-how advisers need to improve their protection conversations and write business more efficiently – along with technology toolkits, which can help with risk reality reports, lead generation and underwriting criteria, and product comparisons.
Work to be done
Despite an increased adviser appetite, it’s clear that there is still much work to be done.
The Gen Re Protection Pulse update for H1 2024 highlighted that while income protection sales were encouragingly up 8 per cent compared to the same period in 2023, both term assurance and critical illness sales had unfortunately decreased year-on year.
We are living in financially challenging times, which has clearly had a detrimental impact on consumers’ affordability.
With mortgage payments increasing by around £500 for over 1mn UK households, is it any surprise that when faced with these types of financial pressures, protection insurance is seen by many people as a nice-to-have rather than an essential product, and not something they actively seek out?
The onus therefore remains on us as an industry to ensure we’re doing all we can, collaborating to help build greater consumer awareness of the vital benefits protection insurance provides clients, as well as giving advisers the structured support that truly embeds protection into their business.
