By guest blogger Karen Barrett

Working in financial services most of us are aware of the gaps – protection, retirement, savings and insurance. Gaps that mean for the majority of people they are storing up trouble for the future. Ask most consumers and hardly any would be aware of what it means for them, their life plans and their future. As a recent BBC Panorama documentary illustrated, very few families earning the national average household wage of £40k were making provision for their financial security either now in the form of protection or for the future via long term savings.

Recent research findings of ours showed that UK adults are putting their financial security at risk, with 30% of consumers uninsured in vital areas such as life insurance, income protection, critical illness and mortgage payment protection. Furthermore, a growing number of consumers are now decreasing their insurance policies, with 8% cutting back on important insurance areas in the past 12 months.

The squeeze on consumers is still not beginning to ease as families face the biggest fall in their spending power in more than a year. Consumers’ spending power deteriorated further last month to the lowest level since February 2011, meaning, according to the Lloyds TSB Spending Power Report, each adult has £113 less per year to spend (after inflation) on non-essential items compared to a year earlier.

While there has been and continues to be much debate on this subject within the industry, there is still not enough discussion at a consumer level. It’s a given that the government needs to create a stable environment in which businesses and consumers can plan ahead for the long term. Also, that this needs to be made a priority right now so that other organisations can follow suit. However it seems to me that the tide is now turning and more people realise they need to take responsibility for their own future financial security, so I expect to see engagement with the consumer grow – from government, government agencies, product providers, advisers and consumer bodies. The opportunity for the industry to get this right is up for grabs and I know I’m not the only one passionate about doing right by the consumer.

I struggle to find a parallel in any other industry where advertising and marketing spend is focused on how to get compensation and redress. I believe the FSCS campaign to make people aware of the compensation scheme was not the way to build trust and encourage consumers to take up the mantle of their own financial responsibility. Misselling scandals and negative press have not done much for the cause either.

Marketing financial products to consumers – 30% of consumers are uninsured in vital areas such as life insurance, income protection and critical illness cover

There needs to be a more positive approach across the whole of our industry. Most importantly those working hard to better the industry need to shout loud and clear about their work in the consumer media where we can shape attitudes instead of keeping the debate confined to industry publications and forums. As a marketer working in financial services I know there is much to learn from the way other industries handle challenges such as consumer awareness and reputation management.

Now I feel there is a drive for society as a whole to make things better for people. Companies are increasingly focused on treating their customers better and thinking about the long term, rather than short term gain. In part this is due to many people today having a better awareness of the future, and in part due to the advances of technology which eases consumer access to information. No longer can companies hide less than stellar customer services or less than fair financial products. Consumers are now well practised in turning to the web to find others’ experiences before rewarding companies with their own custom.

At an adviser event I attended last week, every single adviser there was proud of the service they offer to clients and felt passionate about helping them achieve their aims and goals. Feedback from their clients supported this view. Providers who support our marketing and PR campaign to promote advice to consumers have been telling me of various customer focused initiatives within their organisations. Those tasked by government with providing financial education and information to the masses seem to finally be heading in the right direction.

For our part, our soon to launch Value of Advice campaign will look to demonstrate what we believe is the most important issue the advice industry is facing now and will increasingly face post RDR – proving the value of independent financial advice. We’ll be using the media to showcase how consumers benefit from taking financial advice, aiming to bust the myths around paying for advice, talking about the accessibility of quality advice and the advice process.

The support for this consumer facing campaign to date has been impressive with advisers, industry and the consumer media all backing the work we are doing to show how advice can help people feel more confident about their personal finances. We know the media are more than happy to bring this sort of campaign to their audiences and we have already achieved seven wonderfully positive pieces in the national media prior to official launch. I think this demonstrates a willingness to write up the good news stories from our industry.

It’s up to all of us working in the industry to keep this momentum going, and really make a difference through the services and products we provide to the man and woman on the street. If we can all keep the end user front of mind, like so many of the advisers I met last week, I am confident the future will be bright.

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

Over to you: Do you agree with Karen that while consumers are becoming more aware of the need to take responsibility for their own financial security, there is still not enough discussion on the subject, and not enough marketing financial products to consumers at a consumer level? Please leave a comment below.

Sometimes when you see an opportunity you just have to go for it. 

That’s what happened when Jerry Bayman (pictured below), our national corporate sales manager got together with Ian Smart, our head of product development and technical support to point out a gap in the market following new legislation.  Over a few coffees together they found a way for businesses to provide employees with life cover in a tax efficient manner.

Relevant life policies can be used for small businesses that don’t have enough eligible employees to warrant a group life scheme or for high-earning employees who have substantial pension funds and don’t want their death-in-service benefits to form part of their lifetime allowance.

We were the first provider to offer relevant life policies in 2008 and since then they’ve become hugely popular. Relevant life policies can be the door opener into business protection and a way to help you grow your business. 

And here are 5 ways you can use relevant life policies to grow your protection business

• To provide death-in-service benefits to employees and directors of small businesses that don’t have access to registered group life schemes.
• To top-up existing death-in-service cover that high earning clients have within a registered group life scheme.
• To take death-in-service benefits outside of a registered group life scheme, freeing up pensions lifetime allowance.
• To make contact with new business protection clients.
• To develop professional connections in the business protection market.

To find out more, visit The Bright Grey Relevant Life Policy Page

Over to you: Relevant life policies have created genuine opportunites at a time when protection sales are flat. Have you been successful in this area? What other ideas have you got for growing this market. How have your corporate clients reacted to this advice? Please leave a comment or share a link below and let me know.

The Headline Money Awards have been one of the prestigious events in the financial services industry social calendar for ten years. Celebrating PR and journalism, over 800 commentators, writers, financial advisers, PRs, marketers and more converged on the Hilton Park Lane on a blustery May evening. As usual it was a great event.

What was good about HMA this year?

Our guests: Paul Robertson (Editor of Cover) – always fun and full of interesting stories. Tom Selby (Money Marketing) -brimming with excitement over his award. Yuan Phoon (Mortgage Introducer) – the only journalist to turn up in black tie to a lounge suit event. James Andrews (Yahoo! Finance) – always fascinating to hear his insights into what makes readers “click on links”. George Kyriakos (Financial Adviser) – the man with the headlines and Amreek Sachdev (AMG Financial Management) – a financial adviser with a wealth of ideas.

The winners: Great to see Helen Pridham and Natalie Holt walk off stage with more metal for their trophy cabinets. Congratulations to all the other winners.

The Awards Music: Clips from Science Fiction films and TV shows providing a sub-game for the geeks in the room. We got all but two – even Joe 90.

Twitter: People were tweeting throughout. I had a great conversation with someone who I didn’t see in person at all.

Claire Balding: TV sports presenter in control with mic in hand.

But what was the best thing about The Headline Money Awards 2012?

Well done Headline Money and thanks for a great evening.

Over to you: Were you at the Headline Money Awards on Thursday 10 May? What was the best part of the evening for you? Please leave a comment and share your stories.

Ask your female friends what their priorities are in life and those with a family will probably say it’s their children and the need to protect them. And yes this will be demonstrated by the love and attention the children receive. By the safety messages such as don’t speak to strangers, by making sure they know how to cross the road and drumming into them the importance of always wearing a seatbelt in the car. But are mums giving as much thought to their family’s long-term financial security?

More women are in control of the purse strings nowadays and many are the main earners in the household. Yet there are still thousands of women who are reluctant to take out protection insurance. Why is this? Advisers will be used to the excuses – it’s too expensive, I haven’t got time to talk to an IFA, my employer will pay me sick pay. And for many full-time mums they may not see the point if they’re not working. But with the cost of replacing a stay at home parent valued at around £30,000 a year, having some financial protection in place would mean that the family could afford to pay for childcare and for someone to carry out domestic chores. Even those who have experienced a friend or relative suffering from a critical illness can still be reluctant to take out protection.

There is no denying the fact that the subjects of serious illness or death are downright depressing. But the desire for a parent to protect their child should also extend to thoughts about how the family would cope financially if the worst did happen. What kind of an impact would a serious illness have on their life, career and their family? For many people, one of their biggest concerns would be surviving the illness and recovering from it. But it can be difficult to focus on getting better if there are worries about the next bill coming through the door or how new school uniforms and school trips are going to be paid for. When a person is living with a serious illness such as cancer, money worries can be as distressing as the illness itself.

Talk to as many female clients as you can now and help them to get cheaper premiums before the gender directive kicks in

So how do we persuade women that protection insurance is important and ensure they make greater provision for the long term by having a financial safety net in place? Last year, as part of a research project, I sat behind a one way mirror to observe a group of women talking about financial protection. One person pointed out that aside from the salary women will be bringing home, managing household tasks and looking after the children, often extended to the care of elderly parents too. She went on to say that these caring responsibilities could create different financial and emotional pressures. There will be feelings of guilt if the carer is unable to carry out these duties – even if it is due to serious illness – and then a worry as to where the money will come from to pay for additional support.

Another woman in the group, who had suffered a critical illness herself, mentioned the unexpected costs a serious illness could bring. Providers usually talk about how the money from a critical illness payout or income protection policy will help pay for the household bills and the mortgage. But as this particular lady pointed out there is an array of other costs such as medical treatment not available on the NHS, prescriptions or transport costs to and from the hospital.

The gender directive will be in place by December 2012 and will impact on price and underwriting. The cost of insurance for women is likely to rise and with it create a further barrier to buying critical illness cover or income protection. With these issues in mind it is important that we continue to promote protection and focus our marketing activity around the issues that affect women and their families. This is where case studies could really help. Reading emotional stories about someone who has actually claimed and how the payout has benefitted them, will bring home some important messages.

Protection insurance is all about having a financial safety net in place in case the unthinkable happens like long-term illness, long-term injury or an early death. It brings peace of mind and financial independence, knowing there will be no need to rely on family and friends. And talking about protection in terms of lifestyle will make it clear to clients that it’s not just about the mortgage payment. No-one likes to think about the nightmare scenario; but a bit of preparation could help keep the family financially secure whatever happens. And having a chat with as many female clients as you possibly can now, could help them to get cheaper premiums before the gender directive pricing changes kicks in on 21 December.

Originally published in Financial Adviser and FT Adviser

Over to you: What do you think of the Gender Directive? Have you started to target more female clients? Please share your thoughts on your experiences so far by leaving a comment below.

Tools you can use:

Bright Grey  - where you will find a range of sales aids dedicated to attracting female clients

Scottish Provident – where you can find the Gender Directive Price Opportunity Toolkit

I often get asked to speak at local events. A popular topic is giving advisers marketing ideas about how to grow their businesses. One recent invite was from an old colleague who I have probably not seen in over 10 years. I was also delighted to see on the guest list another couple of names I recognised from my very early days in the industry – from the 1990s. It’s very interesting to be asked to go and speak about how we can grow the protection market in the current post recessionary world, and be talking to people with whom I had similar conversations with two decades ago.

When I thought about what I would say to them, I realised that some things have not changed at all.

1) People still do not think that they need protection and even those that do, think of it as a grudge purchase.

2) They think that it is too expensive

3) They believe that insurance companies will try very hard to find a way to decline claims.

On top of that, apart from a surge of critical illness sales in the late 1990s and early 2000s, the protection market has been relatively flat.

However, the way we do business has changed completely. Back when I started, individual telephones were appearing on desks for the first time (and of course HR departments were as worried that people would spend their time making personal calls as they are now worried employees will spend their time on Facebook). There were no individual PCs, no internet and no mobile phones. We had to fax hand calculated and typed quotations (from rate books) to advisers. Sales consultants travelled the country with sacks full of 2p pieces with which to phone the office from public call boxes. We advertised in the trade press but unless you were in London you didn’t get your copy of the trade papers until the following week.
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I believe that protection insurance and content marketing and social media offer us great opportunities

Now we have information overload on the internet. Communication by mobile, skype, iMessage, Facetime and video conference. We can get quotations instantaneously. There are more channels for marketing communications across hundreds of TV stations, social media, electronic bill boards and ads within apps. All of this has happened in less than 20 years. As a marketing person it has been fascinating to see these new methods of communication develop. And I believe that social media and inbound (or content) marketing offer us great opportunities, though we are still in an experimental stage.

However, despite technological developments,  that were beyond the dreams of most science fiction writers when I started in the industry such a short space of time ago, the three basic reasons why people don’t buy protection are still the same now as they were back then.

Ultimately I think that the key to growing the protection market then and now is simply to talk to more people who are not our customers. We need to talk to them, preferably face to face (but maybe facetime to facetime), in order to overcome the same objections we have always received about protection. With all the wonderful technology at our finger tips it is very easy to set up a very powerful content based website.

How does it work? Well it differs from the way we usually “interrupt” people with mailshots, phone calls or adverts. We ensure that when potential customers come looking for information – it is our content that they find when they search.

Let’s think about how people actually use the internet to access information and how they might find you. Say for example someone was looking to buy the best barbeque chicken in Liverpool. They are not going to type ‘chicken’ into Google. They would get billions of results. They won’t type ‘barbeque chicken’ either because it would still create too many results. ‘Best barbeque chicken’ – still not good – if the best is in New York. ‘Best barbeque chicken in Liverpool’ might narrow it down to a few local outlets. Now substitute ‘chicken’ with ‘life cover’.

In this new world we need to be there when people come looking. Making sure that all links lead to you is one of the key ways of getting to see more people face to face.

Over to you: Do you think technology can help us to grow the protection market? Are you interested in finding out  more about protection insurance and content marketing? Please leave a comment below.

If you enjoyed this blog you might also like these:

• What is the Next Level of your Business Development?
• A hole load of sales ideas.
• The gender directive price opportunity.
   

By guest blogger Jeff Salway

Protection insurance was my specialist patch when I began my journalism career at trade paper Financial Adviser – and, frankly, I knew virtually nothing about it. A small number of industry contacts sought to exploit that ignorance in search of coverage in the paper, but most took the opportunity to talk about protection with someone who could still see it from the perspective of the man on the street.

That perspective was one of vague familiarity with protection – and research suggests consumer awareness of IP and CI is higher than you might expect – but little understanding of how it might relate to me. Nine years later that’s no longer the case for me, but what hasn’t changed is that gap in the public perception. It’s talked about as an awareness gap, but the issue is more about understanding, in terms of what protection is, what it does and where it fits into household finances.

Even now, as households anxious about jobs, wages, benefit cuts and the rising cost of living seek to strengthen their financial safety net by paying down debts, reducing borrowing and saving more, there’s little evidence of more people turning to protection insurance. The industry has sought to redress the balance, working on new ways of promoting protection, improving consumer understanding of it and developing products to make them more suitable and relevant. Perhaps the biggest single example of progress in recent years has been the improved transparency over claims.

The same difficult challenges remain, namely bridging the gap between consumer desire for financial security and demand for protection insurance

It’s not that long since I was covering the debate over critical illness and life insurance claims statistics, with many in the industry unconvinced of the merits of publishing the proportion they rejected. After much opposition a number of insurers relented in 2005 and have since used their critical illness claims figures effectively in countering negative coverage of the product. But that’s a rare example of positive change. Otherwise the same difficult challenges remain, namely bridging the gap between consumer desire for financial security and demand for protection insurance.

Perhaps that’s ready to change, especially where income protection is concerned. In the wake of the financial crisis there is some evidence of a shift in attitudes towards individual and household finances, albeit only slowly. There’s a greater willingness to look at household finances in the round, reflected to some extent in reduced borrowing and increased debt repayments. That has been driven partly by tighter lending conditions, but the result is the same – the gradual demise of the never-never culture.

But how do protection insurance providers take advantage? That the “fear factor” approach doesn’t work has been proven. Scaring people into buying protection by hammering home the potential financial consequences of not having it is often counter-productive. People largely buy products and services for aspirational reasons, even in financial services. (That’s one reason why massive sales of payment protection insurance by high street banks carried a strong whiff of suspicion that should have aroused the authorities far earlier than it did.)

When asked what they consider essential expenditure, most people point to broadband, their car, their mobile phone and other tangible, day-to-day, aspirational items. They are far less likely, understandably, to see as essential the protection of the very income that enables them to have those things. That reality may prompt wailing and gnashing of teeth in areas of the industry, but it’s natural.

So how do you get people interested in protection? Maybe you focus on those positives – how it means you can afford to keep your car, your phone and your broadband access, even in times of financial hardship. For many families those items are essential in helping them work, functioning on a day-by-day basis and enabling their children to thrive in school. We all know that protection can provide an invaluable safety net, but can it be pitched as an aspirational product without losing its value? With simpler products and more effective use of online channels, I believe it can.

Over to you: Do you agree with Jeff’s views? Do you think protection insurance can ever be seen as an aspirational purchase? Please leave a comment below and let me know your thoughts.

Other guest blogs:

Tony Langham: Why has finanical services gone so badly wrong?

John Lappin: Are we assuming too much about protection advice?

Jeff Prestridge: Why we need a protection awareness day

Edmund Tirbutt: Is it time for GRiD to spread its wings into Individual Protection?

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

Last year with the help of Duncan Bannatyne we launched The Next Level as part of our drive to make your business even more successful. Duncan gave some straight talking insights into how he generated new ideas, growth and profit from changes in market legislation.

And now it’s your turn. The EU Gender Directive is one such opportunity and we have the tools to help you grab it.

Have a look at this short video which describes the gender directive opportunity and the toolkit we have put together to help you make the most of it.

You can find the full Gender Directive Price Opportunity Toolkit here.

Over to You: Please use the comments section below to let me know what you think of the Gender Directive Opportunity and the marketing materials the Scottish Provident marketing team have put together for you.

Click here for more Sales and Marketing Blogs:

A Hole Load of Sales Ideas

What business tips did Advisers learn from Duncan Bannatyne?

Protection price lessons we can learn from Retail Sales

As there are so many nice people in financial services, why has it all gone so badly wrong?

Last week I was lucky, even privileged, to attend two of the warmest and fondest ‘retirement’ send-offs I can remember. On Wednesday, the industry said goodbye to Money Management’s Editor for the last 25 years Janet Walford OBE who “encapsulates what FT journalism is about” including a fulsome and heartfelt tribute by the Mail on Sunday’s Jeff Prestridge.

On Thursday, high in HSBC’s Canary Wharf offices, all three previous Chairmen – Daniel Godfrey, Ron Sandler and Otto Thoresen – paid tribute to Wendy van den Hende, the Personal Finance Education Group’s first Chief Executive. Moneysavingexpert’s Martin Lewis, the closest we have to a personal finance celebrity, was beamed in to endorse Wendy’s contribution to financial education in schools.

Janet and Wendy symbolize everything that makes the financial services world so enjoyable to work in. The words collected by colleagues for Wendy said it all – great leader, inspirational, passionate, respected, straight to the point etc. Both rooms were full of warm feelings and great people, and I was once again left wondering why, as there are so many nice people in financial services, has it all gone so badly wrong?

Well first of all has it? In my view yes, the level of trust between the public and the industry has never been lower. We have a savings gap, a protection gap and an advice gap – and little sign of improvement in any of them. Too few people have adequate insurance and protection, many people haven’t saved enough for retirement or a rainy day and access to face to face financial advice is set to decline even further.

There are serious obstacles to overcome to change any of this. Banking can never regain trust while the charade of “free banking” exists. The asset management industry can’t keep increasing charges while interest rates remain low. We can’t persist with a regime that thinks simple products are automatically less risky than complex ones – or worse still, that simplified products are in some way a substitute for financial advice. Beneath all of this, though, lie two systemic problems.

The savings, advice and the protection gap are real. The problem is not what the current regulator does as much as what it doesn’t do.

On the industry side we have to align ourselves with our customers. Too many financial services businesses claim to be “customer centric” and built to serve their customers when they aren’t. Shareholders, profits and bonuses are all too often the only things prioritised. Our industry will only really succeed when a sense of shared value exists, when companies, employees, shareholders and customers benefit together. “We make money when you make money” should be the cornerstone of our industry. Nationwide’s new advertising slogan “on your side” should not be something confined to the mutual sector.

However if the industry needs to change, so does the current myopic political and regulatory structure. The structure is almost solely geared to preventing people from taking the wrong decisions and not protecting them from the risks of taking no decisions at all. As a result a shrinking advice sector is shrunk further while a whole generation will reach retirement short of money. The savings, advice and protection gaps are real. The problem is not what the current regulator does as much as what it doesn’t do. The political and regulatory structure should be charged with continually answering two further questions:

“Are Britons saving enough during their working lives to give them a satisfactory retirement?”
“Are Britons taking adequate steps to protect themselves and their families from the known risks of life?”

Government, society and the Treasury Select Committee should be able to quiz the regulatory structure about the demand side as well as the supply side.

Hopefully the industry would then change its priorities as society sets it the right goals. And then future Janet Walfords and Wendy van den Hendes will work in a sector that is not only full of nice people, but is respected for doing a good job for the British people.

Over to you: Do you agree with Tony’s views? What should the industry be doing to focus the Government’s attention in the right places? Please leave a comment below and let me know your thoughts.

Click for more guest blogs:

Jeff Prestridge: Why we need an annual ‘protection awareness day

Edmund Tirbutt: Is it time for GRiD to spread its wings into Individual Protection?

John Lappin: Are we assuming too many things about protection advice?

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

Tune into Question Time and you’ll be met with a bunch of politicians all shouting to get their voices heard. All believing what they have to say far outweighs that of their rivals and never actually answering the questions asked. It is a debate which extends not just to the studio audience but to an online audience too. David Dimbleby recently declared that Question Time was bigger than the X-Factor on Twitter (#bbcqt). And he might be right. One programme alone generated 3,000 tweets.

The online debate might not be quite as highbrow as some of the arguments going on in the studio but they are certainly more entertaining. From ‘Dimbleby is wearing an amazing tie’ to ‘sighting of audience member wearing tweed jacket and bow tie combo’, it’s as much fun tuning into Twitter as it is watching those in the studio try and get their point across.

But while the politicians are arguing their corner and the tweeters are tweeting their opinions, the protection industry has also been doing a fair bit of debating. From the gender directive to RDR, SARs and simple products, those in the industry have had an opportunity to have their say. And it’s happening online too. Forums, social networking sites and financial websites all offer a platform for voices to be heard and have encouraged more people to join in the insurance debate.

The decision by some providers to start using SARs (subject access requests) as opposed to GP reports when collecting client’s medical data, has triggered some polarised views. Is this seemingly less costly option the way forward or a step too far? While the current practice of requesting medical GP reports can sometimes seem costly, I for one feel that the insurance industry should take all the options into account and work together before embarking on a new way of working. The last thing we want to do is to alienate the very people who we are relying on to provide a service for us.

Forums, social networking sites and financial websites all offer a platform for voices to be heard in the insurance debate

There is also a danger that requesting medical information in this way could create confusion and leave clients caught between insurers and doctors. This is because GPs must send the records to patients before they then send on the data to the insurer. However, that is just my opinion and others have theirs. But whatever the outcome hopefully we can find a solution that will appeal to us all – GPs, insurers and consumers.

The simple products steering group which is now up and running has so far met with mixed opinions. The group, made up of Government representatives, industry and consumer bodies and chaired by Carol Sargeant has been branded as ‘a waste of time’ in some circles. The aim of the group is to consider where suitable products already exist, how new products can be developed and how they should be branded and approved. The group is expected to report back by July this year on how to bring simple products to the market and how they are promoted in order to ensure consumers take advantage of them.

The debate around designing simple products has been raging on for years. We all want a product that provides consumers with confidence, that meets their basic needs and is value for money. But once they have purchased the simple product will that act as a feeder to more profitable, complex products? Or do you ironically create something quite complex by trying to simplify it?

And then we come to distribution and the impact of RDR. I have been asked many times how I think the protection industry will change post RDR. My feelings are that there will be an increase in protection business written by advisers, which might be balanced out by a reduction in the number of advisers over all. Others may disagree.

There are other issues of course such as marketing and raising consumer awareness and a question was recently asked about whether protection products should be mandatory. The list goes on. And so we will continue to debate and get our opinions aired. Not everyone will agree on the same subject. And wouldn’t life be boring if that was the case. We might all have our own views on SARs, on simple products, RDR and how the gender directive will affect protection sales, but ultimately those working in the protection industry all have one goal – to make sure people are financially prepared for the future.

So we will keep designing products that meet consumers’ needs and that advisers are happy and comfortable in selling. And we will also keep the debate around protection going, by discussing the options for reforming the product and the market in a bid to increase coverage and sales. If we don’t where will our ideas, innovation and inspiration come from in our aim to get the UK population insured?

Originally published in Financial Adviser and on FT Adviser

Over to you: Where do you see the debate around protection insurance going? Is an online debate the way forward? Please leave a comment below.

By guest blogger Jeff Prestridge

HOW are we going to close the yawning £2.6 billion protection insurance gap? It isn’t going to be easy.

Household budgets are under attack like never before as a result of tax hikes, benefit cuts, rising energy bills, widespread pay freezes and a dire economic backdrop. And that’s before we factor in any household ‘nasties’ that come out of the Chancellor of the Exchequer’s Budget later this month.

Such horrendous pressure on household finances is hardly an ideal base from which to promote the benefits of protection insurance. Indeed, it’s a backdrop for some people to cancel insurance – simply to keep financially afloat. And of course, we mustn’t forget the damage done to the protection insurance ‘cause’ by the rampant misselling of payment protection insurance, a blot on the protection insurance landscape that will not go away quietly.

Yet promote we must. We live in an age where the State is no longer prepared to step in and help with an open chequebook those people who suffer from long term illness. Many employers are also hauling back the assistance they are prepared to offer workers who are forced to take time off to recover from long term illness.

How do we do it? Do providers advertise their wares? Well, one big insurer did that recently (think Downton Abbey) and I’m not sure it was a resounding success. It was a brave move but people aren’t really in the mood to think about the virtues of protection insurance on a Sunday night. They want to watch good drama ahead of another long hard week at work.

An industry supported protection insurance advertising campaign has also been muted but it has never quite managed to get off the ground because of inter-company bickering. It’s also an easy way to spend a lot of money very quickly without results (remember the investment trust industry’s ‘Its’ campaign of the late 1990s which was a spectacular failure, not helped by the splits scandal that engulfed it mid-stream).

An alternative approach that is slowly beginning to get industry backing is for an annual ‘protection awareness day’ – a day where the nation’s mind, the protection insurance industry’s mind and the minds of protection insurance advisers are all focused on the virtues of protection insurance.

The focus for this ‘protection awareness day’ would be an annual benefit statement sent by protection insurers to policyholders. This would detail what cover they have – critical illness, income replacement or life – and how much of it. The idea is that it would help concentrate people’s minds on whether they have sufficient cover. The statements would be standard across providers and encourage recipients to talk to a protection adviser/specialist.

The early reaction to an annual protection awareness day suggests it has more supporters than critics

It seems like a good idea. From personal experience, since I took out my critical illness cover in the 1990s, I’ve never once heard from my provider. I’ve never once received a mailing asking whether I want to reassess the amount of cover or consider other products. I’ve almost felt unloved.

I know there are issues over insurers poaching the clients of advisers but I can’t see the harm caused by a letter from a protection insurance provider asking whether I want to speak to an adviser about the breadth and appropriateness of my cover.

Judging by the early reaction of protection experts to an annual ‘protection awareness day’ it has more supporters than critics. ‘It’s a brilliant idea’ (Peter Chadborn, Plan Money). ‘Anything that raises the profile of such a vital subject deserves to be supported by all within the industry’ (Roy McLoughlin, Master Adviser).

Of course, annual protection awareness day and the production of an annual benefit statement don’t address the problem of the millions of people who have yet to obtain any form of protection. None of these non-converts will get an annual benefit statement and a call to arms. These people also need to be encouraged to think protection insurance.

But we’d all be better off – and better protected – if annual protection awareness day gets off the ground. It deserves everyone’s support.

Over to you: Do you agree with Jeff’s views? Do you think that an annual protection awareness day will encourage consumers to think about their protection needs? Please leave a comment below and let me know your thoughts.

Click for more guest blogs:

Edmund Tirbutt: Is it time for GRiD to spread its wings into Individual Protection?

John Lappin: Are we assuming too many things about protection advice?

Tony Langham: Why has financial services gone so badly wrong?

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

To celebrate its 50th anniversary, Money Management magazine is running a series of interviews with people in the industry. We were all asked the same questions each of which refers to the number 50. I decided to have a bit of fun with the answers and not take it too seriously.

What was your first ever investment? £100 shares in Arena Leisure. I got a tip off from a friend. I’ve still got the share certificate and have been paid between 60p and £2.20 in dividends for the past 10 years. I’ve no idea how much they are worth now.

What’s the most significant non-financial event in the past 50 years? Live Aid. It brought together all sorts of people, it didn’t matter what country, religion or political party you belonged to, everyone got so excited by the music. It transcended divisions and prejudices.

Where were you when Lehman’s collapsed? Probably in an airport departure lounge.

If you were the governor of the Bank of England for a day, what would you do? Introduce advertising and sponsorship opportunities onto the back of bank notes.

If I had one piece of advice for the industry 50 years ago it would be… Ride the crest of the wave of technological advancement – don’t try swimming desperately behind it.

How much do you think a house will cost in 50 years? £100,000 for a single room cube with holographic walls.

If I was not in financial services I would be… A writer, Yoga teacher and blogger.

I predict interest rates will move on… 6 September 2013.

If I could put £50,000 into an investment now and only take it out in 50 years, I would put it… Hydrogen fuel engines. One day oil will run out and we need to think about the alternatives.

My worst investment was… Sending a huge Valentine’s bunch of flowers to a girl at school only to find she was emigrating to New Zealand at the end of that week.

If money were no object, I would celebrate Money Management’s 50th by… Holding a posh slap up do anywhere OTHER than The Grosvenor House Hotel, Park Lane.

What’s the best thing about the industry? Despite fierce competition – there is a camaraderie.

Who has had the most impact on the industry over the past 50 years? No one person deserves credit for all the successes and no one person deserves the wrap for its mistakes.

Published on FT Adviser

Over to you: Do you agree with me about Live Aid? Which one question would you have answered differently? Please leave a comment and let me know.

By guest blogger John Lappin

Informed guessing has always been a bit of a tricky exercise for the advice market. For example, once upon a time, it was widely assumed that a huge number of IFAs would become multi-tied, following depolarisation. They didn’t or not many anyway.

If you were to read any of my columns from a few months ago, you would find me assuming that the tide had turned in favour of restricted advice though I wasn’t necessarily happy about it. I based that on the fact that in five conversations in a row with five very different types of IFAs, they said they were going to restrict, admittedly with varying degrees of enthusiasm.

Then a recent survey said that the vast majority of advisers planned to try and stick to independence contradicting my bold assumptions.

The lesson, as I should know by now, is ‘never assume’. That doesn’t mean we shouldn’t at least try and map out what may happen to the market. It is particularly interesting to try and do this for the protection advice market. Oddly this is partly because it is the bit of the market that is, in theory, untouched by the big regulatory changes – the RDR and the MMR.

But is there a danger that we also assume too many things about protection advice? There are at least two headline assumptions for protection advice and they are as follows – that many IFAs will try and sell more protection post 2012 if, for no other reason, than it will help with cash flow. And IFAs who don’t make the RDR grade will move into protection or more likely protection and mortgages.

Now, I don’t think I actually disagree with these assumptions but I can see some pretty fundamental challenges for both groups.

Dealing with IFAs selling more protection first, I must confess it makes me wince a little. Yes there are business challenges, but there also needs to be an advice need. In other words, the business has to be compliant and the advice appropriate. Certainly there are the usual re-broking hazards, though a lot of the heat is likely to be taken out of the issue because premiums are very likely to rise around the time of the RDR start date.

My concerns about what you might call ‘overselling’ are addressed up to a point by the strong possibility that protection has actually been undersold by wealth managers. It may even be possible that advice businesses will neglect protection as they move to their new adviser charging regimes. Their business brain power may be used up making sure their wrap is right and their client agreements compliant. Is it possible then that for this group the RDR effect is neutral? Some will advise on more protection, some less. If there is one thing I would say to this group, it is that the RDR in its ethos is meant to be about making the advice client centric. Advisers should be aiming to construct a system that encourages clients to protect their income and their health as well as build and protect their wealth. Only the very wealthy don’t need the insurance (and I bet many of them need business protection insurance anyway).

Is it possible that many smaller advisers take ‘shelter’ in mortgage and protection advice?

In other words, look after the client and the business should look after itself. It probably helps the cash flow too. However, thinking of protection providers and broker consultants, perhaps they need to be out there making this case i.e. optimise your advice, not optimise your commission.

Now let’s look at the second group, those that will offer mortgages and protection or maybe just protection. I have a few concerns here too. For example, an adviser who is currently an IFA may be geared up for mortgages and protection advice, but also does some 10 to 15 per cent on the other types of business. Will these advisers have considered exactly how to make up for the lost income?

Perhaps focusing their time on what they do best will also boost their income and their sales. But initially this looks like a fall in income to me. In addition, a significant amount of income may be taken on an indemnity basis. This concentration of income streams must clearly carry some risk to the ultimate viability of these businesses.

In addition, have these advisers constructed a referral deal with someone who does still advise on investment and pension business? Is the contract word of mouth or something more formal and does it include their legacy clients?

Is it possible that many smaller advisers take ‘shelter’ in mortgage and protection advice, while they try and get through their final exams? They can’t, in pure regulatory terms, hold on to these clients.  Do you think the wealth manager up the road only wants to borrow them for a while and will give them back?

Finally, just how much will the mortgage market changes stymie protection advice and therefore throw out all these other calculations? The key issue being, what share of the client’s precious time can be devoted to protection advice, given the length of time you will be expected to spend on the mortgage, because that also requires quite a bit of thought too.

But whatever the repercussions, medium term protection sales from this group may depend on how robust the new business models are.

Okay. Now I am a journalist not an adviser. Maybe I am worrying away at things that are simply not really big issues and if so, please let me know. But it strikes me that advisers need robust strategies and business plans that take protection into account whatever their future regulatory status. And maybe providers need to consider ways in which they can help them do that too.

The Money Debate

Over to you: Do you agree with John’s views? Do you think that after RDR advisers will give more protection advice? Please leave a comment below and let me know your thoughts.

Click for more guest blogs:

Jeff Prestridge: Why we need an annual ‘protection awareness day

Edmund Tirbutt: Is it time for GRiD to spread its wings into Individual Protection?

Tony Langham: Why has financial services gone so badly wrong?

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

I know economic conditions are tough and people are strapped for cash. They have huge credit card debts and are spending more than they earn each month. Some are looking at ‘payday loans’. Others are cutting back, not just on luxuries but on necessities. So it must be nigh on impossible to persuade our clients to buy protection. They think protection insurance is expensive don’t they?

Well that’s what people continue to believe. And this is despite the fact that protection premiums have been reducing for over a decade and now offer some of the best deals in history.

I recently sat watching a focus group from behind a one way mirror and once again heard the excuse that protection is too expensive. I asked the moderator (he had an ear piece linked through to me) to point out that people could get up to £200,000 of life cover for a tenner well into their forties. Was that really too expensive? Yes, apparently it was. I rolled my eyes at this point.

“Protection premiums have been reducing for over a decade and now offer some of the best deals in history but people still think protection insurance is expensive.”

However difficult things get, finding a tenner is not that difficult. It’s a medium latte rather than a large latte every day. It’s putting all your loose change in a tin and using one of those machines at ASDA to turn it into ‘real’ money.

Some banks routinely charge a tenner for running a current account. Easy Jet has just introduced a £9 admin fee on flight bookings. I was horrified to be charged nearly a tenner to park in a city centre car park yesterday when visiting the cinema.

Put that into perspective. For ten pounds I parked my car for 3 hours. For the same amount I can buy two hundred thousand pounds of life insurance. Yes I know that’s a monthly premium but I go to the cinema at least once a month.

At the end of 2012 a series of legislative changes will potentially increase the cost of protection insurance.  Given how cheap things have got this shouldn’t be an issue but the general perception that things are already expensive might just be given a boost.

So let’s make a concerted effort to finally lay this excuse to rest. A tenner buys a shed load of protection. If our clients are happy to turn a blind eye to bank account charges, airline admin fees and rip off car park charges, let’s ensure they don’t turn a blind eye to the remarkable value for money that protection continues to offer.

Pubished on my introducer

Over to you: What have your most recent protection clients felt is too much or to little to pay for financial piece of mind? Please leave a comment below.

Click here for more Sales and Marketing Blogs:

A Hole Load of Sales Ideas

What business tips did Advisers learn from Duncan Bannatyne?

Protection price lessons we can learn from Retail Sales

By guest blogger Edmund Tirbutt

The individual protection field is like a rudderless ship which is sailing horribly close to the rocks, and is woefully lacking in any meaningful industry-wide leadership. In my view it would strongly benefit from Group Risk Development (GRiD), the industry body representing the group risk community, expanding its remit to include the individual protection side of the business.

During the past couple of years GRiD has demonstrated a markedly improved ability both to lobby government and to effectively liaise with its own members, and there is no comparable body on the individual protection side. Whilst there are organisations such as The Protection Review and the Income Protection Task Force, it seems clear to me that these exist primarily to further the commercial interests of the individuals behind them. It is hard to see that they really have the interests of the individual protection field as a whole at their heart.

The thing that has really struck me about the movers and shakers at GRiD is that they are motivated primarily by a desire to secure progress for the group risk field as a whole and seem entirely devoid of the type of destructive egos that are so much in evidence in the individual protection arena.

“I do not envisage the individual protection field making significant progress until it can find some worthwhile leadership”

Most of the personalities who worked tirelessly to secure the Default Retirement Age exemption for group risk, for example, seemed intent in remaining anonymous. The individual protection field, on the other hand, is full of consultants instigating largely pointless initiatives just to publicise themselves. Do these same consultants input into government consultation papers in the way that they would probably like us to think they are doing? Sadly, my sources suggest they don’t.

I do not envisage the individual protection field making significant progress until it can find some worthwhile leadership,  and this is never going to come from the sorts of individuals who are currently so intent on hogging the limelight. Editors are always happy to publish their turgid columns because they don’t have to pay them – like they would have to a journalist. But they rarely say anything of interest. Is it therefore surprising that the field fails to expand? If we are to engage IFAs and the public we are going to have to do better than continually recycle the same old tired messages in this way.

It is ironic that some of these self-publicists frequently refer to a “lack of passion” in the industry when they seem almost totally devoid of passion themselves. Indeed, they have actually succeeded in driving individuals who do feel passionate about these subjects away.

On the group risk side of the business we simply don’t have these problems.

Over to you:  Do you agree with Edmund’s view that the individual protection market lacks leadership or is he way off the mark? Who should step up to the plate and what should they do?  Please leave a comment and let me know.

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

Packed shops in the January sales prove that people still love a bargain despite the supposed age of austerity that we are living through at the moment. I always find it amazing that after weeks of spending in the run up to Christmas, many people allow themselves just one day off, before heading back out onto the streets to find even more bargains.

The relentless marketing machine of the retail industry fuels this spending spree with its promise of double discounts and ‘everything must go by Friday’ when of course we all know that the next sale will start on the Saturday morning. The desire for a bargain promotes behaviour that could appear irrational from some viewpoints. The double discount trick tells the consumer that the cost price of the sofa is £1000. The first discount reduces the price to £600 and the second, the double discount, reduces it to £400. The customer is told that they are saving £600. They will buy the sofa and boast to their friends and family that they saved £600. But of course they haven’t saved £600 at all. They have just spent £400. And that is the big trick of the January sales.

“So what can we in the protection industry learn from the spending habits and the trends in the retail sector?”

I have lost track of the number of times I have been quoted by journalists or have written articles over the last five years that state that the price of life assurance is at its lowest ever. Every time I say it I expect that sooner or later the price will stabilise but it hasn’t yet. People well into their 40s can get over £100,000 of life assurance for only £10 a month. That is a truly remarkable bargain. But unfortunately the consumer does not see this. Despite the plummeting price of life cover demand has never increased. The rock bottom price, our own equivalent of double discounting or other such financial seduction marketing, hasn’t altered that fact that the product needs to be ‘sold’. It hasn’t transformed it from a grudge purchase to an aspirational one.

So if we have to continue to sell we need to tap into this obsession the public have with price. However, we do need to be careful that the price message does not become so powerful that we send our protection customers off to the internet to log into price comparison websites.  While people can find some very good deals, advisers can align the price message with the true added value features in the products that they recommend. Life polices with extra services such as counselling or access to medical specialists is often not available on the internet and these features can justify a few extra pence a month. The adviser’s message could be that although prices are lower than ever before, I have the expertise to deliver even more.

Of course thanks to the Gender Directive and new rules for life company taxation we might see some price rises in 2013 so this year may really be the last year of falling protection rates.

“We need to tap into this obsession the public have with price”

Another feature of the retail culture is an increasingly convenient way to shop. You can buy most goods online and have them delivered straight to your home. Although setting the delivery time can sometimes mean the inconvenience of waiting for a specified two or three hour window, most deliveries can be set up quite easily online or in store with a few mouse clicks.

Online applications for protection products are also making things easier for advisers and their clients. They can ensure that all the correct information is in place before submission. When linked to online underwriting services advisers can even schedule telephone underwriting calls or arrange for a convenient time for a medical examination. Of course as a result of almost a decade of intense price competition, there are now many questions on an application form so that a precise underwriting decision can be made. Usually, however, the online experience feels better than wading through 32 pages of paper.

Finally in the retail sector more than ever before there are ‘unbranded’ versions of products available as an entry level product. Indeed in the recession the advice of the money experts was to ‘down-brand’ in order to save some money. Protection products, especially critical illness and income protection, have become increasingly complex as companies have sought advantages over their competitors. Advisers like the complexity as well because it reinforces the need for advice. But we may have gone a little too far. Perhaps there is a place for a simplified range of products to sit alongside their more complex relations.

The Government has kicked off a consultation about the need for some simpler products. These types of discussions always seem to imply that these products are needed outside the advice space. The assumption seems to be that simpler products would sit better in the direct to consumer, non-advised or bancassurance markets.

I do believe that there is a need for some simpler protection products which are not only very competitively priced but also allow ease of purchase online with the minimum of fuss. I see no reason at all why these shouldn’t be part of the advisers repertoire, allowing them to choose a more complex feature rich product for those that want it, and a cheaper vanilla product for those that want simplicity and convenience.

Over to you: How important is protection price in your discussions with clients? Do we need to develop a “simpler” product set as the Government seems to think? Please leave a comment and let me know.

Published in Professional Adviser 

Click here for more Sales and Marketing Blogs:

A Hole Load of Sales Ideas

What business tips did Advisers learn from Duncan Bannatyne?

At the start of a new year it is always tempting to write the ‘financial resolutions article’. They start by saying that after the Christmas break, having eaten and drunk to excess, it’s now time to get fit, join a gym and eat healthy food. It then goes on to suggest that if you are making fitness resolutions you should make financial ones as well, suggesting you cut out unnecessary expenses and luxuries, and ensure that you get your finances in order.

This year however, things are different. Many people are strapped for cash and are already scrutinising their incoming and outgoing money. In fact they started their financial detox so long ago, they can’t even remember when. So with difficult economic conditions ahead, what’s the best solution?

Instant financial safety nets
On TV I see adverts for ‘pay day’ loans, or for companies offering unsecured loans that must be repaid within 12 months. The popularity of these services is madness as many simply take on these loans to take advantage of the January sales rather than for a genuine emergency. It is clear that for many people it is too late to consider changes to spending patterns.

Instead of being worried however, there seems to be a ‘live for the moment’ attitude taking a grip. I heard one of my friends moaning the other day about having a credit card debt of over £6000. And yet I saw him return from town several days later with another arm full of consumer goods. I joked about the debt and he shrugged it off. “I’m just going to enjoy myself and worry about it later,” was his response.

But let’s be realistic. Whether you are living for the moment and racking up more debt, or if you are worried about making ends meet, it is still relatively easy to free up £10 over the course of the month. In fact I’d go as far as to say it should be essential. Ten pounds is all it takes to put in place some financial protection.

Peace of mind strategy
If the monthly credit card bill is making a louder noise when it hits the door mat then ‘live for today and put in place as much of a financial safety net as you can for the future’ has to make sense.

For those for whom the usual annual ‘financial resolutions article’ is still relevant, maybe there is not as much to cut back on, but again it only needs a small monthly investment to put in place a financial safety net for the future.

Here’s my 5 point plan for a successful financial year in 2012

1. Look at your situation
As you reach different life stages, like becoming a home-owner, having children or changing your job, your emergency plan needs to change too. Look at your current lifestyle and what you think it’ll look like in the near future and make sure you have plans in place to protect everything that’s important to you.

2. Speak to an independent financial adviser to weigh up your insurance options
Knowing which insurance products are best for you and your family can be confusing. Why not speak to an independent financial adviser who can talk to you about life cover, critical illness cover and income protection and see which options are best for you?

3. Pay off large credit card debts
Credit cards might seem like an instant safety net to fall back on, but they’ll probably only add to your worries in an emergency situation. Credit card debt will continue to grow if you’re unable to pay the monthly bills.

4. Start saving
Put as much money as you can afford to save into a separate account that you can fall back on if you need to. Make sure you use an easy access account, so you can dip into it quickly in an emergency.

5. Tell someone you trust your emergency plan of action
Tell someone close to you about your emergency savings and how to access them, as well as details about any insurance plans you have. This’ll make things a lot easier for them to put your emergency plan in place if you can’t do it yourself.

Check back here for more Financial Safetynet information from Bright Grey

Happy New Year and thank you for reading Uncovered UK during 2011.

Scottish Provident’s Next Level Tour marketing campaign, starring Duncan Bannatyne was one of the most exciting projects I have been involved in. Over 800 advisers attended the 4 events and of those that filled in the post event survey, 95% rated the sessions as either “Excellent” or “Very Good”.

Bannatyne obviously couldn’t tell advisers how to give advice, that clearly wasn’t the point of the roadshow. But his insights into marketing, communications and business development obviously struck a chord with the audience. Here are some of the messages I came away with.

1) Market your business within the local community.

This is not just about advertising in local newspapers, it’s developing PR relationships with those newspapers. Getting onto local radio. Sponsoring events in local schools and clubs. And above all embracing social media to create a network of links across Twitter, Facebook and Linkedin to draw visitors to your website.

Just getting ready to speak at the Scottish Provident event at Intercontinental Hotel

— Duncan Bannatyne (@DuncanBannatyne) November 28, 2011

2) Seeking business development opportunities from legislative changes.

When Margaret Thatcher changed legislation for the care of the elderly in the 1980s, Bannatyne cashed in on this opportunity by developing a chain of care homes. In 2012 we will see more legislative changes in financial services than we have ever done before. RDR of course with its radical change to the way advice is given and paid for. The gender directive, changes to life company taxation (I-E), and Solvency II will put upward pressure on the price of protection products.

On the whole the media tend to focus on the negatives of these changes. But what are the opportunities? Perhaps gender neutral pricing will make us look for other ways to create value based upon different factors. And the price increase, after a decade of falling prices, is not going to make the products any less or more affordable than they are now. The key problem will still be overcoming people’s objection to buying protection – and that’s a communication problem not one of affordability.

3) Relentlessly network for new ideas and opportunites.

Either online or face to face our industry colleagues, and again those in the local community all face similar challenges but all will have different views and solutions as to how to solve them. Again through social media we have access to a world wide club of like minded people, and a library of ideas, and business tools.

Here’s what some of the attendees tweeted about the Next Level Tour.

Had a great nite met @DuncanBannatyne what a inspirational gent and many thanks for the free book #NextLevelTour

— Craig Gilks (@craigbeauwater) November 28, 2011

Just got home after an inspiring talk by @DuncanBannatyne. A true legend! Thanks @Roger_Edwards and #ScottishProvident #TheNextLevelTour.

— Tim Brookes (@Timo_Brookes) November 29, 2011

Over to you: Please tell us what you are going to do to take your business to The Next Level in 2012, using the comments box. Or Tweet using the button below.

Tweet #TheNextLevel

Over 800 IFAs attended our Next Level Tour in London, Birmingham, Manchester and Edinburgh to hear Duncan Bannatyne tell his story of how he went from ice-cream salesman to multi-millionaire head of the Bannatyne Group.

In this video IFAs talk about the inspiration and ideas they took from Duncan.

Buying a first home represents a major commitment for any couple or individual and traditionally has acted as the trigger for people to buy protection insurance. But with many marrying later, having children later and buying their first home later in life, how can we ensure people are prepared for the future regardless of what life stage they are at?

In the industry we know it makes perfect sense to take out protection insurance when you are young, fit and healthy. Being struck down with a serious illness can happen at any time, not just in middle age. And the longer someone puts off buying protection the more expensive it will be. It is also important to make clients aware that if they leave it until later in life they may develop health problems that could make the policy unaffordable or they may be refused insurance altogether.

“The conversation around protection can be a tough one”

The conversation around protection insurance can be a tough one. But if the unthinkable happens, even those who haven’t set foot on the property ladder yet, will need a financial safety net in place to protect them from the financial consequences of a critical illness.

We are told that the average age of a first-time buyer could be 40 by the end of the decade. But that doesn’t mean the protection sale needs to wait until then. Get the message out to younger clients that they should be laying down firm financial foundations now, not waiting until it’s too late.

Published in Mortgage Strategy

We’re delighted to have won the Individual Critical Illness category at the Cover Excellence Awards 2011.

After our recent “Summer of Marketing”, it’s great to get recognition from advisers for the investment we’ve made in our product to make it even better. We’ll keep on listening to the needs of advisers so that we continue to deliver a compelling proposition that we’re both proud of.

Here’s what my colleague, regional sales manager, Alan Savery said about the award.

There’s been quite a bit of talk about TV advertising in the protection market over the last 18 months. First, renowned IFA Tom Baigrie tried to get the industry to take part in a generic campaign. This failed to happen because of the sums of money involved or perhaps because providers felt the main beneficiaries would be Aviva. So Aviva went ahead on their own and gained plaudits for their tear jerking take on ‘Ghost’ starring Paul Whitehouse promoting the need for life cover. They went on to provoke outrage in Twitterland with their supposedly intrusive bookending of Downton Abbey ad breaks.

People might expect me to jump on the critical band wagon given that Aviva is a major competitor but I won’t. I applaud their campaign. But the clamour for more of the same from other providers is unnecessary. For a start a whole series of different protection TV ads would fast become boring, and there are many other communications channels that we can exploit to suit our different budgets.

Undoubtedly good TV advertising is good for brand building. And some certainly stick in the mind for many years because they are memorable (possibly cheesy) and describe the product well and create the desire. Ask most people my age about ‘Shake ‘n Vac’ and we would be able to sing the words, “Do the shake and vac and put the freshness back”. Others stick in the mind because they are annoying. When the Go Compare Opera singer comes on I want to stick my foot through the TV, but my wife beats me to it by either hitting the mute button or changing channels. Annoying or not it embeds the brand in the brain.

“Let’s not under-estimate the potential for other channels to promote the value of protection – social media viral promotion”

Now of course we have social media. And I don’t just mean Twitter, Facebook and LinkedIn. It is possible to produce a very professional video advert quite cost effectively (the latest iPhone 4S has the highest level of broadcast quality 1080HD capability) and host it on YouTube and then seed it across many web channels. Coming up with a video that goes viral, while promoting your product and brand is the new Holy Grail. Do a YouTube search for a ‘Mother Cat cuddling a Kitten’ – over 100 million hits. Look for ‘Buttery Biscuit Base’ – a hilarious rap song put together using hundreds of clips from Master Chef – 3 million hits. Imagine producing something like that that promoted your brand, or protection product, or your adviser firm.

So hats off to the Ghost and Downton Abbey campaigns, but let’s not under-estimate the potential for other channels to promote the value of protection.

Published on My Introducer

We trawl the internet for news and we sift through company websites for product and service details. The shear unbelievable breadth of information that is available “in the clouds” can make it difficult to prospect for gold amongst all the gravel. But thanks to Twitter I recently rediscovered an old protection sales idea, discovered a great new idea used by US advisers and stumbled upon the spark of an idea that can be used to create another.

The old idea revisited

This protection sales idea was known as “The Polo Principle” back in the early 2000s when I first used it. Simply draw a Polo Mint (i.e. a small circle within a large circle), and divide the Polo into 4 quarters. These represent the four key components of financial planning.

• The Mortgage
• The Pension
• Savings and Investments
• Life insurance

The Polo Principle states that as there is a “hole” in the mint – there is a hole in these financial plans. What happens if you become ill and cannot earn your income. All these other plans become under threat. If you can’t pay the mortgage your house might get repossessed. Stopping contributing to a pension might mean you retire on a much lower income than you were planning to. Savings and investments might help prop things up during a time of crisis – but they won’t last forever – and how annoying to have to use them to pay for everyday expenses rather than the “goal” you really had in mind for them. Life assurance won’t help because you are still alive. And cancelling the life assurance to free up a few quid would not only leave you unprotected but as an impaired life you might not be able to buy any more in future.

The solution to the Polo Principle is to “plug the hole”. And the plug is made of critical illness cover and income protection.

I forgot about the Polo Principle until a provider ran an online competition for sales ideas and the winning entry, whilst not a Polo Mint, was very similar. Great ideas never disappear they just get reinvented for more people to benefit from.

The US Idea

I clicked on a link in a retweet and found this idea from a US financial advisers website – Playing the What If Game. It’s very simple and I quote:

“The “what if?” game is a scary game to play, but it’s an important one.

What if I lose my job?
What if I get seriously ill?
What if I pass away suddenly?
What if one of my children has a condition that requires constant care?
What if my spouse suddenly passes away?

There was a time not too long ago in my life where I dreaded the “what if?” game. I basically avoided thinking about these types of questions, choosing instead to believe that my life was completely safe and nothing like that would ever happen.”

The New Idea

Again as my eyes skimmed over my twitter feed I spotted an announcement from someone who had decided, “To buy that car and book that holiday any way #IMightBeDeadTomorrow”. It was of course the Hash Tag that caught my attention and began to spark some ideas. Clicking on the hashtag immediately revealed hundreds of tweets from similar minded individuals.

“Going to blow my salary on a party #IMightBeDeadTomorrow”
“Hitting on Jayne in the pub tonight #IMightBeDeadTomorrow”

Even though I scanned maybe one hundred of these related tweets I didn’t find one that said, “Must take out life assurance to protect my family #IMightBeDeadTomorrow”.

Individual protection sales ideas in the clouds

That’s just 3 ideas I found on the internet that could help to put across to our customers the importance of protection. The Polo Principle, The What If Game and #IMightBeDeadTomorrow all demonstrate the potential consequences of being unprotected and the importance of getting financial advice in order to put protection in place. Ironically I also found out from the Internet that Polo Mints are called “Life Savers” in the States and I think that The Life Saver Principle sums up the sentiment of these great ideas.

Read the Playing the What If Game article here:

Article originally published on IFAOnline.

It’s getting tougher to convince people to buy protection. Not because we are not promoting it or because advisers are not building it into their recommendations. Even dismissing the usual ‘It will never happen to me so I don’t need it attitude’ with well reasoned arguments, is not enough these days to overcome the main problem. Many people do not have enough cash to spend on the essentials of day to day living let alone life insurance. It’s not up there on their list of priorities like utility bills and the weekly shop.

Ironically though, the reality of leaving the family unprotected is staring all these people in the face and yet to a certain extent they can’t see the wood for the trees. Times are currently hard because of economic factors which are generally beyond the direct control of the public. Inflation is creeping higher and increasing the cost of the shopping basket whilst wages are either frozen or capped. Interest rates, which are at an all time low created a short term buffer zone, an illusion of liquidity, as people had more to spend as their mortgage payments reduced, but this effect is long since over. Lower interest rates mean those with savings are not growing their investments faster than inflation is eroding them.

So many people are struggling. But apart from those who have been unfortunate enough to have lost their jobs, these strugglers are still earning. It’s hard and they may have been exposed to the fact that their income is insufficient to cover their outgoings. But fortunately they haven’t had to face a total loss of income. They have been given a taste of how bad things can be but they still have time to plan for the worst.

“Apart from those who have been unfortunate enough to have lost their jobs, these strugglers are still earning”

So how can we get people to buy when things are so tight? One of the most well received ideas we used at Bright Grey was the ‘Cafe Latte Calculator’. This was conceived in more prosperous times and invited customers to enter the number of coffees they bought each month on the way to work; along with the number or carry out meals and trips to the cinema or the spur of the moment luxury purchases. Most were surprised to find that the sum amounted to anything up to £400 per month. The protection argument was rather simple. Reduce this outgoing by one or two coffees a week and use the saving, say £40 out of the £400 to fund a protection product. That £40 investment could provide the money in future to enable them to continue to spend the other £360 should they be unable to work due to illness.

Of course, in our post recessionary world many people have already made such savings by cutting back on premium brand coffee and perhaps taking a flask of coffee with them to work. But the argument still stands. Finding an extra £20 a month from spending is not that difficult and it could ultimately protect the ability to continue to spend the remainder.

In the past most protection marketing messages have been around providing a large lump sum to clear a mortgage, or to replace a breadwinner’s income in its entirety, or on other windfall amounts of cover. In the current economic circumstances smaller amounts of cover that are affordable and protect the very basic elements of our lifestyles can still make a difference to people who are already feeling the pain. £20,000 worth of critical illness cover or £10 a month worth of life cover are absolutely preferable to none at all.

Published in Money Marketing

Our recent event on the Future of Critical Illness has sparked much debate across the industry. In addition to the recent White Paper and highlights video of the event. Here are four brand new videos of some of our panel members offering their opinions.

In each video our experts answer some of the most pertinent questions facing out industry today.

As always, please do feel free to leave a comment or use our Twitter hashtag #FutureofCI.

Jeff Prestridge, Personal Finance Editor, Mail on Sunday

Roger Edwards, Proposition Director, Bright Grey and Scottish Provident

Nick Kirwan, Assistant Director, Association of British Insurers

Melissa Collett, Ombudsman, Financial Ombudsman Service

You can download a copy of our White Paper from the Future of Critical Illness event here. Future of Critical Illness Summit White Paper

I’d love to hear your thoughts so please feel free to leave a comment or use our hashtag #FutureofCI on Twitter.

For those who were unable to attend our lively debate, or for the attendees who want a recap, here are the video highlights from the event so you can catch-up on all the best bits.

Please do leave a comment or use our hashtag #FutureofCI on Twitter.

Once again I’d like to thank our panel members Jeff Prestridge (Mail on Sunday), Nick Kirwan (ABI), Melissa Collett (FOS) and Neil McCarthy (DL&P) for being part of such a great event.