According to research reported in last month's COVER, many IFAs have poor protection market knowledge. Do you agree and what should be done about it? Do we need a dedicated protection exam?
Chris Hulme, Clayton Hulme Partnership
Irrespective of your sector of expertise, protection products will undoubtedly enter into the conversation with clients.
But it has been very much an add-on to advice rather than a core element, which seems to lead to a lower understanding and knowledge in the field.
Life is simple. Death is death. Comparisons are easy. But how much do we really understand about the intricacies of CI and IP?
For example, CI definitions and criteria, such as keyhole surgery or providers differing classification of occupation types.
Options such as renewable term and buyback are rarely used, but can be invaluable, even more so when wrapped in trust.
IP takes intricacy even further when considering maximum benefit amounts, acceptable proof of income prior to claim, career break options and group v. individual.
Combine multiple benefits and the analysis becomes harder. Take Scottish Provident, on a combined CI and IP policy who, on diagnosis of a CI, pay an immediate cash benefit (that is in addition to the CI benefit) equal to the IP benefit of the deferred period. But who would really know that?
Proper analysis of existing plans is a great failing in the protection market, which sees clients cancel policies containing benefits that cannot be replaced with modern equivalents.
As long as the supermarkets continue to peddle non-advised protection, advisers will provide better protection advice to clients. Examination and learning will only enhance our knowledge and professionalism.
Andy Rowson, Aegon
This is a timely reminder that many advisers need to improve their protection knowledge if they are to capitalise on the opportunities that will be present in a post-RDR environment.
The most concerning finding from the research is that many IFAs did not know the most frequent causes of long-term disability claims and that they had not been informed of the new CI oral disclosure guidelines.
In theory, we would be in favour of a comprehensive protection exam. But we understand the huge pressures currently on advisers who are battling against time to meet the requirements of the RDR, in order that they can carry on advising from 1 January 2013.
For this reason, we would not be in favour of adding to this burden immediately. Instead, we would encourage advisers who want to increase their protection activity, and their knowledge, to attend the many protection-focused seminars that product providers have been conducting over recent months.
When we have asked what else we, as a provider, can do to help advisers, the clear message we’re getting back is for us to provide education and exam assistance.
For this reason, over the past few years Aegon has held adviser-focused seminars on topics such as mortgage protection, business protection and RDR readiness.
For our part, we will continue to work closely with advisers in order to assist them in transitioning their business models and providing all the educational support we can, in order that they can survive and thrive post-RDR.
