Firms have developed the capability to hold protection products on a retail investment platform. How does it work and do you think the market is moving this way?
Mark Dennison, LightBlue UK
Generally, clients like to see all of their finances in one place, so offering protection on platforms makes sense. Although currently the term assurance offerings on platforms may not make a huge difference to the market, it can only be a matter of time before others follow the few that are already doing this.
It is very likely that we will see a range of protection products, not just term assurance, made more widely available on investment platforms in the future. Indeed, the idea of a ‘protection wrap' or its equivalent, where customers can view and amend all their protection cover in one place, is unlikely to be far away.
For some people, a platform will be a very useful way of buying protection, as the level of cover a family needs can fluctuate regularly, and platforms can more easily show the gap between the total value of investments held and the total amount needed in protection.
Anything which encourages protection to be at the core of a client's financial planning has to be good. Events can change a family's priorities overnight, so it is essential to plan for what could happen tomorrow as well as 20 years ahead.
However at this moment I'm not convinced that there is a very strong demand for protection on platforms amongst advisers, especially when there are other investment related issues which still need resolving. As platforms evolve, I'm sure the opportunities for protection will more strongly surface, and we will see propositions emerge to hugely benefit the market.
Barry Neilson, Nucleus
Our product is called Wealthprotect and is provided by a third party called Integration Protection Solutions. Currently it's a term assurance proposition. The amount covered varies in direct proportion to the level of assets on the platform.
The market is definitely moving this way. Protection is an area where there's been little innovation in the last 20-30 years. What we're seeing is greater usage of platforms by advisers who are clearly keen to get ever increasing elements of their client proposition on platforms, so they get the benefit of reduced administration.
The clients potentially get the benefit of propositions that integrate more seamlessly into other elements of their financial affairs.
What platforms increasingly have is access to rich and deep data about clients. There's an environment being created where people are innovating propositions and products that can directly link into the availability of that data.
If you think about protection historically, which would have been a standalone product, it would have been impossible to link the sum assured with the client's other investments, as they were probably scattered across 20 different fund groups.
Now they are being consolidated via a platform, the creation of a deeper set of data for the client will enable third parties to generate client-specific products.
The concept of platforms on protection on platform will increase dramatically over the next few years. You will probably see innovation around products that look to mitigate IHT liabilities on the death of the investor.
