Not all advisers are protection experts. So what would be good advice for those turning to the market? Alan Dring advises gathering specific client information.
Some may say it is a case of ‘after the horse has bolted’, but it is never too late to adjust business objectives and revise action plans to accommodate changing markets, particularly in a recession. There has never been a better time for advisers to make themselves indispensable.
So what are most advisers doing to capitalise on their opportunity? Many are already reaping the benefits of the growth market in consolidation and more are now getting their head out of the sand and taking a positive perspective of the new market. The opportunity to focus on protection and additional cover options is increasing every day as clients seek to adjust their current arrangements, capitalise on the attractive mortgage rates and the reduction in the Retail Price Index, fuel costs etc.
However, before we get too excited, there is a need for the adviser fraternity to address the fact that, like it or not, they do not have the confidence of the consumer that would make an easy conversion of these opportunities. One thing to do before embarking on a revised business plan would be a thorough review of the client bank. Experience shows that advisers who believe they have 250 clients only have 60/70 when an honest analysis is completed.
Too many ‘clients’ have disappeared so there is a lot of hard work to be done. Advisers can start this process by putting together a consolidation package that will show how the economies that can be made from reductions can be translated into protection and other product sales (even utilities or debt management). Recession, as we all know, brings opportunities because people seek greater security from the things that now threaten: unemployment, debt, illness, social threats and the like and so the extensive protection menus offered by advisers, but often never driven by them, now take on a very positive perspective if they can be promoted as the necessity they are to many.
It is worth mentioning a couple of things that provoked the broker audience at Sesame Roadshows to question their approach to client management. The first question is, how many clients are in negative equity? And the second, how many have jobs that are recession vulnerable, and how many of those jobs are recession proof?
Knowledge is power
We all appreciate that knowledge is power and we are familiar with the Tesco success story that owes much to the information they carry on their ‘clients’ via their loyalty card proposition. If advisers know the answers to the two questions posed above, then they have some very valuable data. Along with the additional information, such as which clients have children going off to university next year and/or parents who may be potential clients, obtained over and above the standard fact find detail, then they are well placed to gain competitive advantage and grow their bottom line, even in a recession.
So if we accept that the opportunities exist for more protection and health cover sales as a significant percentage of the population seek to ensure that they do not squander their disposable income, then how do we obtain our share of that market?
In the last twelve months, anybody who has avoided redundancy has seen the pound in their pocket going further. If advisers look holistically at the individual circumstances of their clients, they should be able to see that there are disposable funds from reduced mortgages, a lower RPI, and a natural instinct by many to protect and consolidate rather than spend.
A simple example of a couple with a combined income of £60k with a property value of £200k and a variable mortgage of £150k could have seen their monthly repayments reduced by £200 pm. Income protection for an £800 pm mortgage payment (£50) and healthcare for a family of four with a £100 excess (£130) would see the £200 well spent.
The reputation of the financial sector has taken such a knock that consumer confidence, particularly regarding the ‘big is beautiful’ brands will take some time to recover. That said, the consumer still needs advice and while the web is often the first port of call, it will never replace the professional adviser who is able to determine what their clients need because they have in-depth client knowledge and, as a result, know when they will need it.
An idea that may help with any campaign targeted at cross selling is to develop a Sales Time Line for clients that enables the adviser to know the most opportune time to convert a client
need into a sale. Such initiatives, if adapted, should become an integral part of the adviser’s processes and the chosen software should be capable of progressing the sale – not just prompting a diary reminder.
A short book by Donald R Keough the former COO of Coca Cola – The Ten Commandments for Business Failure – focuses on the way that company took advantage of competitor’s failures during the Great Depression and highlights how the real opportunities for growth come on the back of competitors becoming afraid of the market. Coca Cola commissioned a survey to enable them to know exactly what their markets wanted and what they would pay for it – a simple equation, but one that once you know the answer to, you have the knowledge to determine your sales line and when it is right to approach your clients for the targeted product. Health care and protection are on many shopping lists as they benefit from reductions in mortgage rates etc. We have to make sure we are there to consolidate their budgets with their needs.
Alan Dring is managing director of sales consultants at www.themadappraoch.com
