Business protection is one of the largest untapped markets in desperate need of financial advice. Clare Harrop issues a call to arms
The Institute of Directors also produces useful research reports about the company director market, so take a look at their information as well.
In many cases, advisers who review their existing client base will already have business clients where they may have previously looked after their pensions, mortgage or investment needs.
Think about targeting your message to those people that it is designed to protect and who will be the decision makers.
These are partners and directors of the business or key individuals in finance, such as the finance director, IT and sales as well as guarantors of any business loans the company may hold.
Using professional contacts such as solicitors, surveyors and accountants are ideal people that should be receptive to talking about the benefits of both business protection and key man insurance.
Part of the reason why businesses do not have cover is because no one has explained what it is and what it does.
They have also never considered the real impact of what would happen if they lost a key person.
Firms who take out loans are not always referred by their banks to an adviser to discuss protection in the same way as they would do if they were an individual taking out a mortgage. Indeed, many banks do not always insist upon a protection review.
This gives huge opportunities for advisers. There are four main types of business for advisers to think about:
■ The sole trader who owns their business and may have a number of employees
■ The limited company, whereby the directors run a limited company on behalf of the shareholders and who are the owners of the company
■ The traditional partnership where an ordinary partnership is owned by the partners of the business and they will often manage the business, and
■ The limited liability partnership, which has members rather than partners or shareholders.
Each of these structures has different benefits and advantages, so it’s worth doing your homework on who you want to market to before you start sending out those mailers.
There is scope to partner up with legal firms to increase your business protection revenue streams.
Clients often do not understand the legal implications of not having their share protection aligned effectively with their company documents and many advice processes do not include the hand-off to seeking legal advice effectively. Ask your client if they actually follow up with their solicitor.
Most business owners are extremely switched on people – you can grab or lose their attention in a heartbeat, so you’ve got to get that first contact right.
The flipside is being so pushed for time means they will pay professional advisers who can save them time and money.
Clare Harrop is head of specialist protection at Legal & General
