After co-founding CBK in 2002, Peter Chadborn set about placing quality advice at the top of the company's agenda. Lucy Quinton learns more about his quest for perfection
The emergence of non-advisory products, such as those sold by supermarket chains, may cause some people in the insurance industry to have a dim view of the future, but is it really that bleak for small IFAs?
IFA Peter Chadborn, principal of CBK, believes the future looks bright, providing advisers know where to position themselves in the market. He explains: "You either have to specialise in one particular area and farm out the rest of the work or you have to work within a team that has individual specialists."
CBK, set up in 2002 with Andy Baker and Mark Kearle, is a perfect example of Chadborn's philosophy; the staff at the firm each specialise in different areas. This way of conducting business was further strengthened late last year when the firm decided to restructure into three different divisions based in Colchester, Nottingham and Swansea. Talking about the company's decision to split into three, Chadborn says: "The idea was to adapt to the rapidly-changing industry by giving autonomy to each office, enabling each team to evolve in its own way, creating a structure that enables strategic alliances to be formed within the CBK framework."
He adds that the different offices wanted to grow in different ways and concentrate on different areas of business.
Chadborn has plenty of experience within the financial services sector. Stumbling into his first job as an area representative, aged 20, he progressed to sales manager at Refuge Assurance. After succumbing to the fact this was going to be his career, he stayed with the firm for 10 years before he moved on to become a bancassurer for Barclays Financial Management. The experience taught him how "to spot an opportunity and when to move on". He adds: "I always knew ultimately that I wanted to be an IFA – any adviser would have to admit this is the ultimate target – but I knew I wanted to have more experience in the market before I became an adviser. That's why I decided to go into bancassurance". Chadborn says he learnt a lot during his time at the company through the variety of opportunities he was given. "In reality, I probably learnt more in my first six months at Barclays than in my 10 years at Refuge," he says.
In 2002, he decided the time was right to become an IFA. Here the idea of founding a company to provide an environment for advisers wanting to escape the restraints of large employers, with their advisory limitations and product bias, was born.
High standards
"It is difficult to find quality employees as we set such high standards and the way advice is given is top of the agenda," he adds. But all the hard work has paid off as CBK is now perceived by providers as a champion of demonstrating the merits of advice over non-advice, as well as showing the benefits of quality over quantity.
Mis-communication is rife in the industry, according to Chadborn. There is a "them-and-us" attitude between providers and IFAs. He says advisers know very little about the workings of a life office and similarly, not many life offices understand what it means to be an IFA. Chadborn says he is impressed by firms that spend time with IFAs to see what they really do. "Ultimately, they will provide the best service levels because they understand what IFAs want," he says.
Overall though, small companies receive worse treatment from providers than larger firms because of their size. "Generally, being a small company makes you less of a priority. Small IFAs have to accept the attention will be less than if it was a national firm," Chadborn says.
Besides failure to communicate properly within the industry, the insurance sector has also suffered badly from recent bad press and mis-selling scandals, which has given birth to widespread consumer mistrust. "There are far too many advisers that are perceived as salesmen and consumers associate them with mis-selling," says Chadborn. "Commission hungry salesmen do not appeal because customers want advisers. However, advisers need to act as such rather than have the title 'adviser' on the business card while just being a broker trying to sell insurance," he warns.
Chadborn sees the adviser role as providing a service that people cannot do for themselves. He says most customers who approach CBK after buying a product on a non-advise basis change their mind. For example, with term assurance, sometimes the terms are not long enough or it may not be placed in a trust fund. Chadborn sees his role as explaining this to his clients. He says that anyone who sees themselves as "old school", where they can inform someone what product they need in 15 minutes, suggests the IFA has not understood the client's needs. "Customers are more aware of what is going on when it comes to financial services so they will question and demand more, which raises standards," he says.
Chadborn believes IFAs have to decide how to position themselves in the market in order to move forward. Touching upon the ongoing price war, Chadborn argues it is a good thing because IFAs have to focus on a product's quality rather than its price. "The role of the traditional broker is dead. Just hunting around for quotes is no longer good enough," he says. "There is a real groundswell of advisers questioning life offices and becoming fussier when selecting the firms they are dealing with," he adds.
Chadborn stresses the importance of working with providers with a similar outlook and standards: "There has been a steady decline in standards over the last few years because of profit and complacency in addition to the attitude that the best option is to be cheap."
Cheaper options
But while cheaper options tend to be found in the direct sales market, Chadborn is not threatened by companies selling non-advised policies as "it is a different market". At CBK, advisers tell clients about cheaper versions of what they recommend in the market but the firm also tells clients the reasons a certain policy is not recommended. Consequently, the firm has retention rates above the market average. "The industry is obsessed with the concept of cheapness, but this is not the answer," Chadborn says.
He worries about the idea that there are not that many people who approach CBK once they have bought cover on a direct sales basis, but insists that customers should not be forced to take advice. What concerns him though is the misconception that once a policy has been bought, consumers are lulled in to a false sense of security.
Chadborn believes the future is bright for advisers. "As long as you are adaptable and prepared to keep one step ahead there are great prospects," he concludes.
