Following on from the introduction of sales guidelines for critical illness, COVER's sister title Mortgage Solutions has asked the industry if advisers need increased guidance in selling protection.
Matt Morris of LifeSearch's, Dean Mason of Masons Financial Planning and Ian Smart of Bright Grey responded to Mortgage Solutions' question:
Would advisers sell more protection if further sales templates were created, like the critical illness guidelines drawn up by an industry-wide group lead by the ABI?
Matt Morris, senior policy adviser at LifeSearch
The critical illness scripts are a direct response to the FSA's concerns over disclosure on critical illness sales.
The ABI worked with advisers, particularly LifeSearch, in drawing up a script for those with less experience in the protection advice market.
With the downturn in mortgages in the past two to three years, more mortgage brokers have been turning to protection, which is great news as it is undersold.
However, the advice needs to cover several important areas so that the consumer is in no doubt what they are buying and how they are financially protected.
The scripts should give confidence to those advisers who are wary of selling protection.
This could well lead to more critical illness being sold and, crucially, prevent the need for the FSA to launch into complex regulation which will simply stifle the market.
Advisers do not have to use these scripts if they are confident in their own disclosure processes.
So, could this be carried over into other areas? Possibly.
However, there are no question marks over disclosure for other protection products and so producing scripts seems unnecessary at the present time.
If mortgage advisers want to do their clients a big favour, they should look at recommending income protection above all other products in the majority of cases.
It offers comprehensive cover and need not be any more complicated to sell than critical illness.
It is an ideal choice for a new homeowner, as it guarantees they will be able to maintain their standard of living when they are too ill to work.
In the current climate of slashed state support, that safety net is more important than ever.
Dean Mason, practice principal at Masons Financial Planning
In principle, I believe these scripts are a good idea, so long as there is logical flexibility within them to tailor the wording to suit the individual client and the adviser's style, with compromising advice.
It's also vital that these are not used as a tool by the regulator for another bureaucratic straitjacket that is not in the client's best interest.
Mortgage brokers have wildly varying levels of knowledge on protection, in my experience, and this often bears little relation to their experience in the mortgage industry generally.
Two things we all know are that protection is the cornerstone of financial advice and in the current climate we all need to expand our learning and strengthen the proposition to a current or prospective client.
Having spent some time working at a protection only brokerage, I find discussing all forms of protection with a client comes naturally.
I know others who are finding it tough to adapt to more holistic advice.
I believe if used correctly (subject to the caveat already mentioned) these scripts would certainly help many advisers and should increase sales.
Being able to fully explain critical illness cover, income protection, private medical insurance and even the pros and cons of different life cover elements, such as trusts, should help brokers retain at least some of the clients who may use them for the mortgage, but play the online lottery with protection.
This can only be good news.
I do also believe that the wider media and public, whose opinion is what really counts here, should be made aware of these templates.
It would show again that we are putting our house in order and can give the industry some much needed good PR.
Ian Smart, head of product development and technical support at Bright Grey
It‘s well accepted in financial services that protection insurance is something that needs to be sold and there's a legion of well-versed advisers who are good at putting across the need for protection.
It is also the case that protection should be the foundation of all financial planning.
So, when it comes to supporting advisers' sales, it's vital that they are armed with all the necessary facts and figures that demonstrate the need for insurance and also help convince the client that they need to buy it.
Certainly, there's one thing that the protection industry is not short of and that is fantastic marketing material from providers that support both the sale and consumers' understanding of what they're about to buy.
It's fair to question that, given the amount of material already available, a sales template would somehow create additional cut through.
However, before we debate the merit and usefulness of these templates, we need to be aware of the biggest stumbling block that means these templates will have no impact on sales of protection.
The fact is that, while a great deal of time and effort has gone into producing a document to assist advisers, it is unlikely they will ever see the light of day.
The problem is that IFAs are simply not aware that they exist and so, having been printed, they're simply going to languish in their boxes collecting dust in a storage bay somewhere.
The missing ingredient in the whole process has been communicating that these sales templates are available, creating a demand for them and having a process in place so they end up where they were intended to be - on the desks of advisers across Britain.
