The problem for advisers is that with margins under pressure, they could end up running at twice the speed just to stay in the same place.
However, is there an alternative solution? Successful consumer businesses are very aware of market forces such as this and are experts at figuring out how to increase their yield from each customer, rather than just trying to gain new ones. We see this everywhere we shop – from Amazon to IKEA.
As for advisers, most know that expanding their proposition is what they should be doing, but are they really clear on why?
For me, the fundamental ‘why’ for selling protection is trust. Whilst consumers might question the motives of some financial institutions, this is not the case for the trusted relationship that exists between an adviser and their customer.
Furthermore, this is backed-up by contract law, which states that the adviser is acting on the customer’s behalf. So as someone who has the financial interests of their customers at heart, why wouldn’t advisers want to ensure that their customers’ homes and lifestyles are safeguarded?
This is a fantastic baseline for an adviser to start to take steps left and right to broaden their proposition. The reality is that putting protection policies in place is no fun for customers. They want someone to walk them through the risks and demonstrate the cover they should have.
Of course, customers don’t always take out a policy immediately, but the subject is far better broached by a trusted and trained adviser.
‘Take the plunge’
Clearly, there is also commercial opportunity in brokering protection: profits increase as the adviser is often generating twice the revenue per consultation.
Customer loyalty and potential additional business is also increased and, by taking on another part of the customer’s life admin tasks, advisers can ringfence themselves from some serious competitive threats. Plus, the adviser will now have more opportunities for frequent touch points with the customer during those long, fixed rate terms.
And don’t forget that there’s lots of training support available from networks and providers to help enhance advisers’ skills, so there’s no excuse not to take the plunge.
As a final thought – and possibly another why – there is a growing debate around exposure to future risks for advisers who don’t explain to customers their financial vulnerabilities when taking on a mortgage – and how these risks can be mitigated. In the post-PPI litigation environment, many people are wondering where the claims management companies will look next.
Could protection – or the lack of it – be one such area in the future?
In business it’s rare for habits to change unless there’s a driving force behind it. This is understandable as it’s uncomfortable and sometimes draining having to adjust.
However, history often shows that such changes can turn out for the best in the long run.