It’s up to us to tackle the protection gap – Bawa

Far too few people have policies in place that would provide a financial safety net for them and their loved ones, a fact made clear by Financial Conduct Authority (FCA) data earlier this year.

The regulator’s interim findings of its competition review into pure protection products made for sobering reading for anyone who genuinely appreciates the impact protection can have. For example, it found 58% of adults in the UK do not have a pure protection policy, even though the majority would benefit from one.

And one of the big factors holding back protection is consumer understanding – a lack of awareness of what income protection or life insurance products even are, let alone how they can support them.

What’s that?

The protection industry actually performs pretty well, on the face of it. As the FCA found, for those with policies, there is a wide range of products and providers to choose from, the costs have remained relatively stable over recent years, and most of the time, claims are paid out properly and on time.

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The trouble is that we aren’t getting the message through to enough people. All too often, people don’t know what these products are, or haven’t been prompted to consider how the products could deliver for them and their families.

Once clients are educated about protection, we can see that they are more willing to sign up for them to experience the benefits that come from having those safety nets in place. So how can we address that education gap?

Giving advisers options

For networks, one of the most effective ways to support greater protection sales is simply by ensuring advisers have sufficient options for their clients. That means partnering with a range of different providers, particularly those that cater to specific niches, so that whatever the circumstances, advisers have products that they can recommend.

At Rosemount, for example, we recently partnered with Marketing and Management Services (MMS), opening up its various protection brands – names like Keystone, Palladian and Safeshield – to our members. These brands focus on accident, sickness and unemployment policies, a form of income protection that can be easily overlooked by advisers.

Having a wide range of options to discuss with clients can help start that conversation, ensuring they think carefully about what would happen to them and their loved ones if they lost their usual income for a period of time.

When protection feels awkward

It would be remiss of me to ignore the fact some advisers find protection advice difficult.

Protection inevitably involves more of an emphasis on selling than pure advice, since it’s not the sort of product clients approach advisers about. Instead, it’s something advisers have to raise with clients who believe their sole priority is a mortgage or a pension, but who would benefit from taking a more holistic approach to their financial planning.

That emphasis on selling doesn’t come naturally to everyone, and that’s ok. What’s not ok is allowing that awkwardness to hold advisers back from properly highlighting the role of protection to their clients. Protection must be part of the conversation, but it’s up to individual advisers to work out the most appropriate route for them.

There’s no ‘right’ answer here. At Rosemount, we’ve worked with advisers who have found protection difficult, providing bespoke training, masterclasses and even facilitating advisers shadowing their more proficient peers to see in practice how best to showcase the likes of life insurance and critical illness, as well as how to overcome common objections.

And if protection still feels like a difficult subject to broach properly, there is the option to refer clients on to colleagues who are more comfortable and experienced with making the case for protection that expands beyond just life insurance, and includes those forms of general insurance that can be underestimated.

The need for answers

With the backdrop of Consumer Duty, protection isn’t an area advisers can afford to pay lip service to. The products offer a crucial financial safety net, and when they are explained fully, clients are often open to the security they offer.

But we aren’t going to address that education gap without real action. Advisers have to act as advocates for all forms of protection. Doing so means making sure protection is a central part of the advice process for all clients, not just as and when clients seem the most open to the potential benefits.