Large numbers of intermediaries are considering selling up and retiring or moving to pastures new. Perhaps, given the uncertainty that we face as an industry, this is not surprising. The Retail Distribution Review (RDR) will change the way we work as an industry forever, with the introduction of ‘adviser charging’.
Of course, commission has been a hot topic since the very earliest days of life assurance sales. I remember a life assurance head office, where a nineteenthcentury
letter hung on the wall, disputing the payment and expenses of a salesman. No doubt it was put there to remind the current generation that the old guard are watching. Later came the maximum commission agreement, and with the introduction of full regulation, rules around related benefits put pay to lavish ‘fringe benefits’ enjoyed by many firms.
However, clients require good, honest advice that is given in their best interest, and this will always be the case. Pity the poor client who has seen insurance sales go from industrial branch door knockers to specialised independent advisers offering advice in a limited product area in a matter of a few short years.
Among all this, we must not lose sight of the fact that people regard our industry as one that will never seemingly sort itself out. Maybe the new RDR proposals will help? I certainly believe so. The important thing, as ever, will be the communication of the message to clients in a way that they can understand and trust.
Our industry has proved time and time again its ability to respond to changes in a positive way, and to come back from challenges all the stronger. If large numbers of
intermediaries feel that the time has come to hang up their hats, then I am confident
a new generation will emerge offering a new way to advise. The internet and its importance when it comes to disseminating information is certainly the most ignificant move in that direction.
A recent survey by Hodge Lifetime asked brokers about their plans for the future of equity release advice, and responses were positive, with many indicating that they
would be increasing their own marketing efforts in response to increased customer
interest in equity release products. There were concerns, particularly about the continued perception of equity release by the media as a product of last resort, however confidence among advisers was strong.
A year ago, Hodge Lifetime found that 54% of mortgage brokers surveyed were
looking to diversify their advice offering and were considering equity release. Just
a year later, it seems that new and existing equity release advisers alike are gaining
confidence and remaining bullish about business over the next 12 months.
However, for this to succeed dedicated advice is the key and this is again reflected
in Hodge Lifetime’s IFA confidence report. The effect of equity release upon state
benefit entitlement, charges and guaranteed drawdown facilities remain top of advisers’ lists when talking to clients, assessing each individual’s circumstances and the right product to suit their needs. Finding the cheapest rate seems less of a priority if the rest of the product details do not match the client’s requirements.
A move into equity release for some mortgage advisers and concentration on marketing initiatives for established advisers demonstrate plausible and resourceful
decisions in the current market. The survivors of this latest economic cycle will be those who embrace the changes and move their business models to cope. However, they will not succeed unless they put the client at the centre of all they do. As someone once said to me: “look after the clients, and they will look after you”.
