Market views: Simple products - threat or opportunity?

Leaving aside the question of advice, do you see simple protection products as a threat to IFAs or a stepping stone for clients? Should IFAs sell them alongside fully featured products?

Chris Hulme, Clayton Hulme Partnership
The question of simple products, or to be exact, the answer of simple products is far from simple. We have seen examples in the past – stakeholder, for one. Its basic attributes and price cap fell way short of addressing the needs for investment and, more importantly, fund performance.

It is unclear how simple products could perform properly as these inherently inferior solutions are typically aimed at the poor, disadvantaged or the easily led – which is wrong.

The idea of simple products is to create a benchmark. But we already have the ABI standards, which any client can easily check, and with the publicity around ‘Money Made Clear’, how far away from the client can comparisons be on product quality, pricing and eligibility?

CAT standards introduced for mortgages and ISAs had little effect and are now long forgotten. I suspect simple products will suffer the same demise. Life cover is as straightforward as it can be – no insurer in the world can argue if you’re dead or not.

Critical illness cover is complex and far beyond simplification under this guise. To reiterate, the ABI have this well and truly under control.

As long as there are publications such as Which? with their claim that critical illness cover is a luxury product and not a core one, the clients’ confusion will reign.
For income protection, there are basic ASU-style solutions that, again, require no further simplification.

Advisers should not fear simple products. The market should. True advice will direct the client towards the right solution for him or her, whether simple or not.

Martin Werth, Ageas
Consumers need effective protection and only a tiny minority has adequate cover, signalling a huge potential for the industry. But our products are complex, as each one invariably covers just a few of the risks of income disruption and customers do not always understand the limitations of their covers.

There is a huge opportunity for the industry to improve its consumer proposition. In this regard, a simple product is not always limited to a single cause of claim (e.g. death), but could be one plan that meets all reasonable causes of claim.

We are supportive of solutions that increase consumer protection and that are clear to consumers. Advice is an important part of the customer proposition as it provides greater consumer confidence around understanding the scope and limitations of protection.

We do not see the first sale as the end-to-end solution, but part of a customer journey enabling more people to access advice. We see the ongoing customer relationship as critical, providing opportunities to review customer needs and for the long-term success of IFAs.

Simple products sold with advice provide IFAs with the opportunity to revisit their customers to extend the scope of their covers. However, we are also supportive of simple products sold without advice, where this is a journey that allows consumers to access advice at a later stage so that any gaps in their cover are addressed.

In conclusion, any opportunity that enables more customers to access ongoing advice should be welcomed.