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?
Kevin Carr, Protection Review
I think we all welcome the vision of a market where consumers can buy the products they need with confidence.
However, many wonder if there is a contradiction at the heart of the idea. To buy with confidence, consumers should first ideally understand what it is they actually need, rather than making assumptions driven by cost and perceived simplicity. As the saying goes: "I'd rather pay more for something I need than less for something I don't."
To achieve this across a mass market requires well-informed consumers who understand their financial risks, which won't happen overnight. This presents an opportunity for intermediaries.
It is also as much about the simplicity of the process as it is the simplicity of product. Any initiatives that are solely focused on products are unlikely to achieve much success.
We can simplify the process by engaging consumers with simple bite-sized chunks about what insurance does, while guiding them towards what is most appropriate.
Simplified products should increase the basic level of protection held by consumers as well as raising demand for wider information and act as a stepping stone to advice.
This consensus comes when the Competition Commission's ban on the sale of PPI on completion of a loan application comes into effect, which is ironic to say the least.
And advisers could certainly include any new product range where relevant. It's not dissimilar to introducing a client to short-term IP as a stepping stone to long-term IP.
Neil McCarthy, Direct Life
I don't see simple products being a threat to advisers. The more accessible product solutions are to consumers, the happier they will be to understand and buy these products through whatever channel they choose.
My definition of simple would be something that a consumer can understand and decide on. It hasn't been thought through whether simple products should be restricted by any parameters such as product features, definitions, distribution processes or charges.
The recent Treasury paper was suitably vague in the way simple products could be designed, but stated that protection, annuities and savings plans (ISAs) could all fall under this category.
An adviser identifies client needs and makes appropriate recommendations using the full array of products, and I'm sure some simple products will fulfil customer needs.
Starting with a simple product will allow an adviser to introduce other specific features that may be relevant to customers' needs for solutions involving products such as term assurance, protecting income, cash ISAs or annuities - as they do now.
There will always be complex financial situations that require an extremely complex solution to deliver the right answer. This could involve a mix of simple and complex products to fulfil the need - some term assurance and a specialised investment vehicle, for example.
Simple products should help stimulate more opportunities for advisers, and shouldn't be seen as a threat, just another component to their financial toolbox.
