There is a growing trend of protection products/advice sold through an aggregator. Are we at risk of creating a two tier advice market, and if so what would this mean?
Rob Quayle, Direct Life
Many people now want to use self-service options. Price Comparison sites are excellent places to do so. However, the question remains: if those people had spoken to an adviser first, would they have bought a different product?
In my opinion the answer is quite possibly yes, and what’s more, this is likely to have been a more suitable product. That is not to say the product they bought will be inappropriate, and we have to bear in mind as they did not approach an adviser, it is possible that had Price Comparison sites not existed they would not have purchased any product at all, which would be the worst case scenario.
However, it is too simple to look at this as a two-tier market. There are adviser-based aggregator solutions, such as LifeQuote Consumer, that allow consumers to self-serve for simple products, with the option of defaulting to an adviser for more complex needs.
These start closing the gap between Advised and Non-Advised, ensuring information is available for the consumer to determine whether or not they really do understand their needs and the right solution.
By having help at hand and good follow up the gap can be sealed. But, regardless of whether it’s one, two or three tiers, I would hope that we would all agree that being able to cover one’s protection needs is the foremost priority. And that as a consequence, the ability to provide a range of accessible channels for purchase, with products and services to suit the varying demands of consumers, must be at the heart of our industry.
Carl Lamb, IFA firm Almary Green
We are looking at the potential for a [two-tier] market and speaking as an adviser, I think we have to be conscious of that. It’s very difficult because, ultimately, with protection, people still need advice.
It is slightly bizarre that protection advice is still not regulated because inadvertently people could end up buying the wrong product, and there are issues around trusts and other bits and pieces. It’s important for the individual, they need to be aware how the contracts are bound and the different bells and whistles that accompany it.
[In terms of unintended consequences] It’s very much buyer beware. Because a consumer thinks he needs some type of protection may mean he actually needs something completely different.
It’s about making people understand that just going on price alone [isn’t right, you need to also think about], the structure, what it covers and the benefits. It’s about making sure you’re doing a cost-benefit analysis. Any decent adviser would undertake a cost-benefit analysis for you.
I think simple term policies is not so much of an issue but policies such as critical illness or income protection or anything with any additional benefits must be sold on an advised basis.
It’s about making sure people think about what they’re getting themselves into. People need to be made aware of what the options are and the benefits and the pitfalls.
When it comes to the advice process, where the products are more complicated in nature, they should be advised.
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