Life offices must improve how they support general financial advisers. Plan Money's Pete Chadborn explains the issues to Fiona Murphy
"Whereas firms such as us have had to evolve our model and refine it, some firms have had to drastically overhaul their propositions. The knock-on effect is that we’ve had to concentrate more than ever on efficiency of process, aligning remuneration with workloads.
"That means much more fee-based rates and much more accountability supplied for what we’re earning versus what we’re doing. That in itself puts a downward pressure on remuneration, which means we’ve got to be a lot more efficient in what we do.”
Chadborn adds that it is “frustrating” that you cannot align the work with your remuneration. He gives an example.
“I could arrange a £10 a month term assurance policy that could pay me a couple of hundred pounds for commission. It could be hours or weeks or months of work. I could equally arrange a £100 a month term assurance policy that pays £2,000 commission. It could be a clean life, and [gets accepted by the insurer quickly]. Apart from the advice, the work in the client’s eyes looks straightforward. I’ve been underpaid on one and overpaid on another. That’s been ironed out on the non-protection side, or is being ironed out, as advisers refine their models.”
Blinkered decisions
Chadborn says he feels the decision-makers and life offices seem “blinkered, in that a lot of the decisions and directions are driven by people who only work in the protection industry”.
“Whereas there are firms and people like me where protection is only an element of what we do, and we advise on other areas. That is shaping and creating our frustrations.
“As an adviser, I deal with what comes across my desk. We should always prioritise protection, because it underpins all financial plans.
“When you look at aligning the work and remuneration, it seems like protection is a lucky dip. I could say to a client we can do retirement planning: let’s understand what you have and your aspirations, and put a strategy in place. There will be a cost of ‘x’ for providing that service and you might need some product restructures. You can articulate your service and the cost of that service very clearly.”
