The frustrating anomaly of protection advice

  • Peter Chadborn
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Like it or not, when assessing the hours of work per case in relation to the remuneration, protection business is often less profitable than other lines of advice.

In fact a frustrating anomaly of protection advice is the frequent inability to closely align the remuneration with the work because of the unknown health factors. For example; a £20 premium case could have heath complications which incur significant work for the adviser firm whereas a £150 premium case could be ‘clean' and go ‘straight through'.

However, there exists a more significant issue. The dreaded counter-offer. Factfinding has been completed, research has been undertaken, recommendations have been made, the client agrees with the rationale supporting the recommendation and says: "Yes, that is worth committing some of my hard-earned money too, happy to proceed."

As any adviser will attest; that is the easy bit. The underwriting process awaits. Fingers crossed. Anything other than an acceptance at ordinary rates will necessitate the adviser having to re-sell, re-position the need for the cover and maybe even re-apply to other life offices.

While presenting on this issue at a recent Protection Review adviser training roadshow, about one quarter of the audience claim to multi-app; the term used for submitting more than one application in an attempt to identify which provider will offer the most favourable terms.

But I believe this is unnecessary. This process creates more work for the adviser, their firm and the client due to the need for additional form filling, illustrations, application submissions and additional pipeline chasing. Even at the end of this process the outcomes may be identical.

The process needs to be more efficient. The client's expectations need to be managed from outset and the adviser's workload needs to be kept to a minimum.

We gather headline health and occupational data at the same time as the initial protection discussions. During the research process, once a short-list of, say, three potential providers have been selected; their underwriting departments are emailed with the (anonymous) summary of the client's health situation, broad details of the cover required and a request for likely underwriting outcomes.

As a result of this process the recommended protection solutions are going to be sufficiently accurate regarding expected premiums and counter terms, subject of course to full underwriting.

Consequently, there are fewer surprises for the adviser, the client's expectations have been well managed, there will be greater sales conversions and there is no need to multi-app so the adviser's workload is not increased.

I must give credit to AEGON from who I first got the idea.

Peter Chadborn is a financial planner at IFA Plan Money

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