Legal & General's Richard Kateley urges advisers to first consider their own business protection needs as a starting point before offering plans to clients.
Last week saw the launch of our latest research into the state of the SME market and the need for them to protect their businesses and their awareness of the risks.
Our findings not only underlined the need for SMEs to protect their businesses, but also highlighted how advisers can increase business-owners' awareness of the risks they could be facing.
For me this report is an ideal business case for any adviser who wants to diversify their business mix and get into a new market.
Some of the stats that are within the report are enough to make any sales person salivate at the opportunities:
• 98.2% of the 4.8m private companies in the UK are SME's with less than 10 employees.
• Less than half have a financial adviser.
• 90% said they would want to seek professional advice on the subject
• 89% businesses who took our business protection did so because they were advised to.
• Main reason for not having cover - "Never considered it"
There is a huge opportunity for advisers in this market and at the end of the day it is not a complicated one.
As part of the research we talked to advisers who are already in the market and the general feeling was that it was an uphill struggle to start with.
However the issues were not necessarily around the complexities of the products or push back from the business owners but more around their own confidence, getting the right introductions, and the lack of customer and professional connections awareness of the need.
This is born out in the discussions my team and I have with advisers. We are often told they do not have any corporate clients and they are not sure how to get into this market. For me calling them corporate clients is one of the issues because it sounds well, too corporate.
What we are really talking about here are small businesses, the engineering company on your trading estate, the payroll company or the retail shop on the high street.
Business owners are no different than your domestic clients and in many cases they are the same people. It's just that we have not made the connection that they own, run or work for a small business.
In reality most financial adviser firms are themselves SME's and from the conversations I have had, many do not have the very cover that they are looking at advising other businesses to have.
So if you are looking at our new report and thinking that this is something that you would like to develop but not sure where to start. You might consider starting at your own office front door.
Some of the simplest questions you can ask yourself:
• How long will your business survive without you?
• Without your best salesman?
• Without your para-planner?
• Could their loss through death or critical illness put terminal pressures on your bottom line?
• If you are a limited company or partnership what will happen if one of the business owners was to die?
• Could you find the required funds to retain control of the business?
I always find that if I have bought into something I become much more confident when I am talking to others about it.
You understand what triggers made you want to protect your business which will help you with your client discussions and use the fact that you have it as an endorsement.
I have not met one mortgage adviser who does not have a policy to protect their own mortgage but I have met many advisers who have not protected their own businesses.
From our research the main reason most SME's do not have cover fundamentally comes down to a lack of knowledge not only of the risks, which some business do understand, but equally that there are solutions out there in terms of protection.
We do not have that excuse, so if nothing else I hope our report helps advisers and any other principals reading this blog to go and consider their own businesses and consider their potential need for cover.
So why not join our campaign and get business assured in 2015
Richard Kateley is head of specialist protection at Legal & General
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