As an adviser running a busy business, finding the time to have an in-depth discussion with your clients about their protection needs can be a challenge in itself. But we believe that opening up an informed and honest dialogue with your clients about protection is about more than making the most of business opportunities, it is also about ensuring you are providing the right advice to your clients.
Whether you have already begun to make protection a major part of your business plans, or if you have not had the opportunity to think about it properly, we want to ensure you are equipped with the tools and guides to make the next step. Insight Magazine answers two of the most important questions an adviser will ask when contemplating selling protection:
To provide the most suitable advice for your clients…
Thoroughly going through protection options with your client proves your credentials as an adviser. Building trust comes from displaying a real belief in the purpose of your protection role: To provide your clients with the insurance advice they need to most effectively protect themselves against possible scenarios of financial detriment.
Looking back over your client base, how often does the client only opt for the protection option directly linked to taking out a mortgage? Protection should become a separate conversation, one that targets a different set of needs. We have an Insurance Recommendation Summary form on our broker website for just that purpose. To work through with your client, this is an important document that is used to evidence the conversation.
To make sure you’re Treating Customers Fairly…
One of the guiding principles of the FCA Sourcebook is for you to: “pay due regard to the interests of customers and treat them fairly’. You have a moral obligation to ensure your client has been given all the proper advice on what you can offer, how they can be covered and how little it can cost. So it’s not just about selling protection, it’s about staying compliant.
One of the most underused questions when discussing protection, is to ask your client whether they truly understand what is meant by: “Your home may be repossessed if you do not keep up with your monthly payments on your mortgage”. This can be a very effective tool to ensure they fully grasp the implications of suddenly being in a financial crisis. After all, your client is looking to build on their lifestyle, the last thing they would want is to go back a step.
To tap into an undersold resource…
The infamous protection gap in the UK is as big as it has been in years, with sources suggesting that it stood at an unfathomable 2.4 trillion pounds in 2014. This is testament to the attitudes regarding insurance for many people, as they prioritise how they spend their money.
But most forms of insurance are there to provide financial peace of mind. We believe that given a thorough and informed breakdown of how they spend their money compared to how much they spend on protecting themselves, many clients might soon change their preformed opinion on their insurance needs.
Empower your client with the facts…
There is no perfect solution to selling protection. But we believe that by equipping your clients with all the information, the tools and the advice to make their own decision, they will have every opportunity to realise how sensible a good protection plan really is.
Start off by asking the right questions: Do they know how the chances of developing a Critical Illness increases every ten years compared with the chances of death? Do your clients realise how lengthy financial processes can be in the event of a family member passing away? Do they know how much quoted premiums increase over time, suggesting a “wait till I can afford it” approach is detrimental to them financially?
But your client will also require hard facts to back this up and reinforce your assertion of their protection needs. Have factsheets and datasheets ready to produce that are catered for their situation, age and household circumstances. Clear infographics and charts are always a great way for clients to take the information on board. This can also include timescales regarding releasing finances, statistics around the probability of developing a critical illness, or current state payments for absence from work. People will always naturally want to protect themselves against the most likely scenario, which means given the facts, many would consider taking a protection policy.
Create a Menu Plan…
This is a crucial element of the protection dialogue you open with your client. Ensuring you always strive to offer the ideal world scenario or the ‘Utopian Version’ of protection is essential in complying with FCA guidelines. We encourage the creation of a comprehensive protection package for your client, where you can break down and individually discuss what each type of cover provides. Make sure you ask the right questions: Do they think they could live on their savings? How long would their employer provide full salary when they are off of work? Are they the sole bread-winner in the household?
This will allow you to segregate your client’s needs, so that each situation is covered on its own. This can then be collated to produce a full protection package for your clients. If possible, produce a professional and thorough family protection document for your clients to take away, in case they do not wish to make an immediate decision. You can always pick the conversation up another time with a follow-up appointment, which is protection-focussed and separate from the mortgage dialogue.
Make use of materials…
Lifestyle planners are another great way to discuss protection with your clients and to create budget margins to calculate expenditure. By breaking down what they spend on each luxury per month, you can work together to cut down on life’s little pleasures slightly, freeing up a surprising amount of money that they can spend on maintaining that lifestyle in the first place. Clients are often taken aback by how much they actually spend, which can open up more conversations around whether they actually need so much of a certain luxury. After all, many clients think about what they have “spare” at the end of the month, not what they have spent in the first place.
Some providers have bespoke toolkits available for downloading on their sites. These fantastic factsheets, planners and guides save you lots of time. There are even digital versions that can be worked through together live with the client. This can use quick calculations to produce financial solutions for your client, providing the most suitable advice on protection.