What are the key issues and challenges for intermediated protection sales? June protection forum part 1

Adam Higgs: Good morning and welcome to this month’s protection forum. We’re splitting this into two sessions and in first session we will predominantly be looking for adviser views and adviser feedback in terms of what they’re seeing across the market and how they’re acting to drive better consumer outcomes and to kick that off we’ll have Mr Tom Baigrie introducing that session, who’s been very vocal in this area, and I’d be very interested in hearing what he’s got to say. So that’s pretty much all I’m going to do to introduce today’s in terms of the first session. My colleague Robert Harvey is actually going to be chairing this one. So I’m going to pass across to Robert, who will do a quick introduction before he introduces Tom.

Robert Harvey: Well Adam, to be fair, has probably done a pretty good job of introducing what we’re hoping to discuss today. And I would encourage everybody in attendance, advisers and insurers, to obviously to contribute to the discussion. I think this is a really important topic that Tom contacted us to discuss on Forum.

I spent last eight years before joining here as an adviser. I’ll be honest, in that time I saw good practises. I saw bad practises, and I spent a big part of that time as well, managing and supporting a team of advisors from a learning development perspective and latterly as head of protection at DrewBerry, and a big part of my role there was trying to drive up the standards of advisers.

I think from my perspective, some of the challenges that I saw and I think that Tom’s going to elaborate on, are issues like inadequate sort of disclosures being made, some of the issues around transactional sales processes as well. I think there’s a number of different elements to this for us to consider today. And I think as Adam said in that second session, it’ll be really interesting to hear from insurers and also advisors as well on on what role insurers can play in helping to drive up standards for some of the business quality monitoring that goes on.

But also I’m really keen to hear in that session as well, which Adam will be chairing, from advisers on how useful is that data and that content that is shared with you from insurers. How supported do you feel from insurers when it comes to improving your standards and driving up the overall behaviours across the industry?

I’m going to hand over to Tom from LifeSearch, who is going to spend a little bit of time talking to you today, just setting the scene, I think, and highlighting some of the issues that he sees and that he feels very passionate about and has spoken passionately about. If anyone was at the LifeSearch awards earlier in the year, Tom spoke very passionately about some of these issues and highlighted some of the challenges that he sees. So at this point, without further ado, I’ll hand over to you, Tom, and the floor is all yours. Thank you.

Tom Baigrie: Thank you, Rob. It’s a huge subject. I’ll try and be very brief and to the point. For those of you who don’t know me, I started LifeSearch in 1998, having been an IFA and then a wealth manager and then a financial planner before that. And in effect, LifeSearch was right at the beginning or just about pioneered the the tele-sales advice protection process, tele-advice protection back then. It became an advised process because I was talking to customers myself and realised that you really couldn’t do a proper protection job without giving advice, at least in my opinion. And so LifeSearch was there at the beginning and I think is possibly still the largest advisor operating in the market in terms of number of policies arranged per week. I’m not sure of that. But anyway, that’s my history. Throughout it all, perhaps because of my IFA background, I have been hugely focussed on customer outcomes and also trying to stop some of the rubbish that goes on in the protection market.

In truth, a lot of that rubbish, if I call it that, is focussed in the tele-sales sector that effectively has grown up around LifeSearch’ over the last 22 years. There are two strands to that. There is the advisors who give advice over the phone, which probably now is every single adviser, but but essentially the new model, if you like. And then there is the non advised telesales side of it as well. In other words, most customers are interacting with us over the phone if they’re speaking to someone. But then there is obviously the third side which came along after LifeSearch, which is the pure online transactional side.

A customer approaching our market really has three routes in. They’re either going to click on a website and get a website transaction, whether it’s a comparative one with moneysupermarket or a direct one with Aviva or anybody else. But they’re going to self-serve online and I think they get that on their own head be it when they do that…If they decide they want to speak to someone, they go into two very different paths that look very similar 

The first is when they talk to an advisor, when they get a service that’s supported by the Ombudsman and the Financial Services Compensation Scheme, and clearly is advice as we all know to be.

The second is what is called non advice. The customer I don’t think ever chooses that particularly just is where they click. And my contention is that very few of them actually understand what it is they’re getting.

I’m just focussing on as I see it, the three consumer detriments that do individual customers the most harm and because of the badness of the experience, do our market great harm and stop our market from growing as strongly as it should do. Also, almost entirely curtail the growth in the income protection market from reaching the sort of scales it should reach overall.

So at the LifeSearch awards back in March, not that that’s particularly relevant, I focussed the audience and indeed my own efforts, not on non-advised or advised, but purely on the three, as I saw it, most endemic and worst distributor practises in our market. Now, that’s not to say any of you do it, but I think you will all know and have bumped into firms that you think do do these things.

So if I capsulate those and just before I do say in other words, I’ve focussed my efforts on persuading insurers to act as gatekeepers in order to stop these three practises, which I see as endemic in the non advice market, but also growing rapidly in the advised market for reasons I’ll hopefully explain in a bit.

So those three behaviours, one is commonplace amongst some intermediaries but very commonplace amongst most lead generators or some lead generators…that practise is what I would call harassment calling of customers. In other words, if you leave your number on their website, you will get calls numbering 30 a day, 20 for five days, you name it, you’ll get it. Because the only purpose is to generate a lead that can be passed on or hot keyed through to an intermediary. So these generators are supported by intermediary firms, even though it may well be the lead generator that’s doing it wrong.

The second behaviour is the fact that I’ve never yet met or listened to a non-advised tele-seller explaining what their disclosure of status means. Routinely in a call, you’ll get a disclosure, sometimes upfront, in one case after 36 minutes, and actually quite often not at all. You’ll get a statement that what’s happening here is not advice. It’s providing a factual information to allow you to make your own decision, something like that. The end result is that the customer has no idea that means that the with that sentence, the retailer thinks that they are withdrawing the Ombudsman’s protection, that they don’t have a duty of care to make sure that the customer ends up with the right solution.

And then the third is this effectively the giving of advice during a call where it’s claimed to be non advice or high pressure tactics from advisers who are perfectly entitled to give advice, obviously, and basically deceitful and deceptive practises during sales calls.

So my contention is that these behaviours are commonplace…but this is not just about non advice this is about advisors as well – some had cancel from outset rates of 18% and first year lapse rates of an additional 20%. So that’s a 38% lapse rate in year one. A market can’t grow with that and no customer can be happy if they’re involved in a process which has that kind of chaotic number of mis-sales.

To date, I’ve had an overwhelmingly positive response from insurers. And I think if I may, Robert, I’m just going to move into that element because it’s current. The insurers I’ve spoken to have all been positive. They’ve all listed to me the actions which we will hear again later that they take to root out bad distributors.

I’ve found by listening to them all that my previous opinion is confirmed that they really focus heavily on financials. It’s lapse rates that they’re focussing on. That is their definition of worst practise. There isn’t that much testing and almost no mystery shopping designed to show up consumer outcomes. Now there is random sampling of policyholders and done in various ways, distributors are asked to provide a random selection of calls. How that’s policed, I don’t know. But nonetheless, if you speak to any consumer body, they will tell you that the only way you genuinely find out what’s happening to customers in a sales process is by mystery shopping. So I’ve been putting this to insurers, and by and large they’ve they’ve all agreed with me in principle, but they’ve mostly raised the two objections. 

One, that it’s extra resource and cost on them that their competitors don’t have to face necessarily. And I’m unlikely after all, to get unanimous agreement that everyone will do this, and anyway, what would that do to all the distributors out there? We’d all be bombarded with mystery shopping from 18 insurers or whatever it is or more. So that’s the first practical problem.

And the second problem is that no insurer wants to be seen as the toughest person in the market to do business with, or one that is putting distributors out of business just because they don’t think the distributors any good would. It would get that reputation, even if they’re right to do that.

So these twin objections are fair enough, I think, and that’s led me to engage with the Elixir programme, which I’m sure you will hear about later. But essentially it’s a club of insurers that exchanges data about all of us in order to basically ascertain the quality or improve the quality of distribution. My contention as stated is that that’s almost certainly almost entirely a financial process as opposed to a customer outcome process. And I want to broaden it to that.

So this argument now heads into its later stages where I have gathered statements from all the insurers, including some of those on there, and I’m sharing them with them about three more to go I think, it gets me up to the sort of 20 mark, and I intend to share those statements with insurers and say, listen, here is a body of support for this, some of them very explicitly in favour of mystery shopping, others of them a bit more vague, frankly, and less committal. But that goes with the territory. I’ve written to some of those asking them to beef it up a bit, and I’ll circulate those and then ask for them to go to Elixir or work with Elixir to create their own mystery shopping programme and to share that information out in the terms they can with the wider market. Because I do think it’s publicity and openness that is absolutely key to improving an industry.

My aim is not to root out every last, I don’t think I can root out or we can root out every last, bit of malpractice. That would be facile, but I think it is quite possible to change the trend, the direction of our market, which, if I can put it in terms of the tele-sales market, the trend is towards getting away with being the worst you can be, or being as bad as you can get away with. That is the trend I see in our market. It’s aggravated, I said I’d come back to this point, aggravated by the current situation in the lead generation market, where often an Internet generated lead will cost up to £100 per enquiry and therefore that’s gold dust effectively and very expensive stuff. So that pressure on margins on the value of each call generates an urge to poorer behaviours because you’ve got to make the sale, otherwise you’re going under. These pressures will get worse because I’m sure the insurers will tell you during the cost of living crisis, through the cost of living crisis. So we can expect this trend to magnify. And I am seeking to get insurers to nip it in the bud by doing the mystery shopping and then the holding to account of distributors who they can see are failing customers. Because that way we can turn the direction of the industry from the present wrong path to the path of trying to be the best we can be in a tele-sales environment, be it not advised or advised

So that’s where I am and that’s where I’ve got to. I am amazed with how positive the insurers have been and how close I appear to be to getting them to agree. But I think the last hurdle in this particular race is without doubt, five times higher than all the rest. And that’s where they actually have to put their money and management on the line and say, we will do this with Elixir and we will get together and make this happen in a cogent and open fashion so that the whole market can listen to itself improving, which would be a fantastic and rare thing. As the as the alternative, because they may well not agree to this, I’ve been speaking with the PDG (Protection Distributors Group), which some of you I know are members of, and everyone is welcome to apply if they’re an adviser, and that body is supporting me in terms of draughting a note to insurers to encourage the process through Elixir, but also to suggest that if that doesn’t happen, then distribution needs to find a way of mystery shopping itself essentially, and that would then become the fallback position. Rob I think that’s as much as I can do without boring people witless.

Robert Harvey: Brilliant. Thanks, Tom. I think it’d be really interesting to open this up to discussion now. And there’s been a few comments in the chat – Ian if I can bring you in, because I think you made a really interesting point in the chat there around, if we’re tackling the three issues that you’ve raised Tom, The first one there around lead generation and some of the issues that that’s creating. Ian, if you’re there, I wonder if you wanted to just expand on your point that you’ve made in the chat? 

Ian McKenna: Well, I was actually inviting Tom to expand on it a little bit. To be fair, I think there is this whole I don’t believe we’ve got Alain Desmier on the call today, which is perhaps a shame. Alan’s done some great work in trying to create systems. My understanding, Tom, please correct me if I get any of the detail wrong, but my understanding is that from a regulatory perspective, if an advisor takes a lead, the firm taking the lead takes responsibility for all the dialogue that there has been prior to them receiving the lead. Therefore, if there has been, let’s call it misrepresentation from the lead generator, unless you prove the correct provenance of that lead and that it’s been compliant at every stage you’re risking incurring and regulatory risk. Is that right Tom, have I summarised that correctly 

Tom Baigrie: Yes, you have. I think, Ian, in broad terms, the truth though, and this is the point I’d been making to all these insurers, is that the regulator is not enforcing these kind of issues at all. They don’t actually have any enforcement teams doing this kind of work in our sector. They’re all too busy elsewhere. So it’s not really that the individual firm is likely to be put out of business because it’s buying dodgy leads. By the regulator that is. I think the individual firm buying dodgy leads is likely to go out of business anyway because dodgy lead suppliers are not just dodgy to customers, they are they are dodgy to towards those they sell to. And anyone who’s dealt in the online affiliate market will know that it really is a nest of vipers. And if you find a good one, you tend to just stick with them

The reason I haven’t gone into that, that’s one of the areas like loaded premiums where I’ve said, you know, Alain Desmier is running a good campaign there. The ASA were very strong on it and did a big job last year. It’s actually creeping back according to Rob White, a PDG member. The number of poor lead generation tactics is now back on the rise because actually you’ve got to keep whacking the mole and the ASA is not that good at that. So it’s that practice of harassment calling, I think that is the absolute identifier of poor lead generation practise. So that’s the practical symptom that you can tell if someone is a bad lead generator, they will be harassment calling. If they’re a good one, they probably will not be, they will not be needing to flog leads at the kind of volume and prices that necessitate terrible behaviour.

Ian McKenna: Good point. Thanks, Tom.

Robert Harvey: Thank you. And Tom, just out of interest in terms of that, obviously, that harassment calling is perhaps endemic in some elements of kind of the lead gen industry. But is that something that you think or that you see within the kind of advised intermediary space? Do you see firms kind of acting in that way? Is that something that concerns you, that there are advisors that are following those practises?

Tom Baigrie: The honest answer is no. All my mystery shopping has been focussed on non-advised Intermediaries, I haven’t bothered with the advice sector. Elixir will tell you that advisors are going out of business pretty plentiful advisors in financial trouble in the tele sales market in particular. So that’s just where I focussed my efforts. The the truth is though, that there are a relatively small number of lead generators like this. And if you are an advisor dealing with one of them, then you are effectively facilitating this process.

I don’t suspect advisors themselves would go into this because it doesn’t seem a very productive process. In other words, a customer who’s been called 40 times is highly unlikely to take your advice. They’re going to hate you. They’re not going to deal with you. But if you’re a lead generator, your mission is not to get them to take advice. It’s to sell the lead. So once you’ve got them on the phone, after 40 times, you transfer that lead to your partner, your distribution, your tele-sales seller. And that could be advised or non-advised. You’ve done your job. You’ve given them a hotkey transfer. He’s paid £100 for it, or whatever the price is that you charge, and that’s the end of everyone’s interest. The adviser, if they’re an advisor, doesn’t know that about the previous 99 calls that have driven the customer absolutely mad. And that advice process will then go on. Maybe it is successful sometimes. I doubt it, but maybe.

Robert Harvey: It’s interesting, I don’t know how much of the market relies on leads from lead-gen sources. But I wonder, is there a better way of of ultimately our industry generating leads? There’s a lot of talk, of course, about protection advisors partnering with wealth advisors and referring clients. It feels to me as though there’s got to be a better way of potentially engaging with potential consumers in this space.

Tom Baigrie: I think there are lots of better ways, but in the end the way that you have to engage with the majority of consumers is the way the majority of consumers want to engage. And if you think about people out there, consumers out there, very often their first inclination, even if they’ve received advice from a mortgage broker or whatever, the next inclination is to go online and type life insurance into Google. And at that point, you are then confronted by an array of advertisers that fall into one of those three categories I replied earlier. So there are non advisers in that space and those non advisers actually do engage in harassment, calling some of them sometimes. That is where my mystery shopping focussed. So you asked me about advisors earlier, not all advisors do engage in this. But to say that therefore internet generated leads are not good is totally the wrong way round. We’ve got to build a system that services customers properly in the way that they want to approach us well, when they approach us in the way they want to approach us.

So social media marketing is vital to get through to people. When you click on that ad, you need to come into a process which is going to treat you fairly. And my contention is the insurers can manage it so that that is the case. It will take them a while, but they can easily get it to that stage. They just have to decide that that’s what they want to do more than hit this month’s proper target, because actually they’re going to lose most of it in this month’s elapsed rate.

Robert Harvey: Just looking at the chat, so Caroline Ashton’s asked, where’s the FCA in this? I mean, is this something that’s that’s on their radar?

Tom Baigrie: I’ve been speaking to it to Sheldon Mills. I don’t know if anyone else is better qualified to answer this than me, perhaps, but I have been speaking to the FCA and their whole focus at the moment is on consumer duty. They see the consumer duty as setting the groundwork for more enforcement and demands for better behaviours from all parties.

But in practise I have read through, I’ve been through, worked through line by line, the two consultation papers regarding the consumer duty and the first was absolutely on point. If that had come through, that would have achieved exactly everything the FCA is saying they want to achieve. I oversimplify, but that is that’s the broad truth. The second, which was the consultation paper, 36 of last year, quite a lot of them would fly about, really watered that down to such an extent that I don’t see the FCA as having any practical ability to really enforce change in our market in the near future. And anyway, they make absolutely clear that they’re way under resourced. They haven’t got any enforcement manpower operating in this sector at this level of detail 

So I think, where is the FCA in this? I don’t want to be rude to them, but in our case they’re asleep at the wheel, but actually they’re not. They’re just focussed on 1000 other things that they see as being far more serious than someone buying the wrong protection product or in some way not getting the best protection solution for them.

Robert Harvey: And and Paul Reed, you said ‘how often does a FOS’ door get knocked from customers that have gone through the non advice journey?’ I mean I think as you pointed out, Tom, the very fact of it being non-advised means that the the consumer has no recourse.

Tom Baigrie: Well, it’s not quite that simple. The consumer does have recourse. And there was one case last year where the force deemed them to have received advice. So were there a campaign advising all non advised customers who received no advice, if you see what I mean, non-advice tele-sales that they could complain to the ombudsman, I think there’d be a lot more action. But the Ombudsman is so swamped with work across all its various areas that that would be pointless.

But furthermore, what happens, because again we mystery shop this, when someone who’s received a non-advice tele-sale then makes a complaint, either pre sale or post-sale, is they get very firmly battered back. Chapter and verse documented. You have no right to complain. We told you we weren’t giving you advice whether the court has recorded or not, you’ll get that very clear statement and effectively that mitigates against any further complaint. It’s very strong legal kind of stuff that the customer gets and they, with one exception last year – I haven’t looked at all the FOS case books but only heard of one anyway, they accept that batting back and go okay I made a cock up because what are you doing? You’re cancelling a £20 a month premium or if it’s whatever it might be premium and you’re saying you’ll rewrite it again somewhere else. Obviously your health might stop you doing that, in which case, you might take it more seriously.

So in other words, the, the Ombudsman is possibly ready to take action, but very few think of going that far after the treatment they get from a non-adviser. That’s what our mystery shopping has revealed. I can’t say more than that.

Robert Harvey: Adam Higgs, you’ve just raised your hand, so I’ll come to you.

Adam Higgs: Thanks, Rob. I’m going to fire another question at you, Tom, if you don’t mind. You’ve spoken very eloquently about what you think insurers should be doing to help stamp this out, which all makes perfect sense and I totally agree with all of that. But are there things that advisors can also be doing to help limit how much this goes on? Is there more they can do? Is there somewhere they can report bad lead generators to? What more can general advisors do? I guess my general question.

Tom Baigrie: I’m very happy to answer it. So what could advisors do? Well, the first thing is make sure your own house is in order. Look at what’s actually happening on your advisor force. LifeSearch is I think probably one of the biggest advisory forces in tele-sales.

Well, essentially make sure your house is in decent order. Nothing is perfect. The Ombudsman is there for when you cock up. So but that would be the first thing is to raise our standards. But it’s really hard to raise your standards when you’re competing against people who don’t need to have any. That is the fundamental problem with improving advice. And people say we should have professional qualifications. I say, ‘Whoa, you’re asking me to load more costs onto my business, my advisors are really good, they’re really qualified, I trained them to death, not to death, but to excellence’. And now I’ve got to take and pay for that, no. Because I’m competing against people who don’t have that. And so are all of you one way or another.

So that actually means that their model becomes more profitable, as is the case at the moment. Their model can spend more on Google and more anywhere else, and therefore that is the sector of the market that will in time become dominant. It’s not that far away from it now that though you wouldn’t know that from looking at the Swiss Re stats, which have got this completely wrong, in my opinion, I’m talking to them about that 

Tom Baigrie: So what can advisors do, in a nutshell? You can make sure your house is in order, but also, you know, you come across dodgy firms, dodgy lead generators, dodgy stuff in the market. Your retention teams will look at churns where the company, the guy purported to come from, Typically it’s L&G, they use a way your policy was arranged but it could be Vitality where or you know and suddenly they’re having a conversation with someone who’s purporting to be an insurer’s improvement advice scheme or something ridiculous.

So you will come across these things and what do you do with them? At the moment people sort of don’t have a thing. So the right thing to do, to be honest, is to gather what evidence you can. And I’m making this up as I go along. But the two members of the PDG who focus on this particularly closely are Rob White of Caspian and me.

And if you just simply say, just as you know this is one, then I simply ping it over to Mike Pritchard, the senior manager at Legal & General, who runs the Elixir. He’s the kind of chief exec or MD of the Elixir thing that all the insurers share. And I say, right, Mike, why aren’t you stopping this load existing? Sometimes I mystery shop myself, but very rarely I’ve got too much else to do.

So anyway circulate bad practise and you’re not unless you’re trying to form a cartel, or gain some big financial advantage from this, you’re not acting anti-competitive in the slightest. You’re trying to stop consumer detriment, which the competition law specifically allows us all to do. So yes, share bad practise with with with us and we’ll try and get Elixir to stop it I guess is probably the only practical course of action.

Robert Harvey: Great. Thanks, Tom. Ian, you’ve got your hand up.

Ian McKenna: Yes, I just wanted to share an example that I literally came across last night and invite the group to comment. I was watching something on YouTube and for some reason it decided to target me for a life insurance ad from what purported to be, and I think they are, I haven’t checked the FCA register yet, a directly authorised firm but I just want to share the pitch that they gave and I’d like to hear other people’s reactions as to whether you think that’s fair or not. Amusingly given, I was watching the video on the 6th of June, it was saying that life insurance would never be as cheaper after the end of May, and the message was that basically it’s never going to be as cheap as this again, an act now. That struck me as a little bit extreme. I mean, you know, you can make the argument about each month we get older, but actually that’s based on your birthday, not the last day of the month. I don’t know what do people think? Is that pushing it or not? I’ve seen quite a few heads nodding, saying that you think, okay, all right.

Tom Baigrie: I think the answer is yes, of course it’s pushing it. Yes, It’s an overstated advertising sort of effort. And if that was the end of it, if that end then brought you through to a proper advisory process. Well, it’s an advertising standards authority issue, but there is no catastrophic harm. But that is almost certainly not the case. If someone is advertising like that, then they will be lead generating, then they will be harassment calling you and they will put you through to people who are unlikely to give you a get a right consumer outcome 

Ian McKenna: It’s interesting because, they say they’re FCA regulated, but for example, their process required you to tick to accept their T&C’s before you could go to the quote button. But, there was no way to read, said T&C’s before you agreed to them. And it just went on from there, I mean, as I say, they say they’re a regulated firm, I will do a little bit of digging 

Robert Harvey: I think just very briefly as well, there are ways of engaging with consumers. And I think it’s probably fair to say that you’re more likely, I guess in my experience of adverts I’ve seen, as you are more likely to see some of these slightly dodgy looking adverts from kind of lead-gen type sources and maybe some of the lesser quality firms out there. But I think it does highlight as well that actually is advisors, I suppose from my perspective some this is not possible for all advice firms, admittedly, but certainly there are opportunities.

I think, for us to better engage with consumers through the use of social media, through email, our marketing campaigns and this sort of stuff. My previous role, we spent a lot of time working on email campaigns, ad campaigns and the like to engage with consumers in a powerful way, but in a way that reflected the value of getting advice and the importance of speaking to an expert. And we weren’t doing anything particularly clever with that. It was just relying on email, re-marketing and online advertising, but it was done in such a way that ultimately it was about highlighting the importance and the value of advice and speaking to professionals. So I guess there’s maybe a little bit more that that could be done in that area. But Paul, you had your hand up a second ago, so I’ll come to you 

Paul Reed: Yeah, it’s just reaffirming a couple of the bits that have already been said there. But if the offer ends at the end of May and you’re watching it in June, that’s not a great start, is it, to do any form of advert? It doesn’t seem to instil any confidence in it, but where it says that the rates will never be as cheap again, well, insurers quite often have rate cuts. And, you know, they’ll make changes to their rates. It’s not necessarily linked purely to birthday, whether it’s based on trying to get a certain market share and a certain product or having a rate cut to promote something or whatever. There’s multiple reasons. But yes, it’s frustrating those adverts because it just paints that bad picture of the industry, doesn’t it? And if that’s what consumers see and they’re not stupid, that they’re seeing an advert that ends in May and they’re watching it in June it straight away puts the industry in a bad light before they’ve even started a journey to look for insurance.

Robert Harvey: I’d be interested to hear from other people on the call, particularly advisers, to me that advert also is, is a quite good example of I suppose to some extent what I have seen in the past amongst advisers, not just from non advice, is protection advice is still I think there is a risk that it’s treated as a transactional sales process in a way that broader financial planning isn’t. And I don’t know whether that’s because of the challenges of the product itself. It’s not something that necessarily consumers on the whole still regard as being something that they need advice on. I don’t know. I might be completely wrong on that, but the sense I get is that protection insurance is still kind of lumped in with general insurance products where traditionally you would you wouldn’t speak to an adviser. Consumers nowadays probably wouldn’t think of speaking to an adviser to buy car insurance or other general insurance products. And so to some extent, does protection get lumped into that? And so whilst it’s not the fault of consumers, consumers don’t necessarily always value advice. But as I said, is there a risk that even amongst advisors, protection products are still sort of sold to consumers through transactional sales processes where the focus is very much on the speed of the sale close in the business.

I’ve been on courses and things and spoken to advisers where there’s still an overwhelming focus on sales. And it’s, you know, it’s banging out sales, it’s selling policies, it’s selling high volumes of policies. It’s closing that business there and then on the day, trying to get the client over the line. You know, getting that policy on the books without as much regard for actually the process of advising that client, and I’d be really interested to hear from other advisors on the call on whether that’s something that they think is an issue or is a challenge. Because I think when we hear from some insurers later on, and obviously the insurers out there are collecting data on advice firms which, I’d love to see all of this data which will clearly highlight where there are some bad practises around effectively treating it as a transactional sales process. Because I imagine that you see very high lapse rates from firms or from advisors where policies are sold like that. 

I know from my own experience that when we collected some data on our own clients, it was interesting that those policies that had gone on risk on the same day as the fact find. In other words, the fact had been completed, the policy went through the application process, placed on risk that day, not because the advisers that I was working with were giving bad advice, but because it was able to close the business there and then and place it on risk. Actually, they did tend to then have a higher lapse rate because there was no established relationship with the adviser. The client hadn’t necessarily had time to consider all the options and these sorts of things.

But it is difficult because equally we’re still facing a challenge from consumers, and we see that in some of the stats that get published around the drop in volumes of business, particularly income protection, that consumers don’t necessarily still see the value in these products in the way that we would like them to. So I think that that is a challenge as well.

Tom Baigrie: Lots of consumers don’t want to speak to anybody. That’s really very clear. That’s probably the majority under the age of 40 or whatever. And therefore they trade online and that market is therefore lost to advice. Although if you support online advice engines as LifeSearch does, then plenty of them drop out of that online process into the advisory process. But the consumer said, I want to talk to someone, I want to have a conversation, but I don’t want it to be advice. I just want it to be someone selling me something, is just a useful fallacy. But that’s not the that’s not the basis on which I’m fighting my efforts at the moment. I’m simplifying it down from that complexity.

Adam Higgs: So I wonder as a bit of an action for us, Rob, one of the things that that we could do at Protection Guru is maybe almost come up with a due diligence ‘explanation’. This is kind of high level what advisers could do just to check the source of their leads and the legitimacy and how good this lead generator is.

Robert Harvey: I think it’d be a very useful thing to do. I guess what is interesting is that on last month’s forum, we had a discussion around the sort of the use of social media and things to engage with consumers. And I guess it’s quite interesting to think about what more can advisers do. And Tom, you made the point that actually for a lot of younger consumers, increasingly they don’t even speak to advisor full stop. They just want to go and buy something online. And actually the challenge is then is getting that person in front of an adviser. They might start their journey through an online process, but then actually end up speaking to an adviser.

I think probably what you’re doing at LifeSearch is similar to what we did at DrewBerry, which was to provide an online facility where people could generate quotes online and they could have a look at some options online. We would educate them and tell them everything they could possibly want to know about the products, but then engage with them through the advice process by making contact with them that way. And that does feel like a sort of way of particularly engaging with younger consumers. But I guess as last month’s forum highlighted, there’s lots of different, interesting, innovative ways in which a lot of advisers now are looking to try and engage better with consumers, using social media to generate leads through highlighting the value of protection, insurance and this sort of stuff. So it feels like there’s lots of different, interesting things that the people could, could do in this area.

I’m conscious of time, but there’s been a few interesting comments just made in the chats. Scott, you’ve highlighted something around the advertising and focussing on cost and lowest cost options, which obviously is a subject particularly close to our hearts at Protection Guru. I don’t know if you wanted to just just expand on that a little bit.

Scott Taylor-Barr: It’s just really to say that any insurance that’s sold primarily on cost is always going to end up in a bad place. You know, if you’re just going to chase the lowest possible cost then you’re always stripping things away to change that. And, you know, insurance is one of those places where more than anything else, you get what you pay for. And if you’re just going to have the very, very lowest cost protection, then hey, guess what’s going to happen when you need to make a claim? You’re probably not going to have the experience that you were hoping for.

So I think any advertising that starts off with ‘I can save you a fortune on …’ is generally going to end up in a bad place. Yes it is possible to shave a little bit of cost off in certain places, but I think when you start to talk about that above all else, and not talk about the quality of the product, not talk about what you’re covered for, not talk about going through an advice process to make sure you’ve actually got the protection package that’s right for you. And your sole purpose is I’m going to save you money. I think that’s always a bad starting point.

Ian McKenna: I’m going to come in there. Scott, from everything you’ve just said, I hope you’ve had a chance to use Protection Guru Pro because it sounds like it might be quite useful given your positioning. Have you tried it yet? 

Scott Taylor-Barr: Yes. Any tool I can get my hand on, I will have to play with it to see. A lot of my conversations are around quality of proposition and it’s very rarely that I’m advising somebody to take the lowest cost product because usually for a couple of quid more, there’s something that adds quite a lot of bang to the buck, that’s going to be a better fit for them overall.

Ian McKenna: So that is the scenario we designed the system to support. So hopefully it’s giving you what you need.

Robert Harvey: As you say, Scott, I think the one of the challenges that we see and kind of wanted to try and draw out in this session as well, is that there’s different practises amongst all sorts of distribution channels and I think particularly around the kind of advice distribution. One of the things that we were trying to almost support advisers with, as Ian says, with Protection Guru Pro, is to help steer those conversations away from cost driven recommendations more to the quality. And I think that’s become even more important in recent years as we’ve seen a real proliferation of different products and options available on the market. The basic core products now are pretty good, but you’ve got all these different nuances between plans and as you say, it can lead to some pretty major differences in client outcomes.