The Importance of Informed Choice

By Alan Waddington

Income protection has a simple purpose - to protect someone’s income if they can’t work through illness or injury. However, choosing the right cover is something that requires knowledge, insight and understanding. It should reflect the needs of the individual, their circumstances and their responsibilities and is far from a commodity that can be plucked boxed-ready off the shelf.

That’s why Cirencester Friendly only accepts business from FCA regulated intermediaries, and entirely on an advised basis. Our business development and marketing teams work with advisers to ensure they know the unique features of our products so that they can articulate them to their clients, not just pitch on price.

The premium, or price, is just one element of the value of a product. While there is no doubt price is important; cover needs to be accessible, there is so much more that should be considered. When we talk about “informed choice”, we mean ensuring that all the features and benefits, including claims track record, relevant to that consumer’s lifestyle and needs, have been fully explored.

When buying something as important as protection for your pay cheque; the thing that enables you to cover all your other bills and expenses, it is vital that you know all the facts. The decision to buy any financial services product should always be taken with all the relevant information to hand, but arguably this is even more important for income protection. Failure to select the right product and options could impact not just you, but your family in the short and long term, seriously denting your financial resilience.

For advisers to do their job to the best of their abilities, they need to know the facts. It is up to providers to be transparent, sharing as much information as possible. We want advisers to know what we’re good at. That’s why we’ve taken the decision to provide as much detail around our claims figures as we can.

Just one, all encompassing, claims total and percentage only tells half the story. If an adviser is going to recommend our product to their client, they need to know how our claims processes will fit with the lifestyles, occupation and dreams of their client. Knowing who we’ve looked after over the years, gives advisers confidence to trust us now and in the future.

While I think the protection industry has become better at giving advisers and their clients an informed choice, providing a raft of content and tools helping them to assess quality and features, there is always room for improvement.

It is still the case that many advisers have to justify why they’ve not selected the cheapest product. Should it not be the other way round? Why not have to justify why the cheapest has been chosen and demonstrate that all other features and benefits have been considered? Without pre-empting the FCA’s Pure Protect Market Study, it will be interesting to see their views on “choice” when considering restricted or preferred panels or loaded premiums with enhanced commissions. How is consumer choice affected here?

The biggest thing we can do is to communicate more effectively. Keeping sales and marketing literature as simple and easy to follow is essential. Advisers don’t have time to peruse every nuance of a product policy document and having quick and easy sales aids to hand makes their job so much easier. Using different formats like graphics and videos also helps to explain the options and demonstrate the benefits.

Knowledgeable and motivated Business Development Managers can make a huge difference too. By taking time to show advisers how to tailor product features to the needs of their clients they can ensure different options are both understood and discussed. Who else knows the unique features than a provider’s own BDM team? It is vital that knowledge is imparted to advisers, either face to face, over webinars or in short videos. We should never assume an adviser remembers everything and it’s our job to keep them up to date.

What could further improve dialogue around informed choice is more collaboration between providers, helping to explain options in the protection market and working together to grow knowledge and expertise. Some of the fabulous work by the IPTF team is already making this happen through their regular meetings, workshops and the 7Advisers programme. Naturally, we are all mindful that providers are in competition with each other, but my ambition is that we can come together to raise awareness of the great good income protection can deliver to people, families and societies as a whole.