"For many years, ‘selling’ has been deemed poor practice. In my opinion, this needs to be addressed."
Earlier this month, the Association of Mortgage Intermediaries (AMI) published its Protection Viewpoint Report titled ‘Making Protection Personal’. It’s packed with useful statistics and, in my opinion, is a must-read for anyone working in the mortgage & protection markets.
However, what I don’t understand is why this report has been hailed as a strong indicator that the advice profession is heading in the right direction. For example, the report revealed that 21% of those who took out a mortgage via an adviser asked about protection – up from 11% in 2023.
“Surely if protection advice is part of what we do, that figure should be heading towards 0%?”
The report also states that 41% of advisers said they were having more protection conversations. If twice as many customers are asking about protection, should we be surprised that this figure has increased?! AMI reported a similar percentage (42%) of advisers saying they believe that customer outcomes have improved since the introduction of Consumer Duty. Is that true?
In 2023’s report, AMI concluded that 43% of adults in the UK have Life Insurance. That’s reduced to 40% in 2024 - which is surely the wrong direction. In my opinion, judgement on whether or not we’re witnessing better customer outcomes should be measured by the volume of people who’ve taken our advice.
“In 2020, 7% of adults had Income Protection (IP). Fast forward to 2024, and that figure hasn’t changed. It’s the same story with Critical Illness Cover (CIC).”
The dial hasn’t moved; we’re kidding ourselves if we believe otherwise just because we’ve had more conversations. It’s also worth highlighting that of the 40% of customers who bought Life Insurance, only 29% did so as a result of advice. The rest bought their plan via a price comparison site or directly from a provider.
So, why might an adviser struggle to convince customers to listen to advice?
Most of the time, advisers haven’t managed to create enough value in the customer’s mind for them to want to purchase a policy. Your customer has to acknowledge the existence of financial instability and (explicitly agree) that they must be protected. In my experience, this process rarely happens.
Explaining the product without agreeing on the problem won’t make them buy it either. In fact, you risk ‘persuasion bias’ which occurs when people feel you’re selling them something which - almost always - reduces their likelihood of buying to zero. Instead, advisers must provide the solution to a problem that customers recognise as a risk to their future because anyone will buy a product so long as they can afford it and see value.
“If they still don’t buy a plan then you haven’t built enough value.”
Much is said today about added-value benefits – won’t these services add enough value for customers to want to buy a policy? These benefits certainly won’t do any harm but if you don’t want to buy a phone for example, why would you be bothered if it has a high-quality camera or a tracking device to tell you when you’ve lost it? It’s not easy to build perceived value. This seems to be a barrier in the advice profession as it sits too close to what we used to call ‘selling’.
“For many years, ‘selling’ has been deemed poor practice. In my opinion, this needs to be addressed.”
Industry peers will say that protection isn’t bought, it’s sold. However, they’ll also say that they’re not salespeople but advisers. We need to square that circle and understand that the best advisers are the ones with customers who take their advice, and when it comes to protection, that means sales.
