Protection has a clear role to play in the avoidance of foreseeable harm to clients under the Consumer Duty.
In light of this, should advisers change their approach to soft skills during the ‘protection conversation’?
Many believe the duty means business as usual for protection specialists, who tend to have the new requirements already covered when speaking to clients.
You are putting protection in front of people in a different way, so they see the value in it
“It’s standard best practice anyway — explaining to clients what you are doing and why you are doing it,” says Plus Financial Group commercial director Matthew Chapman.
Aspirational approach
He recommends an ‘aspirational’ approach, where the protection conversation is part of a wider discussion around clients’ plans and hopes for the future.
“Talk to clients about income security and financial resilience — that’s what we’re all working towards regardless of wealth and background,” he says.
This strategy is used by protection specialist LifeSearch, which focuses on client needs and outcomes.
Let’s stop treating protection like a standalone bolt-on solution that you drop in and try to work around
“We aim to have natural conversations with customers and avoid talking about products and industry jargon,” says Justin Harper, the firm’s chief marketing officer.
“Customers often come to us with an idea of what they want but, to ensure we protect them properly, our conversations often uncover other needs that had been overlooked.”
Discussing needs
The Consumer Duty will most likely have a bigger impact on how mortgage and wealth advisers talk to their clients about protection.
“They’ve always had the duty to look after the needs of the client but there is now an ongoing need to ensure that, if there is a protection requirement, it is discussed with the client,” says Protection Guru product manager Adam Higgs.
“Advisers have to look at the wider ‘What ifs’ and, as such, a lot of the soft skills will focus on whether there is a protection need.”
Talk to clients about income security and financial resilience — that’s what we’re all working towards regardless of wealth and background
Higgs points out advisers do not need to ask lots of questions in forensic detail to establish this.
“They can ask if the client has a family and what would happen if they couldn’t earn an income, or if someone died,” he says.
If this indicates the client has a protection need, Higgs adds, the adviser can refer to someone else, such as a protection specialist, to fulfil that need.
What might change for advisers under the duty is the emphasis they place on cost and value when talking to clients about protection.
“The duty has value stamped all over it, so it may be that advisers talk a lot less about cost and more about the benefits of what the cover is designed to do,” says Higgs.
We aim to have natural conversations with customers and avoid talking about products and industry jargon
He also thinks more advisers could highlight some of the other features of protection policies that are less obvious to the public, such as added-value benefits and different levels of cover.
Reframing the conversation
For Chapman, the key thing is to advise clients about protecting their income as part of the broader advice process, rather than to sell insurance to cover debt such as a mortgage.
This is not just semantics. It is about recognising, if clients do not protect their income, other aspects of their financial plans — such as pension contributions and the ability to invest and to financially support their families — are potentially at risk.
“Soft skills are about reframing and rethinking protection, so the product seems more enticing and valuable than just selling insurance,” says Chapman.
“Let’s stop treating it like a standalone bolt-on solution that you drop in and try to work around.”
It’s standard best practice anyway — explaining to clients what you are doing and why you are doing it
He is a fan of protecting a client’s income before they acquire debt rather than protecting the debt/mortgage itself. So, if a client’s income is protected before a mortgage application is submitted, for example, that debt is protected by default.
“That’s why I do it before submitting a mortgage application — I can win the hearts and minds of clients,” says Chapman.
“Soft skills should really focus on what matters to them. You are putting protection in front of people in a different way, so they see the value in it.”
This article featured in the October 2023 edition of MM.
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