How can Financial Services Professionals better engage with their clients?

Are we fighting a losing battle trying to overcome public perception that protection insurance is expensive, difficult to buy and that insurers go out of their way to decline claims?

At a national level this might be the case.

I’ve written before about the concept of “confirmation bias”. If someone has a viewpoint there are plenty of articles and videos online which will confirm their viewpoint. And it is human nature not to go looking for something that supports the opposite view.

Financial Services Professionals

Over two decades we’ve seen massive efforts by the protection industry to improve. Customer service is better. Marketing and technical material is simpler and easier to understand. And we’ve increased the percentage of claims paid up into the high 90%.

But such is the national media’s influence that the public still believe the opposite.

Confirmation bias works because the Daily Mail and other publications still publish enough negative articles, and have a huge back catalogue of content, that perpetuates the view.

National Media shapes a national viewpoint.

Take the Westminster offshore investment scandal as an example. Many newspapers ran stories condemning David Cameron for “dodging” and “avoiding” inheritance tax. Everyone is up in arms about this. It proves that David Cameron is a crook doesn’t it? He must resign.

It took Martin Lewis to point out on Twitter:

“Dear fellow journalists, calling legit inheritance tax planning dodgy, even if it’s Cameron, is wrong. Pls stop.”

As I write this people have liked Martin’s tweet 1900 times and retweeted it 2700 times.

That’s an overwhelming vote of support for his correct viewpoint. But I guarantee that the articles about David Cameron being crooked will continue, thus adding to the weight of confirmation bias against him.

Can the UK protection industry hope to overcome such a media view at a national level?

In his recent Cover Magazine article Kevin Carr suggested that we should pay all claims and not rely upon definitions. Leading industry personalities responded saying this wasn’t possible. Prices would go up.

On the assumption that paying all claims, perhaps by using a “something bad happening” catch all definition, isn’t going to happen, we have to assume the media will continue to fuel confirmation bias at a national level. If we can’t pay every claim, then there will always be some declines that the press can pick up on.

In fact, you can guarantee that even if providers paid 99.9% of claims, the media would still report its outrage on the 0.1% declined.

The solution to the problem then is for the industry to focus its attention at the local level. One of the keynote speeches I have in my kit bag is, “The Only Hope for Protection Market Growth is the Social Financial Adviser”. I still believe that this is the case.

It’s the financial adviser that has strong relationships with their clients at a local level. Whilst the national psyche is that you can’t trust financial planners, individual advisers have the strong trust of their own clients.

We can change things.

Many people talk about social media and using it to find more clients. It’s definitely possible to do this but we must remember that social media is not a promotional vehicle. It’s an engagement platform. A method to create, build and strengthen relationships with new and existing clients. A foundation to build trust.

Telling positive stories, about the 90% plus claims statistics for example, and building upon that trust in those relationships might help change public opinion much more than battling against the established national media fueled perception that continues to hinder protection market growth.

Now it’s Your Turn:

What have you been doing to promote your business and engage with more clients? Please share your ideas here or on social media.

Cover magazine originally published a version of this piece in the May 2016 issue.

Stories and Customer Engagement Should be the Focus for 2016

The 7 Families initiative proves that stories work.

Often better than slick advertising campaigns. Stories resonate with people. The campaign shows that combined with social media it’s a great way to engage with potential customers.

Stories and Customer Engagement

I’ve been saying, with my tongue slightly in my cheek, that what the protection industry needs are 7000 families. Every product provider, reinsurer and financial adviser could be pushing out stories on the printed page, in video and in audio. There’s little evidence that this will happen.

As the 7th Family takes centre stage, discussions will turn to whether the campaign should continue. Who will fund it and by how much? Strong leadership from the team ensured the success of round one of the campaign but will that be enough to guarantee more?

Making a dent

We need to do more because, although a well-conceived campaign, 7 Families hasn’t made much of a dent in the true perception people have of protection product providers.

Recently the Daily Mail ran an article about a declined critical illness claim. The client developed a cancer in situ the policy didn’t cover, even under a partial payment. The journalist took a neutral stance. The piece was quite balanced and made the point people should read the small print or ask their adviser to explain it to them.

The comments beneath the article, however, betrayed the true feelings of the readers and their perceptions. “Product providers always try and decline claims,” they raged. “All protection insurance is a rip off.” “Financial advisers are conmen.” “Critical Illness is a scam.” “Don’t touch any of these policies with a barge pole.”

A huge task and a long game face the industry to change these views. But companies are cutting marketing budgets or channelling them elsewhere. Product development meetings focus on adding a few more critical illness conditions. Or knocking a few pennies off the premium rate. New entrants to the market launch high quality and complex products but have to play the same price and condition games to grab their share of a flat market.

People before profit?

Actuarial minds focus on how to make the existing cake more profitable. They’ll ask questions. Should they stop taking business from those advisers they feel have “persistency issues”? Should they use postcode pricing to squeeze a little more off the headline rate to appear cheap. Then they go on to load the premiums of more applicants?

None of these actions engage customers. They don’t help change perceptions of a maligned industry.

True and sustained customer engagement is what we need. 7 Families points the way ahead but it’s only a tiny first step. Postcode pricing might make you more profitable in the short term. But once everyone catches up we’re all back to where we started and customers are still writing nasty comments under Daily Mail articles.

Let’s follow the path indicated by 7 Families, but let’s ramp up the customer engagement to unheard of levels. Looking outward is the only way to grow the market.

Now it’s your turn:

What do you think Protection Provider’s should do to increase customer engagement in 2016? Are stories and customer engagement the way forward? Please leave a comment or share your thoughts on Social Media.

Money Marketing Magazine originally published this article on 10 December 2015.

Could Commission Review Provide a Much Needed Protection Shake Up?

Apart from the scribbling of journalists’ pens, the room descended into shocked silence.

Speaking at the Protection Review Conference in July, Mike Ward from had just made a controversial statement.

Could commission review provide much-needed protection shake-up?

He said he thought protection providers should pay much more commission on life assurance, critical illness and income protection products.

I do not think anyone was expecting his angle. As part of a panel of speakers talking about ways of growing the market, Ward’s comment stood out among the usual calls for product innovation, simplification and more marketing spend. Needless to say, before the morning session was over, his remarks were all over the online editions of the trade publications.

Just days later Money Marketing ran an article pointing to legislation in Australia calling for capping of protection product commission. It opened a debate as to whether this would be a route worth travelling in UK financial services. Replying to the article, most advisers, product providers and independent commentators were against the idea. Indeed, a few questioned the wisdom of reopening such a contentious subject.

Since then we have learned of the new Conservative Government’s plans for yet another review of financial advice. Like it or not, that discussion is bound to reopen the subject of commission on protection products once again.

Do I agree with Ward?

Yes, because as an industry we have made the propositions so complex and the underwriting process so long and tedious that advisers spend excessive time on protection compared to what they receive in compensation.

Do I think we should follow Australia’s lead and put a cap on commission or, indeed, ban it altogether?

No, because we know from the run up to RDR that consumers will not pay the same level of fees for protection advice as they would for investment and pensions planning. Nothing has changed since the last round of legislation. Banning or capping commission on protection is still likely to cut take up and not stimulate more.

The Australian experience is a red herring. The Trowbridge Initiative points to high commissions creating customer detriment and, therefore, calls for a cap on commissions to 60 per cent of the first year’s premiums (compared to the 150 to 200 per cent in the UK). Trowbridge cites high lapse rates on protection products and argues that advisers are encouraged to re-broke often because of high commission rates.

It is easy to see how that argument could apply in the UK but there is one fundamental difference. Australian protection products are mainly “annually costed”. Premiums go up every year just like car insurance premiums do in the UK.

Faced with such increases healthy lives look to switch to a cheaper “new” product each year. High commissions do not cause the lapses the premium structure does. Arguably, a commission cap might increase re-broking and not cut it.

Tinkering with commission levels or banning it will not increase demand for protection in the UK. Nor will it overcome the consistent poor view that consumers have of the insurance industry.

According to the Association of British Insurers, we pay out 97.7 per cent of all claims, yet consumers still think we decline more than 60 per cent. These are the perceptions we have to change. Commissions are not part of the problem.

Ward’s idea of paying more commission would indeed lead to more protection being recommended if advisers felt suitably compensated for the work they put in. Researching the market (particularly for critical illness products), the time they spend on managing the lengthy application process and having to handle their client’s expectations if they turn out to be rated all adds up.

Would paying higher commission create a revolution in the protection market? Probably not.

Those who shared the same panel as Ward at the Protection Review Conference, and advocated simplification and increased marketing (much less news-worthy approaches), still represent the best chance for long-term growth.

When we make products easy to understand, when we surround them with a mass of positive marketing messages, when we let customers apply almost instantly and design processes that do not force advisers to spend months on even the smallest cases – only then can we even begin to consider changes to commission structures.

Now it’s your turn:

Do you think a commission review would give a much-needed shake up of UK Protection? Please leave a comment or share a link to your own blog. Why not share this article using the social media buttons below?

This is my September column for Money Marketing Magazine originally published in September 2015.