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Roger Edwards, Bright Grey Proposition Director, talks protection

Is it time for GRiD to spread its wings into Individual Protection?

By guest blogger Edmund Tirbutt

The individual protection field is like a rudderless ship which is sailing horribly close to the rocks, and is woefully lacking in any meaningful industry-wide leadership. In my view it would strongly benefit from Group Risk Development (GRiD), the industry body representing the group risk community, expanding its remit to include the individual protection side of the business.

During the past couple of years GRiD has demonstrated a markedly improved ability both to lobby government and to effectively liaise with its own members, and there is no comparable body on the individual protection side. Whilst there are organisations such as The Protection Review and the Income Protection Task Force, it seems clear to me that these exist primarily to further the commercial interests of the individuals behind them. It is hard to see that they really have the interests of the individual protection field as a whole at their heart.

The thing that has really struck me about the movers and shakers at GRiD is that they are motivated primarily by a desire to secure progress for the group risk field as a whole and seem entirely devoid of the type of destructive egos that are so much in evidence in the individual protection arena.

“I do not envisage the individual protection field making significant progress until it can find some worthwhile leadership”

Most of the personalities who worked tirelessly to secure the Default Retirement Age exemption for group risk, for example, seemed intent in remaining anonymous. The individual protection field, on the other hand, is full of consultants instigating largely pointless initiatives just to publicise themselves. Do these same consultants input into government consultation papers in the way that they would probably like us to think they are doing? Sadly, my sources suggest they don’t.

I do not envisage the individual protection field making significant progress until it can find some worthwhile leadership,  and this is never going to come from the sorts of individuals who are currently so intent on hogging the limelight. Editors are always happy to publish their turgid columns because they don’t have to pay them – like they would have to a journalist. But they rarely say anything of interest. Is it therefore surprising that the field fails to expand? If we are to engage IFAs and the public we are going to have to do better than continually recycle the same old tired messages in this way.

It is ironic that some of these self-publicists frequently refer to a “lack of passion” in the industry when they seem almost totally devoid of passion themselves. Indeed, they have actually succeeded in driving individuals who do feel passionate about these subjects away.

On the group risk side of the business we simply don’t have these problems.

Over to you:  Do you agree with Edmund’s view that the individual protection market lacks leadership or is he way off the mark? Who should step up to the plate and what should they do?  Please leave a comment and let me know.

The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.

Roger Edwards 2 February 2012

Price lessons we can learn from Retail Sales

Packed shops in the January sales prove that people still love a bargain despite the supposed age of austerity that we are living through at the moment. I always find it amazing that after weeks of spending in the run up to Christmas, many people allow themselves just one day off, before heading back out onto the streets to find even more bargains.

The relentless marketing machine of the retail industry fuels this spending spree with its promise of double discounts and ‘everything must go by Friday’ when of course we all know that the next sale will start on the Saturday morning. The desire for a bargain promotes behaviour that could appear irrational from some viewpoints. The double discount trick tells the consumer that the cost price of the sofa is £1000. The first discount reduces the price to £600 and the second, the double discount, reduces it to £400. The customer is told that they are saving £600. They will buy the sofa and boast to their friends and family that they saved £600. But of course they haven’t saved £600 at all. They have just spent £400. And that is the big trick of the January sales.

“So what can we in the protection industry learn from the spending habits and the trends in the retail sector?”

I have lost track of the number of times I have been quoted by journalists or have written articles over the last five years that state that the price of life assurance is at its lowest ever. Every time I say it I expect that sooner or later the price will stabilise but it hasn’t yet. People well into their 40s can get over £100,000 of life assurance for only £10 a month. That is a truly remarkable bargain. But unfortunately the consumer does not see this. Despite the plummeting price of life cover demand has never increased. The rock bottom price, our own equivalent of double discounting or other such financial seduction marketing, hasn’t altered that fact that the product needs to be ‘sold’. It hasn’t transformed it from a grudge purchase to an aspirational one.

So if we have to continue to sell we need to tap into this obsession the public have with price. However, we do need to be careful that the price message does not become so powerful that we send our protection customers off to the internet to log into price comparison websites.  While people can find some very good deals, advisers can align the price message with the true added value features in the products that they recommend. Life polices with extra services such as counselling or access to medical specialists is often not available on the internet and these features can justify a few extra pence a month. The adviser’s message could be that although prices are lower than ever before, I have the expertise to deliver even more.

Of course thanks to the Gender Directive and new rules for life company taxation we might see some price rises in 2013 so this year may really be the last year of falling protection rates.

“We need to tap into this obsession the public have with price”

Another feature of the retail culture is an increasingly convenient way to shop. You can buy most goods online and have them delivered straight to your home. Although setting the delivery time can sometimes mean the inconvenience of waiting for a specified two or three hour window, most deliveries can be set up quite easily online or in store with a few mouse clicks.

Online applications for protection products are also making things easier for advisers and their clients. They can ensure that all the correct information is in place before submission. When linked to online underwriting services advisers can even schedule telephone underwriting calls or arrange for a convenient time for a medical examination. Of course as a result of almost a decade of intense price competition, there are now many questions on an application form so that a precise underwriting decision can be made. Usually, however, the online experience feels better than wading through 32 pages of paper.

Finally in the retail sector more than ever before there are ‘unbranded’ versions of products available as an entry level product. Indeed in the recession the advice of the money experts was to ‘down-brand’ in order to save some money. Protection products, especially critical illness and income protection, have become increasingly complex as companies have sought advantages over their competitors. Advisers like the complexity as well because it reinforces the need for advice. But we may have gone a little too far. Perhaps there is a place for a simplified range of products to sit alongside their more complex relations.

The Government has kicked off a consultation about the need for some simpler products. These types of discussions always seem to imply that these products are needed outside the advice space. The assumption seems to be that simpler products would sit better in the direct to consumer, non-advised or bancassurance markets.

I do believe that there is a need for some simpler protection products which are not only very competitively priced but also allow ease of purchase online with the minimum of fuss. I see no reason at all why these shouldn’t be part of the advisers repertoire, allowing them to choose a more complex feature rich product for those that want it, and a cheaper vanilla product for those that want simplicity and convenience.

Over to you: How important is the price of protection in your discussions with clients? Do we need to develop a “simpler” product set as the Government seems to think? Please leave a comment and let me know.

Published in Professional Adviser 

Roger Edwards 1 February 2012

5 tips for a successful financial year

At the start of a new year it is always tempting to write the ‘financial resolutions article’. They start by saying that after the Christmas break, having eaten and drunk to excess, it’s now time to get fit, join a gym and eat healthy food. It then goes on to suggest that if you are making fitness resolutions you should make financial ones as well, suggesting you cut out unnecessary expenses and luxuries, and ensure that you get your finances in order.

This year however, things are different. Many people are strapped for cash and are already scrutinising their incoming and outgoing money. In fact they started their financial detox so long ago, they can’t even remember when. So with difficult economic conditions ahead, what’s the best solution?

Instant financial safety nets
On TV I see adverts for ‘pay day’ loans, or for companies offering unsecured loans that must be repaid within 12 months. The popularity of these services is madness as many simply take on these loans to take advantage of the January sales rather than for a genuine emergency. It is clear that for many people it is too late to consider changes to spending patterns.

Instead of being worried however, there seems to be a ‘live for the moment’ attitude taking a grip. I heard one of my friends moaning the other day about having a credit card debt of over £6000. And yet I saw him return from town several days later with another arm full of consumer goods. I joked about the debt and he shrugged it off. “I’m just going to enjoy myself and worry about it later,” was his response.

But let’s be realistic. Whether you are living for the moment and racking up more debt, or if you are worried about making ends meet, it is still relatively easy to free up £10 over the course of the month. In fact I’d go as far as to say it should be essential. Ten pounds is all it takes to put in place some financial protection.

Peace of mind strategy
If the monthly credit card bill is making a louder noise when it hits the door mat then ‘live for today and put in place as much of a financial safety net as you can for the future’ has to make sense.

For those for whom the usual annual ‘financial resolutions article’ is still relevant, maybe there is not as much to cut back on, but again it only needs a small monthly investment to put in place a financial safety net for the future.

Here’s my 5 point plan for a successful financial year in 2012

1. Look at your situation
As you reach different life stages, like becoming a home-owner, having children or changing your job, your emergency plan needs to change too. Look at your current lifestyle and what you think it’ll look like in the near future and make sure you have plans in place to protect everything that’s important to you.

2. Speak to an independent financial adviser to weigh up your insurance options
Knowing which insurance products are best for you and your family can be confusing. Why not speak to an independent financial adviser who can talk to you about life cover, critical illness cover and income protection and see which options are best for you?

3. Pay off large credit card debts
Credit cards might seem like an instant safety net to fall back on, but they’ll probably only add to your worries in an emergency situation. Credit card debt will continue to grow if you’re unable to pay the monthly bills.

4. Start saving
Put as much money as you can afford to save into a separate account that you can fall back on if you need to. Make sure you use an easy access account, so you can dip into it quickly in an emergency.

5. Tell someone you trust your emergency plan of action
Tell someone close to you about your emergency savings and how to access them, as well as details about any insurance plans you have. This’ll make things a lot easier for them to put your emergency plan in place if you can’t do it yourself.

Check back here for more Financial Safetynet information from Bright Grey

Roger Edwards 17 January 2012

What comes first – protection or mortgage?

Buying a first home represents a major commitment for any couple or individual and traditionally has acted as the trigger for people to buy protection insurance. But with many marrying later, having children later and buying their first home later in life, how can we ensure people are prepared for the future regardless of what life stage they are at?

In the industry we know it makes perfect sense to take out protection insurance when you are young, fit and healthy. Being struck down with a serious illness can happen at any time, not just in middle age. And the longer someone puts off buying protection the more expensive it will be. It is also important to make clients aware that if they leave it until later in life they may develop health problems that could make the policy unaffordable or they may be refused insurance altogether.

“The conversation around protection can be a tough one”

The conversation around protection insurance can be a tough one. But if the unthinkable happens, even those who haven’t set foot on the property ladder yet, will need a financial safety net in place to protect them from the financial consequences of a critical illness.

We are told that the average age of a first-time buyer could be 40 by the end of the decade. But that doesn’t mean the protection sale needs to wait until then. Get the message out to younger clients that they should be laying down firm financial foundations now, not waiting until it’s too late.

Published in Mortgage Strategy

Roger Edwards 6 December 2011

Alan Savery talks about Bright Grey’s Critical Illness Cover Award Win

We’re delighted to have won the Individual Critical Illness category at the Cover Excellence Awards 2011.

After our recent “Summer of Marketing”, it’s great to get recognition from advisers for the investment we’ve made in our product to make it even better. We’ll keep on listening to the needs of advisers so that we continue to deliver a compelling proposition that we’re both proud of.

Here’s what my colleague, regional sales manager, Alan Savery said about the award.

Roger Edwards 23 November 2011

How Social Media Viral Promotion is the new Holy Grail

There’s been quite a bit of talk about TV advertising in the protection market over the last 18 months. First, renowned IFA Tom Baigrie tried to get the industry to take part in a generic campaign. This failed to happen because of the sums of money involved or perhaps because providers felt the main beneficiaries would be Aviva. So Aviva went ahead on their own and gained plaudits for their tear jerking take on ‘Ghost’ starring Paul Whitehouse promoting the need for life cover. They went on to provoke outrage in Twitterland with their supposedly intrusive bookending of Downton Abbey ad breaks.

People might expect me to jump on the critical band wagon given that Aviva is a major competitor but I won’t. I applaud their campaign. But the clamour for more of the same from other providers is unnecessary. For a start a whole series of different protection TV ads would fast become boring, and there are many other communications channels that we can exploit to suit our different budgets.

Undoubtedly good TV advertising is good for brand building. And some certainly stick in the mind for many years because they are memorable (possibly cheesy) and describe the product well and create the desire. Ask most people my age about ‘Shake ‘n Vac’ and we would be able to sing the words, “Do the shake and vac and put the freshness back”. Others stick in the mind because they are annoying. When the Go Compare Opera singer comes on I want to stick my foot through the TV, but my wife beats me to it by either hitting the mute button or changing channels. Annoying or not it embeds the brand in the brain.

“Let’s not under-estimate the potential for other channels to promote the value of protection”

Now of course we have social media. And I don’t just mean Twitter, Facebook and LinkedIn. It is possible to produce a very professional video advert quite cost effectively (the latest iPhone 4S has the highest level of broadcast quality 1080HD capability) and host it on YouTube and then seed it across many web channels. Coming up with a video that goes viral, while promoting your product and brand is the new Holy Grail. Do a YouTube search for a ‘Mother Cat cuddling a Kitten’ – over 100 million hits. Look for ‘Buttery Biscuit Base’ – a hilarious rap song put together using hundreds of clips from Master Chef – 3 million hits. Imagine producing something like that that promoted your brand, or protection product, or your adviser firm.

So hats off to the Ghost and Downton Abbey campaigns, but let’s not under-estimate the potential for other channels to promote the value of protection.

Published on My Introducer

Roger Edwards 21 November 2011

A Hole Load of Sales Ideas

We trawl the internet for news and we sift through company websites for product and service details. The shear unbelievable breadth of information that is available “in the clouds” can make it difficult to prospect for gold amongst all the gravel. But thanks to Twitter I recently rediscovered an old protection sales idea, discovered a great new idea used by US advisers and stumbled upon the spark of an idea that can be used to create another.

The old idea revisited

This protection sales idea was known as “The Polo Principle” back in the early 2000s when I first used it. Simply draw a Polo Mint (i.e. a small circle within a large circle), and divide the Polo into 4 quarters. These represent the four key components of financial planning.

• The Mortgage
• The Pension
• Savings and Investments
• Life insurance

The Polo Principle states that as there is a “hole” in the mint – there is a hole in these financial plans. What happens if you become ill and cannot earn your income. All these other plans become under threat. If you can’t pay the mortgage your house might get repossessed. Stopping contributing to a pension might mean you retire on a much lower income than you were planning to. Savings and investments might help prop things up during a time of crisis – but they won’t last forever – and how annoying to have to use them to pay for everyday expenses rather than the “goal” you really had in mind for them. Life assurance won’t help because you are still alive. And cancelling the life assurance to free up a few quid would not only leave you unprotected but as an impaired life you might not be able to buy any more in future.

The solution to the Polo Principle is to “plug the hole”. And the plug is made of critical illness cover and income protection.

I forgot about the Polo Principle until a provider ran an online competition for sales ideas and the winning entry, whilst not a Polo Mint, was very similar. Great ideas never disappear they just get reinvented for more people to benefit from.

The US Idea

I clicked on a link in a retweet and found this idea from a US financial advisers website – Playing the What If Game. It’s very simple and I quote:

“The “what if?” game is a scary game to play, but it’s an important one.

What if I lose my job?
What if I get seriously ill?
What if I pass away suddenly?
What if one of my children has a condition that requires constant care?
What if my spouse suddenly passes away?

There was a time not too long ago in my life where I dreaded the “what if?” game. I basically avoided thinking about these types of questions, choosing instead to believe that my life was completely safe and nothing like that would ever happen.”

The New Idea

Again as my eyes skimmed over my twitter feed I spotted an announcement from someone who had decided, “To buy that car and book that holiday any way #IMightBeDeadTomorrow”. It was of course the Hash Tag that caught my attention and began to spark some ideas. Clicking on the hashtag immediately revealed hundreds of tweets from similar minded individuals.

“Going to blow my salary on a party #IMightBeDeadTomorrow”
“Hitting on Jayne in the pub tonight #IMightBeDeadTomorrow”

Even though I scanned maybe one hundred of these related tweets I didn’t find one that said, “Must take out life assurance to protect my family #IMightBeDeadTomorrow”.

Ideas in the clouds

That’s just 3 ideas I found on the internet that could help to put across to our customers the importance of protection. The Polo Principle, The What If Game and #IMightBeDeadTomorrow all demonstrate the potential consequences of being unprotected and the importance of getting financial advice in order to put protection in place. Ironically I also found out from the Internet that Polo Mints are called “Life Savers” in the States and I think that The Life Saver Principle sums up the sentiment of these great ideas.

Read the Playing the What If Game article here:

Article originally published on IFAOnline.

Roger Edwards 4 November 2011

Is basic protection possible even in tough times?

It’s getting tougher to convince people to buy protection. Not because we are not promoting it or because advisers are not building it into their recommendations. Even dismissing the usual ‘It will never happen to me so I don’t need it attitude’ with well reasoned arguments, is not enough these days to overcome the main problem. Many people do not have enough cash to spend on the essentials of day to day living let alone life insurance. It’s not up there on their list of priorities like utility bills and the weekly shop.

Ironically though, the reality of leaving the family unprotected is staring all these people in the face and yet to a certain extent they can’t see the wood for the trees. Times are currently hard because of economic factors which are generally beyond the direct control of the public. Inflation is creeping higher and increasing the cost of the shopping basket whilst wages are either frozen or capped. Interest rates, which are at an all time low created a short term buffer zone, an illusion of liquidity, as people had more to spend as their mortgage payments reduced, but this effect is long since over. Lower interest rates mean those with savings are not growing their investments faster than inflation is eroding them.

So many people are struggling. But apart from those who have been unfortunate enough to have lost their jobs, these strugglers are still earning. It’s hard and they may have been exposed to the fact that their income is insufficient to cover their outgoings. But fortunately they haven’t had to face a total loss of income. They have been given a taste of how bad things can be but they still have time to plan for the worst.

“Apart from those who have been unfortunate enough to have lost their jobs, these strugglers are still earning”

So how can we get people to buy when things are so tight? One of the most well received ideas we used at Bright Grey was the ‘Cafe Latte Calculator’. This was conceived in more prosperous times and invited customers to enter the number of coffees they bought each month on the way to work; along with the number or carry out meals and trips to the cinema or the spur of the moment luxury purchases. Most were surprised to find that the sum amounted to anything up to £400 per month. The protection argument was rather simple. Reduce this outgoing by one or two coffees a week and use the saving, say £40 out of the £400 to fund a protection product. That £40 investment could provide the money in future to enable them to continue to spend the other £360 should they be unable to work due to illness.

Of course, in our post recessionary world many people have already made such savings by cutting back on premium brand coffee and perhaps taking a flask of coffee with them to work. But the argument still stands. Finding an extra £20 a month from spending is not that difficult and it could ultimately protect the ability to continue to spend the remainder.

In the past most protection marketing messages have been around providing a large lump sum to clear a mortgage, or to replace a breadwinner’s income in its entirety, or on other windfall amounts of cover. In the current economic circumstances smaller amounts of cover that are affordable and protect the very basic elements of our lifestyles can still make a difference to people who are already feeling the pain. £20,000 worth of critical illness cover or £10 a month worth of life cover are absolutely preferable to none at all.

Published in Money Marketing

Roger Edwards 20 October 2011