April 2021

 In March this year, we carried out our first IPTF adviser survey. We wanted to find out which advisers are talking about IP with clients, how often this translated into sales and the sorts of training and support materials that helped advisers do their job, as well as expectations for the year ahead.  IPTF is keen to build relationships with networks and the adviser community and as a first step we identified a need to increase our awareness of current adviser activity around IP. This survey ran throughout March.

Initial indications were encouraging: 57% of respondents recommended IP to at least 70% of clients, with 19% of advisers recommending it to over 90% of those they spoke to. This is great news, or at least it would be if it was reflected in sales figures. IP sales have been on a pleasing upward trajectory since 2014 and indications suggest that interest in the product is at an all-time high. Despite this, the growth in sales is only half the story given that sales of IP have always lagged behind protection counterparts; critical illness and life cover. It is still drastically undersold given the key position it should occupy in any approach to financial planning.

Our survey revealed a pleasing level of conversation around the need to protect income but when we asked how often this led clients to purchase IP, the results were not as comforting. Nearly three quarters (74%) of respondents reported that less than half of their clients went on to take out an income protection policy. For 21% of these advisers, the figure was less than 10%. Conversely, only 1% of advisers said that over 90% of their clients went on to make a purchase. That’s a lot of unsuccessful conversations and a dismal hit rate whichever way you look at it. Why are these conversations so unsuccessful? Research by AMI in 2020 revealed that despite 97% of advisers mentioning protection, only 36% of clients could recall a protection element to the discussion. Is there a need to re-examine the way that protection is being discussed with clients so that it is both understandable and relatable to clients, leaving them feeling empowered to make a decision rather than overwhelmed by choices?

We asked advisers what they thought the main barriers to sale were. Client knowledge and cost were the top answers, attracting far more votes than any other option. This is disappointing at first look but it’s not all bad news and perhaps it is even an opportunity for those of us looking to grow the market. These are issues that we, as an industry, can address. IPTF is working this year (and beyond!) to produce materials and content for both consumers and advisers which explain the very real need for income protection and to overcome the lack of client awareness and understanding that our respondents identified.

It is our belief, along with many in the industry, that once an adviser truly understands why income protection should be the cornerstone of financial planning and indeed where the protection conversation should start, they are better equipped to convey the value of the product to their clients. Once a client understands the protection afforded to them with an income protection policy, price becomes less of an objection because there is an appreciation of the value of the policy. Without an income, clients face potentially difficult and distressing decisions about what to cut back on to make necessary savings. In reality, many people hope to find a way around having to make these difficult decisions by relying on family or friends to help them out. A number of research studies have highlighted how perilous this approach is with very few households accumulating enough savings to see them beyond six weeks, let alone support another family. State benefits are often assumed to provide a safety net, but few clients realise that in many cases they would not even cover basic expenses.

Turning to the year ahead, our respondents were optimistic and nearly three quarters (73%) expected to sell more IP with only 1% expecting sales to be negatively impacted. The largest proportion of respondents had no real concerns about the year ahead but those who were more cautious were most likely to be concerned about harsher underwriting and the resulting potential increase in premiums that might be seen.  None the less, the consensus among respondents was that Covid-19 would be a driver, indeed the biggest positive influence on sales this year.

Our first adviser survey has been a helpful exercise in highlighting how IPTF can help advisers. When asked about training, there was an appetite among our respondents for relevant content that suggests sales techniques as well as content that addresses technical questions about the product. In the months ahead we’ll be looking to start producing content that does exactly that so keep an eye on our website.

We’re also always keen to hear from advisers about how we can help, so welcome email suggestions. We’ll be conducting another survey later in the year and sharing insights as well as content via our email newsletters, which you can sign up to on the homepage of the website.