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Income Protection with Tom and Roy - Episode 2

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Searching for Elephants - Episode 2

Tom Baigrie and Roy McLoughlin make a lot of noise about income protection and we presume the industry wants to sell more of it.

But are we totally aligned? Are there parts of the market that don't want to sell more IP?

Angus - Hello, and welcome back to Episode Two! Searching for Elephants, The LifeSearch podcast coming at ya. Today, we've invited Tom and Roy back because, well, there's a lot to say about income protection. And between you and me, Tom and Roy don't normally agree with each other for all that long. So we've asked these two elephants to come back and trumpet at each other. One more time. Tom Baigrie, Roy McLoughlin, nice to see you again. You guys and others, make a lot of noise about income protection. And we presume the industry wants to sell more of it. But are we totally aligned? Are there parts of the market that don't want to sell more IP.

Tom - Ach Angus, there is a lot of noise. But it's really known as a very limited group of people. You know, in any group, there are three types out there. There's the committed passionate advocates, the minority, that's, that's our slot, and we're making the noise. And then they have a much bigger minority that really don't give a damn. And you can throw all sorts of people into that from the charlatans and dodgy lead generators and cold callers that Simone's article featured in FT advisor through the big non advisor firms and the insurance, DTC operations, you know, IP is not really part of their milieu, they're just selling stuff to consumers who want to buy. So that's not, that's not a market that's particularly keen on IP, or talking about it or ever going to, and then you've got the big majority in the middle, mortgage brokers, financial advisors, and so on. And I think we are starting to move them towards us. And I think that's why the market is growing. So yeah, but there is a problem, there's at least half of the market that really don't give a damn.

Roy - So guess my question to you told me she took a very good game here, LifeSearch are a huge company and talk about income section a lot. How much do you actually sell though?

Tom - Roy, the very first policy I sold when we weren't a huge company, this was back in 1981, when LifeSearch didn't exist. Had an element of income protection in it, I was enormously proud of that. You asked the question at the right time, this is LifeSearch's income protection month. So last week, we protected 179 incomes, how many of you do Roy? Hundred and 79 incomes isn't a bad call. But you're right. We're a big operation. And we're trying really hard now. We haven't been that good at it in the past. But we have got our stuff together. And we're making a big difference. And I think playing a major part in growing the market. But yeah, your challenges is well timed for me, because I'm feeling good about it these days.

Roy - I guess one of the challenges that's been thrown at LifeSearch over the years is that, you know, you do sell bucket loads of life and huge amounts of critical illness and, I suspect some people would say that, is income protection ingrained within your advisors heads as part of the hierarchy of needs? 

Tom - A very good challenge and the answer is ever more so. And right now. Totally. Yeah, our newsfeed is absolutely full every day of income protection, we really are on the case. And we've been getting that way for a long time. But you know, the real challenge that daunted us for many years, is that consumers really have no idea of what income protection is. So when we handle a call that they say, I want a quote for life cover or I've got a question about my quote for life cover to then take them into a journey into an unknown product. They've heard of critical illness when we mentioned that they go 'Yeah, okay, that's for my mortgage', isn't it or something like that, so we can start a conversation. But when we take them into an unknown product they've never heard of, over the phone. It's difficult to explain without sounding like a salesman. That sounds like you're pushing a product. And suddenly the clients going, 'why is this guy talking to me about this, all I wanted was a life quote'. So overcoming that barrier has been very, very hard. And to be fair, I shirked the burden for a fair few years. But in recent years no, we are trying really, really hard. And our advisors all have it top of the top of their list of hierarchy of need. And in fact, you fail on any compliance test at LifeSearch, if you do not explore the income protection need and fail often enough. And yeah, you get into serious bother. But Roy, LifeSearch supported the Seven Families initiative. But we were disappointed when it really seemed to register almost not at all with consumers. We've made lots of positive noises about how it's influenced the advisor community because we think it has, but as I just said, the advisor community is relatively small part of the national protection salesforce. So my challenge to you is you were on the IPTF for 17 years, you ran it for the last, however many long of it, Seven Families was that the best you could do? And what could be done better by the next lot?

Roy - Very good question. My answer is to be frank was that the PR budget allocated was 20 grand a year. And we were never going to reach consumers with that.

Tom - You know, Roy. That's that's actually is new news to me. I did not know it was that little.

Roy - With the benefit of hindsight there. There are lessons that we probably should have realized right at the start of that is based on the premise that very few people in society wake up and say, 'Oh, good, it's said Monday morning, I'm gonna take some income protection out', this still is a product that needs to be sold. And I think one of our biggest conclusions from the whole campaign is that the problem is not with the consumer, the problem is actually with the advisor. And I think what we need to do is convince advisors that income protection is the policy that should be at the top of the hierarchy, before we take that journey out to consumers. And therefore, whilst we thought that Seven Families would be a consumer facing campaign, actually, we had to convince ourselves first, we've done that in droves, because the numbers have basically doubled in the last five years, there's still a long way to go, I hasten to add that and that's and that's down to the help of great companies like your good self. But you know, to make this a broad consumer campaign actually was probably a bridge too far.

Tom - I agree with you. And you're right, you have made a material difference to advisors. It's really then a question I suppose of 'Okay, so how do your successes of the IPTF take it out into the into the non advice space?'. When are we going to see an insurance companies direct to consumer offering, just buy online with the help from a call centre guidance or something one of those, and there are lots of them, and they do lots of business. When are we going to see those guys pushing income protection, because that really would then start to get it out into consumer space?

Roy - Okay, so this is basically, let's face it, talking about decision trees. Okay. And a problem with decision trees and financial services. And we've seen numerous examples over the years, pensions are a great example is that they don't really work. And I think the problem with the DTC space, and I'm not anti that at all, is that unless they advocate advice, which is imperative, when it comes to income protection, okay, well, we're not going to get off the ground. And I think what we need to do is to, we need to collaborate with these with these people. And, you know, a great example is a company like Anorak, who come to people like you and I and say, 'Well, how do we how do we make this a, you know, a product that people could talk about?' And we need to have this almost huge, great neon sign above it saying, this needs advice. And that's where the likes of yourself and all of the other advisors come into play.

Tom - But the moment you say to a consumer, this needs advice, they go, 'Oh, that sounds complicated, am I gonna have to pay a fee' and they don't get it. Somewhere we need some marketing, it does need to be sold. I get your point on that. But it also needs to be marketed. The concept needs to be put out to consumers that they need to protect their incomes at that point...

Roy - But we can do this. Sorry, we could do this really easily. Tom, okay. income protection is about awareness. And we need to make this much more simple. Okay. And it's there are two stair two levels of awareness. The first is what do you get that from the state, and the second is watching your back from your employer. Whereas pretty much we were sitting here a year ago, and a lot of people you would talk to would say, 'It will never happen to me'. I think what this what is how horrible crisis is done. Okay, let's change the mindset of people and seize the moment is the fact that we can now go and talk to people. And I don't think you're going to get that objection anymore. 

Tom - Okay, I hear you. And I can hope you're right. So this would be the time for insurers to back a new Seven Families campaign to get involved to promote stuff, what do you think is stopping them?

Roy - What reminded of, is that there were a few of us that during the Seven Families campaign actually went round, and we spoke to, we reckon over 2000 IFA's, but that wasn't enough. I would, you know, plead to the insurers to revisit that. And let's go back and do that, again. Because Seven Families is probably the greatest training video that you could ever use. There's no intellectual property.

Tom - You're right. There's the new highlights reel. I've yet to watch it, but that'll be a perfect training video, actually. Yeah!

Roy - Absolutely! Okay, this is exactly the time I should be doing it. Now. We went round and asked all insurance for Seven Families campaign mark to about two or three years ago, and there was little appetite for it. And unfortunately, Tom, as you know, the dreaded words return on investment gets thrown back in our faces. Well, I would say there is a return on investment because any market has doubled in size in the last five years, particularly financial services. Firstly, it's pretty much unchallenged. Secondly, as you've rightly pointed out, the Chancellor of the Exchequer is standing at the despatch box talking about the concept of income protection. Okay, if there's ever a time for insurance companies to realise that we could become, you know, I'm not saying mass market, we're not being naïve here. But this could become a generic term that everybody understands. That's why we should have Seven Families two.

Tom - I think, Katherine Moxham and Ron Wheatcroft of the grid group would be saying we are a mass market in the group area. We do protect loads of incomes. So yeah, I think you're doubling in five years point is absolutely valid. Can we get the insurers to seize the day? Can we hell? They look at the business case and they go 'Yes', but the business has to flow through advisors and they'll put all my marketing spend or rather the inquiries they get as a result of my marketing spend, not with my company with some other company that's their favourite. So all of a sudden, we need a fair balance all sorts of structures, which are impossible to police and monitor. And that's where the agreement breaks down. Believe me. I know I tried once before the end result is that we need an insurer, I think, to do a Fidelity. Do you remember when PEPs early. You and I are old enough to remember PEPs, the precursor of ISAs. But when they were first launched by the then Chancellor think it was Nigel Lawson, suddenly every billboard was full of Fidelity, do your PEP we're the best. Ask an advisor, go to your advisor. And suddenly we advisors were being asked about peps all the time. And who did we recommend? Oh Fidelity obviously, because yeah, they were there, they were in the face and their campaign was a good one. So what on earth is a Legal & General not doing or LV= is not doing in this market, seizing the day and going right, we will be the income protection brand. To hell with the rest, we will be it making the case for income protection and say speak to an advisor? Easy.

Roy - That's all very well and good. But I guess, you know, one of my questions is, with the size that you've got, and the undoubted influence that you've got, why insurance companies not coming to the table and having a look at a different type of campaign?

Tom - Gosh Roy, you're putting the putting the blame on me? I do try to influence the insurance companies a lot about lots of different things. The art of the possible is what a lot of them say to me. And it's a phrase I've grown bored with. But yeah, you're right, I should and I will promise you here now I will do more. This podcast is the start of that, you know, as well as most Roy that selling income protection is hard work. What do you think insurance could do to make it easier for advisors or even non-advisors, Lord help us?

Roy - Okay, I hate to quote a past Prime Minister, but it's three very simple words, education, education. What you got to realise is that this is still a product that most people don't understand for all the reasons we've just talked about, okay. And what we need the insurance to do is to come out and help educate the advisor community so that they are completely ofay and confident with this products, such that they can then translate that into the consumer. And whilst there are companies like yourself who have great internal training programs, the vast majority of IFA's that we go and see say that there aren't enough people teaching them how to deal with things like projection handling. And it really is as simple as that sometimes, Tom.

Tom -  Oh Roy for goodness sake, please don't send more insurance company people around to tell me how to protect their families. And that's my job. intermediaries. advisors have to just take it on the chin train that people in objection handling by in the training if you like, but it's there, it's available somewhere, go get it, do it yourself, you know the answers. That's just, that's a retailer's job, and retailers need to step up and do it. Insurance companies can help lots of things they can do. But now I think the retail market needs to go up, stand on his own two feet and deliver it to consumers. 

Roy - The only thing I would say there is altruistically not everybody's got the resource that LifeSearch would have. Is there still a point here that maybe somebody insurance could fund some sort of training program, there are plenty of very good trainers out there to go around the country training other advisors how to sell income protection?

Tom - Well, as long as they really, really know what they're doing. And to be fair, there are one or two that do so. Yeah. Okay. Not everyone has the resource we have. So fair enough. I'm sure the insurance will be queuing up to send their people around and webinars and things to educate advisors. So if that's the real nub of the problem, right, that's pretty easy to solve. And yeah, LifeSearch will lobby for more of that from insurers. No, no, no trouble with that. The thing for me is that it's a two way street. You're very focused on advisors. But the truth is, there are relatively few advisors, and the consumer doesn't really know where to find them, or find out so I suppose. So, you've got to have a guide somewhere. And you know, we've got the BIBA find a broker service, you type in income protection, you get people who know what they're talking about. And that's all you get on that particular service that they're vetted by BIBA. So we've got to get a promotion in for that somewhere. And I do think insurance companies should be promoting that. And indeed, everyone in the market should be promoting that service, unless they've got their own, in which case say, right, yeah, bring your queries to LifeSearch. If you ain't got an IP thing, you should be recommending the BIBA thing or partnering with the likes of us.

Roy - I totally concur. I think signposting is our solution and I think what we need to do is to get insurance behind signposting. And signposting is totally neutral. It's totally Switzerland. And you know, what they can do is they can help and encourage not only holistic advisors, as you mentioned, but the wealth managers, the mortgage brokers, the Employee Benefits consultants towards signposting to the site such as BIBAs, where they can attain those solutions, and on a broader scale to answer your question, let's go back to something that we've been talking about for the last 10 years, which is to encourage the government, to encourage all employers in this country, to have a fixed note Which means that they have to basically tell all of their employees what happens to them in the event of long term sickness. And one of the big issues we have here is that there are so many people think that they've got a much better long term sickness plan by their employer than they actually have. If we implored the government to make that compulsory in the same way they've done it with auto enrolment so we know it can be done, then I think the consumer would actually say, 'Ah, I do have a problem here. What's the solution?'.

Tom - That sounds really good stuff to me Ray in danger agreeing on too much mate.

Angus - Ooh boy! Those elephants are now so exhausted, I've sent them straight back to their respective watering holes for a nap. Hope you found it interesting. Hope you learned something. And if you did, please like and subscribe and do all those wonderful 21st century things and join us next month for more LifeSearch podcasts. December, we're focusing a little more on our innards. Inside the belly of the beast that is LifeSearch. Music Composition and mix engineer was Patrick Baigrie. And the show was created and edited by me, Angus Baigrie. Thanks so much, and see you next time. Lots of love, LifeSearch.

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