Supermarkets are a useful distribution channel in the protection industry because people trust the brands and are encouraged to buy products, according to speakers on IFAonline.tv's Great Protection Debate .
Following an earlier intermediary session of IFAonline TV's Great Protection Debate - in which Tom Baigrie of Lifesearch condemned providers for using non-advised distribution - representatives of the provider groups responded in the provider forum by primarily arguing there are now fewer protection intermediaries in the market to give specialist advice.
Peter Hamilton, protection management director at Zurich, suggests supermarkets selling protection products present a challenge for the industry, but they also bring opportunities because people trust the brands.
He states: “Supermarkets potentially bring brand trust and this is not necessarily a bad thing. People trust brands like John Lewis and if they are saying life assurance is a good thing then we need to harness that. When they talk positively about protection there is a win to be had.”
He points out some consumers know what they want to service their protection needs and if supermarkets make the limitations of their offering clear it does not matter no advice is given.
Nick Kirwan, protection market director at Scottish Widows, says there are not enough advisers to give advice on protection and it is therefore not surprising supermarkets are trying to fill the distribution gap.
He adds: “Giving advice is a very expensive business and this pushes up the market that IFAs have to target. It means they go for the higher net worth people who can afford to pay for advice. An adviser wouldn’t drive 10 miles to a consumer who can only afford £5 a month. There has to be something that services this market or they will always be financially excluded.”
He suggests advice is the “gold standard” and is the right option for people who can afford it, whereas non-advised products are suitable for lower net worth people as long as they are simple products and people have the right information.
Likewise, Paul Cowman, head of protection propositions and market strategy at Prudential, believes intermediaries can offer consumers “something extra” when they are buying protection.
He adds: “I endorse selling direct because if we don’t encourage people to buy protection the market will go down even further because there are less advisers selling it.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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