Protection Premium load protection if you are provider, negotiate premium loaded protection if you are a network, accept the premium loading if you are an adviser unless in the case of the latter two you give it back to the client. But I reckon you better prove it to the RDR team at the FSA whoever they are this week. Not saying it will happen – am saying it massively increases the likelihood. Have a nice weekend everyone.
The Protection Review’s Kevin Carr has called for a trade body or at least a representative group for protection advisers. It might be stand-alone – that is favoured by Alan Lakey, it might be part of Aifa in much the same way as the Association of Mortgage Intermediaries is.
http://www.moneymarketing.co.uk/protection/calls-for-adviser-protection-body/1015963.article
Dealing with the idea overall, the Money Debate is totally in agreement. The very idea that many of the great and the good in the training and exams world thought that protection didn’t need its own exam seems altogether ludicrous to the Money Debate and demonstrates why such a body is needed.
In terms of how any organisation should be constituted, one argument in favour of the Aifa-centric approach is that it would give the organisation its own identity which is much needed, but also the clout of being part of a bigger umbrella body. In many ways the success of the AMI in developing its own identity but leveraging from Aifa’s profile underlines this.
A second argument would be that as many IFAs change model there is a risk they get so caught up with their portfolio modeling and asset allocating and the like, that they forget about the protection needs of some clients. I recently had a conversation with Danby Bloch about this, discussing exactly where on the wealth scale clients had to get to where they didn’t have to ensure their income or their family or their ‘keyness’ to their business, partners and employees. To me, though I’m not an adviser, I think it’s a bit of a difficult call. So did Danby. Danby also suggested it might not be so much about wealth but about wealth and age – some well off young city types might be well advised to ensure their income. That is perhaps a different discussion for a different time.
Anyway I think there is a danger that two emerging branches of the industry stop communicating and that could be exacerbated with a separate group. I think they need to keep communicating because ‘protecting’ and ‘investing’ really are not so different fundamentally regardless of some misplaced prejudices from different types of practitioners. However the Money Debate is of course prepared to listen to arguments putting another view.
John, when we look back at what has been said, what has been promised and what has been achieved we can see that AIFA has not been a success.
The fact that numerous focused bodies have sprung up in the wake of its failures confirms the point.
Why be weighted down by associating with failure when you can start afresh with vitality and the fresh ideas of people who actually know what they are talking about?
Forget AIFA – Protection review should take this forward with assistance from people who know and care, not those that promise and then don’t deliver.
Back to protection and the suggested increase in price due to Solvency II. One further little question. If some intermediary businesses have been based on execution only strategies and benefited year on year from falling prices will those models hit the buffers if protection costs rise when the new regulations come in? This has been, by and large, a market with falling prices for decades. That is a good thing up to a point though of course it has also had its downside.
There will be less reason to rebroke, though we know that any good business will have processes to make sure people are not being rebroked on to worse terms anyway.
But it still looks to me like a massive financial challenge for price driven businesses.
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Alan, spot on – one slight correction if I may, directly authorised IFAs also benefit from this practice if they are part of a network
Undoubtedly true. Negotiating an increased payment because of volume, quality or better persistency is quite acceptable – this is how markets work to the advantage of both parties.
The problem arises when the amount of commission payment is such that the insurer is forced to increase the premiums for that company/networks clients.
This cannot be justified unless your argument is, “I can get away with it so why not”? Is it TCF? Is it fair and reasonable?
IFAs are agents of the client and, quite rightly, we position ourselves on the moral high ground. Tied agents can and do get away with these rapacious tactics but they are not acting on behalf of their clients, they are acting on behalf of one or more insurers.
Let’s put a stop to differential premiums for IFA business before the FSA does it (and worse) for us.