This enables the prompt payment of benefits on death outside probate; it gives the policyholder more control over who will receive the benefits; and it is tax efficient.
Despite some very good online application processes that flag-up to the customer the need to write wills and put policies in trust, these aspects of setting up life assurance are difficult to deliver in a direct-to-consumer journey.
But, things like this should be bread and butter to financial advisers and integral to their recommendations and part of their quality proposition to clients.
It is rather surprising then that in our research not all advisers said they put life policies in trust when it is relevant to do so.
Just over a third said they always did, 6 per cent said they never did and most did 54 per cent of the time, on average.
But the benefit of people coming to a financial adviser rather than purchasing simple products direct from the web has got to be that the qualified adviser can suggest appropriate strategies that more closely address client need; strategies that take into account ‘soft facts’ and are therefore more effective; strategies that utilise trusts and wills and are therefore more tax efficient.
Approach to protection advice
In our study, only 19 per cent of respondents described themselves as protection specialists.
As expected, most were either general practitioners or specialists in other financial services disciplines.
Understanding how protection is regarded within these businesses is key to predicting how protection advice might be extended.
Digging a little deeper, we asked the advisers to choose the statement that most closely represents their approach to protection advice.
Most (45 per cent) said that their main focus is pensions and/or wealth management but that they always investigate the client's protection needs and make a protection recommendation where appropriate.
21 per cent said they cover pensions, wealth management and protection equally and always make a protection recommendation where appropriate.
This is encouraging, but it means that for two thirds of advisers protection is not their main focus. We found that 27 per cent of advisers said their main focus is protection and they investigate the client's protection needs fully.
The problem is that unless advisers are genuinely committed to protection advice and firm in their convictions, they may be disinclined to recommend a solution that on the face of it appears more expensive than something the client could purchase online; a solution that requires more detailed analysis of the client’s circumstances; one that needs more careful explanation; one that they may have to defend if the client subsequently complains they could have got something cheaper elsewhere.
It is easy to see why financial advisers generally are more focused on pensions and wealth management.
