The adviser's sales mix

01 August 2014 Walter van der Merwe, FedGroup Life

Financial adviser's sales mix, from a life insurer’s perspective, need to be built on the foundation of solid client relationships in order to be successful. Without this base, product and price will carry far less weight in terms of driving life insurance sales and creating sustainable long-term business for insurers, for a number of reasons.

The primary importance of developing strong adviser-client relationships is that people prefer to buy life insurance products from people, particularly as these financial services products are intangible until a claim is made. As such, trust needs to be established in order for people to willingly purchase life cover.

The trusted adviser

The number of providers and the variety of products available today, as well as the complexity of life insurance products, particularly when disability income and critical illness cover is included, also necessitates that advisers play a trusted advisory role.

While the general public have become more knowledgeable and sophisticated when it comes to life insurance, most clients require a specialist who can present these products to them in a way they are comfortable with. The role of the adviser is to articulate the key benefits, differente between product offerings, and to then match the correct one with a client's needs.

Building trusting relationships

The determination of those needs is potentially the biggest factor influencing the importance of first building relationships with clients before relying on the other sales mix elements of product and price to drive business. A deeper understanding of a client's life circumstances will allow an adviser to correctly match those specific needs with the appropriate product. This will ensure that product providers are able to comply with the principles set out in Treating Customers Fairly (TCF) which the Financial Services Board (FSB) expects companies to strictly adhere to.

It is only then that the product itself becomes more relevant to the sales process. With a client's needs established, an adviser can then eliminate the products that may not address those needs, which narrows down the options.

Selecting appropriate products

The adviser can then select the most appropriate product with the client, assisting them to understand conditions of payment, how much the product will pay out following specific events, and highlight the circumstances under which a claim may be declined.

Having established relationships upfront, an adviser is also better positioned to help a client meet all the product requirements that pertain to the underwriting process. An adviser who knows their client will be able to help them avoid accidental or unintended non-disclosure, which could affect pay-outs in case of a claim. Informed and knowledgeable advisers with an understanding of a client's history may also be able to pick up and address instances of material non-disclosure during the underwriting phase, ensuring that a client benefits from full cover should a claim be made.

Insurance sales mix

Once the appropriate product, with the right combination of benefits has been selected then the issue of price becomes most relevant. As advisers have access to products from multiple insurers, they can work to secure the most affordable cover as insurers compete for the business based on price competitiveness, when everything else is equal.

However, when it comes to long-term insurance, the lowest price should not always be the most important factor used to secure a sale. Securing sufficient cover to match the needs of a client, taking current and future affordability into account, and ensuring the client understands why there may be loading to secure the level of cover required, is a final yet vital step in the life insurance sales mix. This will ensure clients get what they paid for at claims stage, with predictable and affordable premium inflation, which also ensures sustainable business for the insurer.

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