Ask someone who recently took out protection insurance about their decision to put in place a financial safety net and they’ll most likely talk about peace of mind, financial security and protection from the unexpected.
Ask another about the positive difference their protection policy made when the worst happened and the way they express their feelings will more often than not be very palpable.
They’ll both appreciate the advice to put cover in place, but how does the way they convey its value compare?
Value is subjective. There’s no one size fits all, so we need to be able to get our head around clients’ interpretations.
Value in the UK insurance market is driven by consumer and adviser expectations.
Regulatory frameworks like the Consumer Duty stress transparency, fair pricing, and personalised services.
The focus has moved to offering comprehensive, relationship-based services that meet clients’ financial and emotional needs.
How do advisers and customers define value?
According to our latest Meaning of Value report, there are key differences and alignments in how value is perceived.
Clients prioritise advisers’ expertise and trustworthiness, as well as the ability to maximise returns on their investments.
They value clear fee structures and measurable financial benefits. Additionally, emotional benefits like peace of mind and security are particularly important.
Meanwhile, advisers focus on intangible benefits, such as building trust, offering reassurance, and understanding clients’ unique circumstances.
While advisers recognise the importance of tangible outcomes, they emphasise the psychological and long-term benefits of financial planning.
Is it about price or value?
The focus should be on value, rather than solely on price.
While competitive pricing matters, consumers and advisers agree that other factors like service, trust, and long-term benefits are more important.
For everyday products, price sensitivity is higher. However, for long-term products like pensions and insurance, reliability and reputation matter more.
Importantly, we cannot forget that advisers are crucial in educating clients about balancing costs with quality to ensure financial decisions align with broader goals.
The Meaning of Value report’s findings show 16% of consumers defined value in terms of price.
Within that group, the theme of ‘getting a good deal’ came across very strongly and for some, this means being ‘cheaper than elsewhere’, a ‘decent deal’, or ‘better than the perceived full price’.
While 16% of people consider price as the main factor of value, 84% do not.
Interestingly, customers aren’t necessarily swayed by the cheapest product, with 71% of consumers saying they would choose a more expensive income protection product from a provider with a strong reputation, compared to only 29% choosing a cheaper option.
This indicates we cannot assume that customers just want to buy the cheapest; quality and value count.
What do clients value from an adviser?
Clients often start with a specific issue in mind, with their needs evolving as they go through the advice process.
This is where they benefit from broader holistic advice and goal-based financial planning.
I think about protection advice in the same way I think about check-ups at the dentist. A lot might have changed between consultations, especially if you’ve left it too long.
There are always other risks we need to be thinking about and protection advice, while it might start with a mortgage conversation or an estate planning conversation, it should open a multitude of opportunities for advisers to demonstrate the breadth of ways protection advice can help customers remain financially resilient.
How does this align with adviser feedback?
Advisers generally align with clients on the importance of trust, expertise, and clear communication but tend to underestimate the emphasis clients place on tangible outcomes like investment performance.
While advisers excel in building long-term relationships and offering personalised advice, they must better communicate the tangible value they bring, such as measurable financial gains or cost savings, to align fully with client expectations.
Looking through a protection lens, we need to remind ourselves what benefits both advisers and customers get from protection advice.
For clients, it might be they’ve got a professional taking the responsibility for getting it right and delivering bespoke advice.
They deal with someone with knowledge of products and underwriting, they have knowledge of the market, they can help with claims and of course provide that much needed peace of mind.
And advisers need to remind themselves of the benefits. They can help with client engagement, referral opportunities, review opportunities, intergenerational planning, new revenue streams, and an increase in industry professionalism.
Overall, the risk of customers doing it for themselves is reduced, and there’s ultimately a duty of care we all need to adhere to.
Challenges in demonstrating value
Our research paints a positive picture of the evolving advice profession, with increasing consumer satisfaction and alignment with regulatory goals.
However, challenges remain in demonstrating and measuring value, especially the intangible benefits of advice.
Bridging the perception gap around investment performance, increasing accessibility to advice, and addressing underserved areas like inheritance planning are critical next steps.
The industry must continue working collectively to make financial advice and guidance more accessible and impactful, ensuring more consumers benefit from the expertise and holistic value advisers provide.
