Increased responsibilities created by the Consumer Duty mean some advisers face a choice between setting up their own specialist protection divisions or signposting business out entirely, according to Paradigm Protect.
Paradigm Protect director of protection Mike Allison (pictured left) added that the network was starting to see more advice firms pursue the strategy of establishing their own protection divisions in response to this requirement.
When asked what the biggest impact of the Consumer Duty would be for financial advisers and the advice process in general, Allison explained advisers are being required to tell customers more of the time about all the products and services on offer that can protect them and achieve their financial outcomes.
Speaking to Katie Crook-Davies, co-chairwoman of the Income Protection Task Force (pictured right) on the first day of its Income Protection Awareness Week, Allison added that at the present this does not always happen.
“It may be that brokers will start developing their own specialist protection within their main brokerage firm, which we’ve seen quite a lot this year, or some will inevitably have to move away to signposting – effectively passing it to a third party to do the job at the time,” Allison said.
“Because the FCA do make it absolutely clear that the right advice needs to be given in a timely manner at the right time.”
Citing the example of income protection and data from Legal & General, Allison explained the average IP claimant was aged around 40 but the average age of a first-time buyer was 35.
“Therefore, it’s no longer the case of kicking it down the road and looking at protection a lot later in the advice process,” Alison continued.
“It’s about ensuring that customers are fully aware of all of the things that are out there to support them in reaching those financial objectives when they get to needing it.”