Contrary to popular belief, clients of aggregators buy complex protection products for equally large sums assured as from IFAs and mortgage brokers.  A recent analysis showed many multi million pound policies with annual premiums running to thousands of pounds being quoted, and whilst the very large cases don’t always progress, we do see a significant number of customers who are happy to sign up to annual premiums of over £2,500. 

This article examines whether there are lessons that advisers can learn from price comparison sites and, as some clients now prefer the aggregator approach, whether advisers should offer their existing clients the opportunity to utilise a “direct” service for protection products.

As a supporter of both aggregator platforms for protection products and quote and apply adviser platforms, we can offer an overview as to what consumers buy, and whether they purchase directly or via an intermediary.

It was 1989 when the general public started the move away from intermediated advice when buying personal lines insurance with Churchill and others airing TV adverts for the direct approach.  The advertising targeted motor and household and 25 years later the impact on the high street in terms of small local brokers is profound.

In 1993 arrived. While it could be argued that the industry came full circle, the absence of advice aggregators cemented the change in buying behaviour to online forever. More importantly, as consumers, many of us are now comfortable buying fairly complex and often expensive products online through comparison sites, whether this is a financial product, travel, car or utility.

My experience is that many advisers recognise the significant move towards comparison sites, but too few keep pace with the motivations and behaviours of a new, tablet-literate society.  There is also a perception gap, with many advisers assuming the revolution is driven exclusively by the young, whereas the simplicity of tablets and Apps means that now old and young alike are increasingly comfortable buying online.

At this juncture it is important to stress that advice will remain essential for many individuals and products. Most advisers’ clients will not want the hassle of choosing complex protection products, in the same way that they would not do their own home conveyancing or tax returns.

But, equally important is recognising and accommodating your clients’ and prospects’ evolving buying behaviour, and not losing them to a different channel if for some transactions they would prefer to do it themselves.

We must also accept that when buying online we all make mistakes, we are not product experts, we won’t always make the most informed judgements when comparing products, and we almost certainly don’t read the small print – but we still buy online.

This is why we are advocating that many advisers should try to offer their own comparison sales channels and supporting processes that suit both a non-advised panel solution and a fully advised service. To date 20 firms have added an aggregator service to their web offering, and while volumes are understandably low at the moment, we expect to see more firms and greater volumes in the future.

We have supported mainstream aggregators and advisers’ own panel solutions for many years and therefore we wanted to share some of our experience that may benefit readers.

Advisers can now create the same buying experiences for customers who prefer to engage in this way. While it’s true that advisers offer the customer extra guidance and usually local face to face support, unlike aggregators, our data shows that many customers feel capable of purchasing complex protection products online. Indeed, with bank branch closures, many people are now being forced online even if it is not their preference.

Our experience of advisers currently offering an aggregator service is that it allows them to divert business to this channel when they are busy - saving time, retaining client contact and, assuming they purchase a product, generating new income.

For a self-motivated purchaser, or someone introduced to a good on-line journey, making the decision to buy a product has, in our experience, a better persistency. Completion rates improve dramatically as the journey becomes less complicated.

Typically through our direct business partners, we are seeing products being purchased by individuals in their late 30s, with simple mortgage protection products being the most common.

As consumers change behaviours, it seems to me obvious to try to reflect how your customers want, or may want in the future, to buy certain products and services through traditional intermediaries. The key is not to lose your client to another channel that’s not under your control; once lost, they will be very difficult to recapture.

Author: Neil McCarthy, sales and marketing director, LifeQuote