Perks and Pitfalls of Client Reviews

Lee Robertson  07:09

Welcome to another session. Another one that I’m really looking forward to. I think this is a really, really important topic, you know, with focus on consumer duty at the moment. So the session that Catherine is going to be taking us through today is about and pitfalls, client review meetings, as usual questions in chat or questions at the end. And I’ll probably take up to kind of calls privilege at the end and ask a question or two, myself. So over to Kathryn. And I’ll go off screen as well, while you’re presenting.

Kathryn Knowles  07:40

Fantastic. Thank you. Thank you for saying excellent, which shocked me one time anyway. And so I thought, oh, no, I’ve lost my co host. So. So appreciate that. So yes, obviously, thank you, everybody who’s tuning in and watching or watching this on playback. So today, we’re gonna be talking a se about the perks and pitfalls of client reviews, client reviews are incredibly important. And it’s interesting with client reviews, because some people can really query the commerciality of it, you know, is it worthwhile for my business and things like that, you know, am I actually going to get anything back from this. And whilst there can be a little bit of a hit and miss in terms of, you know, financial return, sometimes with these things, we need to be very mindful, as Lee said, of something known as consumer duty. Now, most of us are aware of consumer duty, it has been DoD that they have been the buzzword for the last coming up towards two years or so now. And it’s everywhere. And it’s basically saying, be good people, you know, in a sense, don’t do anything dodgy, make sure you’re doing everything in the best interest of your clients, which the majority of people and I would suggest, probably, the people who would be listening to this webinar are already going to be pretty much there and know exactly that they are doing everything at the heart of what they’re meant to do, because that’s the very nature of you being someone who will come and listen to a webinar like this. So what’s really interestingly, consumer duty is that consumer duty doesn’t set in stone, what we need to do, it gives us this really open kind of broad statements of saying, we must do right by our customers and make sure we’re continuing to do right by them, which does kind of bring us towards that thing of the, like an annual review or some kind of timeframe for reviewing now in the pension space, investment space, things like that. Doing annual reviews is pretty much part and parcel of the job. So you know, it just kind of sits there and you know, the good advisors will be doing that.

09:27

In the protection space as with anything protections just being left to do it. Same thing. You don’t need to have qualifications, you can start giving advice on gift planning and protection, HT protection with what 20 minutes training, just walk in the door somewhere and someone says hey, go give people information on life insurance and stuff like that. There was no requirements whatsoever, which is really, really scary. But there’s also the no requirements in terms of annual reviews, and things like that. So it’s all comes down to what you as a firm or as an individual are prepared to do and what your resources will allow you But you do need to really be bearing in mind, you might be thinking can I be doing this time for this is actually going to am I gonna lose money because I’m gonna be spending so much time doing, I could have to these people instead of the new people. And this gets quite tricky, it’s quite tricky to find a balance. And as I say, it’s going to be a mixture of you’re gonna get the positivity possibly going to get some negatives. But what we’re gonna be talking about today is very much the reasons as to why we’ll be doing it, the positives of us doing it. But then obviously, naturally, the negatives that can come with it, and the negatives not necessarily from a commercial sense, but how things can go very, very wrong, how you can end up being in like a complaint situation. So it’s very much a kind of like a safeguarding session on what you need to do. So I’m coming from quite a compliancy point of view, you know, don’t turn off, it isn’t going to be full on EU compliance. But it is going to have quite a compliance based background to it. And, obviously, must go by what your compliance people say, what you’re authorised to do. I’m hopefully gonna be giving you ideas as you go along as to some of the ways that you should possibly be changing your reportings to your clients, how you may be looking at these reviews, sort of seeing is this slightly different ways that we could be doing things. And as always, I’m talking from a protection insurance point of view and angle, because that is where my specialism is. And also because quite frankly, a lot of the time it kind of gets forgotten about it gets left to be in the background. And people don’t take it particularly seriously because you don’t need to be qualified to do it. Because you don’t need x y Zed permissions and certain rules and regulations don’t apply as they do to other areas. And I think that can have a real knock on effects as to the mindset of to how we will be looking at it and just how wrong it can go for clients too. So when we’re talking about client reviews, you’ve probably all heard the word churning. So churning is very, very much frowned upon. And we wouldn’t be any good firm would not be doing what’s known as churning. Now churning is something that insurers do look out for. And you can lose your agencies for it. So let’s say you’ve done a client pick random numbers, 100,000 pounds of life insurance over 20 years, and it cost 22 pounds a month. And, you know, you might be fee based you might be commissioned based. If you’re commission based, there is sometimes a temptation to leave annual reviews to a two yearly or four yearly timeframe because of the fact that that will be when your commission stops your main bits of all your commission liability. If you are an indemnity based commission advisor, then it will be a case of your clawback period has gone if your non indemnity then you don’t have that clawback period. But insurers watch out for that, too, you’ve set up a lot of policies, and they have a two year clawback period for a year. But all of a sudden, your retention rate with them suddenly drops at those timeframes they are watching. And you know, if you were doing something like for that clients with 100,000, I think I said 20 years, and it was 22 pounds a month, well, in two years time you do 100,000, over 18 years, for 19 pounds a month, and you’ve maybe done a bit of commission sacrifice to get it to 18 pounds, which you probably will have done because the client is older. So you’re not necessarily going to be able to get cheaper unless there’s some kind of risks that have disappeared. Again, insurers are watching that. And if they start to suspect it, they kind of have a bit of a natter with each other as well and start notice that kind of thing. So we need to be really, really careful of that because one, it’s not right to do that to the clients. Obviously, it is always nicer to give them cheaper premiums, but we need to be doing it for a real reason for the claim not just for getting more payment from the insurers. But also there is then that commercial aspect of you might just simply have your agency’s shot with the insurer, which is not positive, that is potentially gonna have a knock on effect with other agencies that you have, it’s very unlikely that you’ll get that agency back.

Kathryn Knowles  14:00

So the positives, and the reasons that we’re doing these renewals is there’s quite a lot. So there’s more disadvantages. So, you know, don’t seem like a negative session, but we just need to be careful of certain things. So the positives are that we have, you know, we’re speaking to the clients, we’re getting an update on their circumstances, we’re making sure that the insurances is still relevant for them. So life insurance, you know, that maybe took out on the mortgage, have they paid a massive chunk of their mortgage, and actually, you know, there was potential for them reducing the sum assured on that, they might want to keep it higher. And you probably would really discuss that with them. There are advantages to keeping it higher. But could you drop that down, and then their premium really reduced, which, you know, they’re gonna be very thankful, and they will be very happy that you’ve done that for them with income protection, has their salary really increased? And they need to have it completely reviewed because it’s suddenly jumped up quite a bit. And even with things such as known as guaranteed insurability options where we can maybe sometimes get things done in the background to help and just increase the policies of that further medical underwriting that doesn’t always account for how much the salaries can potentially change, you know, for critical illness cover. And this is a massive one with critical illness cover critical illness cover claims. Now we are the experts in things like critical illness cover and stuff like that. And we tell people, This is what you’re insured for, here are your documents. If this happens, if that happens, speak to me speak to the insurer that we will get a claim going forward. But no matter what, as with a lot of these things, these are documents that get put in a drawer somewhere and people don’t realise and they forget. And sometimes they don’t even think about what something is. So we have you know, there’s two specific cases that come to mind for me where there was somebody where we’ve contacted them at a review stage. We’re chatting away and everything and I just went Oh, yeah, I was diagnosed with an acoustic neuroma and it was straight away. You know, and you should be vigilant for this as well. When you speak to clients it straightaway that Paul’s Have you had acoustic neuroma diagnosed. Yeah. So what happened? Okay. Well, you know, you’ve got critical illness cover and the like, yeah. And it’s like, what acoustic neuroma is claimable on this is it. And you know, we went from this person having this happen. Not, you know, obviously, sometimes, you know, acoustic neuroma doesn’t scream out specifically in a listed condition on that critical illness set, but it is sat in there in those conditions. And you know, this person got 500,000 pound paid out that they weren’t expecting, just because we reached them at the review stage and said you need to be, we need to be claimed for this. That’s something similar as somebody with rheumatoid arthritis had been diagnosed with that had no idea that they could claim on the policy. And again, we’ve got them that payout. So you, it’s not just about getting that policy setup. And making sure that everything stays right for the client is making sure we spot those opportunities that are going, this is what we’ve done this fall, this is what it’s designed for. And we need to get this going forward, we need to get a claim going forward. Key things with reviews as well is that we’re going to be protecting clients from scammers. I’m sure that all of us have at some point picked up the phone and heard somebody say, Hi, I’m you know, from the insurance company, you know, you’ve got an insurance policy with this one, this one, this one, this one or this one. It’s one of those, isn’t it? And you can obviously as someone trained in the industry, you just I, okay, come on. Quite a lot of people aren’t. And I have to say as well, it’s really important to bear in mind that somebody’s the the, maybe their intelligence that you think they have, because of the fact that they’re doing this kind of job, or that kind of job, even though job and occupation does not denote intelligence. But you might think, well, they’re earning this amount of money, although in this kind of level of management, they surely wouldn’t fall for something like this. People absolutely do. And you can sometimes find that people who are higher salaries, who are incredibly busy, who are running big businesses, they’re so busy that sometimes if they’re contacted by they’re so busy, that they just kind of start talking. And they don’t think sometimes about actually how to this person knows that one of five insurers know, I’ve only gotten a policy with one insurer, I better contact that person that set this up for me, they don’t necessarily think about that. And it might be something that we obviously trying to able to stop by reminding them regularly to say I am here, I’m the one that has done this, if you need any changes, if anybody’s contacting you, and it’s not me, it might be legitimate, but just chat with me first, we might as well positives, huge positives with reviews is that we might see significant premium reductions. So he tends to find that, obviously, mortgages, often, let’s say 25 years, on average, when they get towards the last five to 10 years or so, the mortgage itself massively drops in terms of the what’s owed. And you’ll see if you if you look at insurance policies, and you kind of mirror the way that they drop, the things like the life insurance, critical illness cover for covering a mortgage, if it’s decreasing the mortgage, we’ll be doing this and the insurance policy or kind of be staying up here, it gives quite a buffer for quite a bit. So you can find, especially when you get into all sorts later bits that actually, you know, you can either reduce the sum assured quite significantly and still be covering the mortgage for some people is incredibly important, every, every little helps kind of thing. We need to make sure that we are paying for what we need, not overpaying, you know, maybe not paying for things that we don’t need, even though as I say there can be reasons for keeping us a higher amount, just you might say, well, actually, there’s more in this now than what the market is, but that could go is just like some additional family protection. The key thing is is just to give the client the choice. You’ve also got things like somebody who’s maybe been diagnosed with cancer in the past, and you maybe had a premium increase that one point, there are times that those premium increases will stay. There are times where they’ve been ridiculous premium increases known as what’s known as a per ml rating. And you might not be at a timeframe where that rating can go. If you look at it now. And you know that can be again, huge. You can potentially save hundreds of pounds a month for somebody just because of the fact that they’re now more of a timeframe since a certain diagnosis. There are certain conditions where when someone’s had them The likelihood of improving the underwriting outcome is not going to happen because it’s something that’s more a long term condition. So it’s more likely that that condition will progress. But there are instances where I’ve had acute situations where it can really, really get positives. And other thing there is exclusions, especially with income protection, someone’s had a wrist exclusion, because they got a bit of repetitive strain injury five years ago, what can we view it now? Can we have that wrist exclusion removed, and you might think, well, it’s a wrist,

20:28

they want to first far better for it to be the Remove than not. And a really key thing here as well is that obviously we do have a consumer duty, we do have that need to make sure we’re doing the best for our clients. If somebody came to you, like the false, let’s say, Financial Ombudsman Service, and they said, right, someone’s complained about you because you did this review, or you didn’t with you. And actually, they found out that they could have now had this policy without this exclusion on there. And they’ve now got a situation which would have been claimable on if you’d reviewed it. Do we think that we would stand up against a complaint in that situation? No, because we you know, if we’re saying that, well, I can do this policy and I can do this and I’m like, I’m, I’m an expert in this area, then we should be doing everything possible. Or there is that thing of signposting. If you’re not sure what to do, if you’ve run out of resources, you know, we shouldn’t not be reviewing clients, it might be you know, you don’t want to necessarily give your clients completely to someone else. But it might be for things like the protection side that you do get in a specialist who can just be there help, especially help with those reviews, maybe just say along the lines of that person’s find us doing exactly what it needs to do, there’s nothing that can change by maybe saying, Actually, we can step in and do something that’s going to be a lot better here. So there’s lots and lots of things that we’re looking out for, you should when you are doing reviews of clients, and this is very reviews of clients are very tricky, depending upon the area that you advise. And obviously a lot of pensions, insurance, insurance investment specialists will have you know, your full ifas will have a set number of families that they look after. So your review process is quite.

Kathryn Knowles  22:06

I’m not gonna say simple because I don’t want it to sound like I’m saying simple, but it’s quite straightforward. You’ve got 80 families, you’re reviewing their cover, boom. But as a protection insurance, if you are just purely doing something like protection insurance, or some other ones, you just have, you know, we’ve got 1000s of clients, absolutely 1000s of them. Because it’s just it’s constant. It’s new people, it’s you know, there isn’t like a set number of families, because it’s an ongoing kind of return in a sense that we will be getting from these policies a lot of the time, there’s maybe what’s known as a little bit of drip commission, a bit of renewal commission kind of there. But it’s not certainly not enough to sustain a business. So you are just constantly getting more and more clients, and so reviewing 1000s of clients every year, very, very tricky. So you need to find a process that can really work for you. So, you know, it could be you know, one of the things that we say is a good idea is you know, when you’re looking at these reviews, you know, it might be that you do phone calls, and say just wait to have a catch up, it might be that you do an email to say I just want to remind you that you’ve got this policy in place. If any of these situations have happened, it’s a really good idea for us to chat or even if you just want to chat anyway, let’s have a chat, you get your name out there to the client, still reminding them that they’ve got the cover, and potentially reminding them as well as things like the value added benefits. You know, saying to them, I just want to double check, we set this policy Did you sign up for that GP service, which was 24 hours a day, seven days a week access to GPS, you’ll make sure that they remember these perks and everything. You can make it quite standardise, but it can be very complex, depending on how many clients you have. And just trying to manage that just it’s just the sheer volume that you are looking at. But there are potentially ways to do that. But what I would say is if you’re viewing clients, if you’re looking at a policy, you know, it’s a good idea to have something on that files that makes it easy for you to see, right? Well, this person got this insurance, but it was non standard terms. There was a plus 100% on the premium there was a risk exclusion on the IP so that when you’re coming up to review it, you can look at it and go right actually, depending upon that situation. Are we okay, get the IP we’re now in timeframe. Now I think I can get that without a wrist exclusion and you may be speak to an insurer and just say Do you think this is possible kind of thing? And and then speak to the clients and see if they obviously want to have a look at that if we are able to improve it’s the pitfalls. There’s so many pitfalls. I don’t want to scare everybody, but there is definitely pitfalls. When we are reviewing clients covered. This is our biggest complaints area. And even though I started talking about protection advice, and then the investments and pensions and everything, obviously pensions, another huge complaints area. Same with investments, you know, things can go wrong. And sometimes things don’t go wrong, but people still want to complain. And you know that that does happen. We are in an industry in a society it where, you know, people have very easy ways to make complaints. And obviously, that should be the case, people should be able to make a complaint if they’re not happy with the service if they think something’s gone wrong. But it does also mean that sometimes you can do everything right, and still receive a complaint and still spend that time to justify a decision still potentially have to speak to the Financial Ombudsman Service, depending upon what this person’s reaction is what they’re doing. Which, you know, it’s very, very unfortunate, but it is something that is part and parcel of working in the area that we have. And we just have to try and try and accept that that is something that’s part and parcel of the business. So when we are replacing a policy, especially in protection insurance, we should have what’s clearly defined as like a replacement policy declaration, that’s how we term it and cure.

25:50

It does what it says what it’s doing. So it works. Well, you know, you might have a slightly different terming to it. But you really should have this, I would be suggesting as an a4 page, in your report, where it’s just very clear, you know, where we’re saying, This is what you have. This is why we’re changing it. This is what you’ve got. Now, here’s the positives and negatives. And so it’s just really quick for people to see it should ideally bullet points as well draw people’s eyes to the main points now.

Kathryn Knowles  26:19

99.99999% of the time, you cannot replace a policy for protection. surance is say that it’s 100% better than the original policy. It is rare to be able to do that. And I’ll explain and you might think, oh, you know, kind of thing, because it’s not nice to say that there’s disadvantages. But we need to write them down, we need to make sure it’s clear so that if somebody does say, Well, they’ve not done this, and they’ve not told me this and everything. What’s interesting and protection insurance and other ones is that usually, it is quite a requirement that we record all of our conversations. Now I know what I face, that’s not the case, which is very, very amusing. Because it’s like that industry kind of regulatory compliancy type assumption that I face completely trustworthy, completely trustworthy, when they’re having an in person meeting that’s not recorded, but protection advisors and other advisors as well, you must be recorded completely, you know, we need to be up to make sure at any point, we can refer back to what you’ve done kind of thing, which is really kind of like, Okay, fair enough. But I’m personally very, very happy being recorded, because then at least I’ve got proof as to what I have said, and potentially why I’ve not said as well, because there’s times that I wouldn’t be saying things at times. But we’re going to have the majority of the time, it can’t be better. And I’m going to take you through some of those examples. Because these some of these disadvantages, you should be including when you are reviewing protection insurance. So life insurance, the majority of life insurance policies in the UK, have a 12 month suicide exclusion, which immediately means that if your clients already has an insurance policy, life insurance policy, and then beyond that 12 months, they don’t have a suicide exclusion on the majority of clients. So you’ve set up in your policy, we’ve got an immediate disadvantage, there is a new 12 on suicide exclusion. And you might wonder, how does that sit? Well, unfortunately, during the pandemic, there was a very, very sad story, it was in the national press, some of you might be aware of it, some of you might not be. And in that there was somebody advisor had reviewed someone’s life insurance policy, and they’ve done a new one. They had not made the person aware that the new policy had a 12 month suicide exclusion. And it was around about 11 months into that policy that that person did take their life. From the insurance point of view, that person didn’t meet the definition of a claim. It was horrific. It was awful. It was really, really bad situation. But ultimately, really, that comes down to the advisor, because the advisors should have made that person aware. You’ve got this policy did the new policies this advantages disadvantages, the disadvantages that this new policy has a twelvemonth suicide exclusion? There are times that that’s not necessarily the case. So there are certain policies that can be arranged which have permanent suicide exclusions. So if you did a new one, it’s an advantage in a sense that there’s only a 12 month suicide exclusion. So it can change quite a bit. But that suicide exclusion statement should really be in there. There are a couple of insurers that don’t have suicide exclusion periods. But the majority do. She really, really wants to be on top of that. And I say that would be for majority of the time majority of people at disadvantage. We then have things like critical illness cover. I Akira, which is my broker firm. I will not allow a critical illness policy to be replaced without something known as a CIA expert report. Now you might have different partings for you, we see AI expert because we find it very thorough in what we need, in the sense of I can go on to that system and say right You had an a policy setup with this insurer in March of 2002. And I’m looking at a policy as of April 2024, with this insurer, and that system will do me a report, which will say, in a list form. This is what this insurer have this in that policy your policy currently has, since the new policy had this, it gives like a score to say which one’s better. And based upon that systems rules, it will then say, well, this one, the old ones better because of this, the new ones bigger is better because of this. In general, when you replace a critical illness policy, it is better. But you can’t say 100%, that it is completely better. And I’ll give some examples. So some good examples, Hex are things that people might not necessarily think of HIV used to be accountable condition under critical illness policies, abi did have it as one of its standard requirements, in a sense to say that if you’re doing a critical illness policy, you need to include this. Well, a couple of years ago, the ABI decided that HIV was no longer a critical illness due to the amount of incredible advancements that we’ve had in the industry. And we’ve even got things like now where, you know, there has been the potential for life insurance, that standard terms, there’s potential for IP at standard terms and protection, potentially getting critical illness cover to, for people living with HIV, which is so far beyond what we used to have even just, it’s from 2020, it has absolutely flown what the options are. So it’s not seen as a critical illness anymore. So straightaway, you can’t say that the new critical illness policy is 100%. Better, because the new one won’t cover HIV diagnosis, the old one does the new one doesn’t. We also have things like cancer, some of the older policies had much broader coverage for cancer diagnosis. Whereas now, obviously, we have lots more listed in certain ways and in partial payments in certain ways. And the new policy has just generally far more policies, I mean, we’re talking usually at least on average, about 60 conditions in critical illness policy compared to what they used to be years ago. So overall, it’d be far, far better in terms of what’s likely to be claimed on. But some of the definitions won’t be as good at times. In all fairness in that kind of an outcome, the price difference between when that personal Richard took out compared to now is probably going to be the deciding factor to just go just keep the original policy, because obviously no matter what the person’s older, so that’s another thing, you have to replace the policy, but the older now, well, it might fit their situation much better. It might be perfect for them, but it’s more expensive. So the disadvantage is that it’s more expensive. The advantages, it’s doing this, and that’s and this which either one doesn’t, but there is still the disadvantage that is more expensive. The other thing that people might not think about with critical illness cover I’m just doing a couple of examples to the last one is the fact that with quite a few of the smaller, quite a few of some of the older critical illness policies for children’s cover, used to cover a maximum 30% or 30,000, for a children’s claim quite a lot of policies now. odd for a little while, at least they were 25% or maximum 25,000. Some of them are now 50%, or a maximum of 50,000. And it can be quite, quite confusing to suddenly because you’re doing all this stuff. I mean, I’ve seen so much stuff trying to compare these policies, and they certainly think that one is just like, well hang on, did we check what the children’s cover was doing? Has that changed? So whenever we’re doing stuff like a critical illness policy, we need really, from a compliance point of view, I’ll be saying, and from a safety point of view for ourselves, advisors, we need to have some kind of statement there to say this is what you have, this is what we have now very clearly set out. Are you happy with this change. And then it’s still in my replacement policy declaration, I will be saying we have replaced, you know, the critical illness policy. I cannot say with 100% certainty that this is better in every way shape and possible form than your original policy. However, we have looked at the reports we’ve looked at the comparisons together. And we both agree that this new policy gives you a much broader cover. It’s got more conditions that are looking at things like that. So you would come up with some wording with your compliance officer. That would be kind of standardised statements in your replacement policy declaration over that same needs to be said for value added benefits. Value added benefits change that can be removed. They are non contractual. So be very, very careful about the wording that you say with that. So you want something in there against say, these insurances often come with some value added benefits such as mental health support, sometimes physiotherapy different things like that. We have obviously these these are non contractual, they can be removed that can be changed. And based upon this situation, I still feel that this new policy is going to be better for you. And again, speak to your compliance person for the right wording for that. Another big party central issue that we can have with replacing and reviewing policies and not replacing points but reviewing policies is income protection, we are massively encouraged to do income protection as we rightly should be. And really, really encouraged and highly recommended to do it. RPI links are potentially CPI linked depending on what the insurance says. So basically, as time goes on, the value of the policy is an essential retained, the premium will go up, as well as the sum assured you will usually find that the premium goes up more than a sum assured. So again, you might be 10 years down the line of RPI linked income protection policy and looked at it and think, hang on a minute, if I did this new, is going to be cheaper, even though everything else is pretty much the same. Because of the fact that the RPI, the very nature of the RPi with the premium is, is growing more than the monthly benefit. But a key area for the annual reviews for income protection is this RPI. Because let’s say we’ve done Max, some assured Max percentage on that person’s income, which is ideally what we want to be doing, we should always really kind of start from that and then kind of work backwards to just covering bills and things like that, again, do what your compliance person says that you’re allowed to do different compliance, people have different opinions, my point of view is and in my firm is that we will do as much as possible because we’re not just going to cover bills, we’re also going to have a standard of living, just because somebody is claiming on an income protection policy doesn’t mean that they suddenly have to live in the house and you know, not do anything ever again, we want to make sure that they they can still go out for their own mental health and things and pay for potentially the hospital post, sometimes pay for the medicines, you’d be surprised sometimes that some conditions where you are able to get your medications, in a sense for free in some way you’re not able to it’s very, very interesting when you end up seeing it anyway, often a bit of a tangent there, I do apologise. So let’s say we’ve done that, and we get to the next year. And we’re doing the review. And the policy is going to RPI link automatically because they will do that. So you can say no, you can turn it down, but they will automatic go for it. And the person’s salary hasn’t changed. And we go and have the island kingdom, while at that point, the person is insured for more than they are allowed to take. Because there’s their max percentage hasn’t changed in terms of their income. But the insurer is assumed that their income has gone up at least by RPI. And so they’re paying for high monthly benefits.

37:29

And they’re also paying an increased premium for that higher benefits. So difficult you have then is that let’s say a claim comes in. And the insurer says, Oh, wait, so proof of income, we’re doing that, okay. Well, their income doesn’t match the maximum bet that what they’ve been paying for. Okay. But obviously, why? And they’re gonna say, Well, you’ve it’s been RPI linked, but the salary has not changed. And we can’t suddenly insure this amount per month, because that means we’re going past our max percentage that we’re allowed to do.

Kathryn Knowles  38:01

And then at that point, we’ve got that awkward situation, have the clients been paying more paying a higher premium for something they can’t claim on? Now the insurer was not going to say, oh, yeah, that is happened. It’s one of those things, don’t worry, we’ll just reduce the premium and you know, they will going forward, you can serve no, no, no, no, bring it back down. We want to do that. But you’re not going to get those premium payments back to say, well, actually, you know, they’re gonna say, Well, you should have been keeping an eye on this, you know, this was a maximum percentage based upon salary. And as the advisor you should have known, and you should have been on top of this. So you’re going to have to be super careful. If you are doing income protection, and you are doing RPI linked, then you really do need to be doing annual reviews with your clients are the ones you know, there can sometimes be arguments to say does it have to be annual? Should it be six months, some people do six monthly, I think six months is quite intense. I personally wouldn’t for me, I wouldn’t be too thrilled if, if my IFA was doing a complete review of my my service, my my systems, my finances every six months, because I just don’t have time to be doing that. Very happy for the once a year thing. But you would again FICCI with your company, but the important thing is to be consistent, you might turn around and say well actually we can do to yearly if you’ve got a reason to justify that and your compliance says it’s okay. And there is a really clear justification for to yearly then that should be okay. But there’s no reason not really to be doing at least some kind of annual outreach, as I say, even if it’s just an email to say, we’re here you’ve got us insurance through us and you know, we should probably have a chat sometime soon. Do you want to not everybody wants to and the other thing to bear in mind as well when we’re doing things and we’re reviewing cover is say things like mortgages, but also and encompass any of these clients changes and circumstances. So we’ve got a client’s they had their original policy setup and let’s let’s say yeah, let’s go with the mortgage one just for ease. So the mortgage was originally 100,000 is now 200,000. Let’s just make it up, they’ve bought submenu, and they need the new insurance. So the original policies now maybe worth 85,000 has been reducing a little bit, you’ll be speaking to them, you know, we’re wanting to do the new cover. Now, let’s say this person has had a diagnosis of cancer during that time. So there’s a couple of options there. One, we might be replacing the full mortgage amount, which is very, very unlikely, I would be suggesting that’s probably not going to be what you’re going to do isn’t a big hint of don’t do that.

40:34

And because when we do that, not only is the person older, so the team is going behind, but they’ve had a cancer diagnosis. So our ability to be able to do it has significantly changed in terms of what the outcomes are going to be very, very likely to be at least some kind of premium increase along the way. And then the question is, since we’re reviewing it, so so we’re going to do, we’re going to do the full policy, or we’re going to do a top up. So we know that there’s 85,000, we now need 200. So we’re going to do an extra 115, top to up based upon this situation. And again, in your replacement policy declaration,

Kathryn Knowles  41:07

I’d be expecting it to have like, this is what you have now. And then the reasons for the new cover. So if it was that you’ve done the full new policy to cover the whole mortgage, I would expect you to put in there sounds like we’re doing it because you’ve got a new mortgage, and it’s you needed more insurance. But then I’d also expect a statement, they’re saying we could have potentially kept your original policy and topped up, but we’ve not done this, because so again, we’re constantly thinking, can somebody be, you know, could I be doing something wrong by this person? Could

41:39

there be a complaint against me? So why haven’t we just done a top up? Why haven’t we kept, you know, often a policy, that’s some obviously bound to be somebody who’s younger. But also, there’s probably not been any premium increases or exclusions on there, there might have been but you know, if there’s been a change, especially in medical circumstances, it’s very, very likely that we just want to keep that original policy in place. The times that it can be a bit trickier is if the mortgage terms increased as well. So if we had 100,000, over 12 years, and the new mortgage is 200,000, over 23 years, that very, very much changes the situation. And we probably would be wanting to just do everything new just because the original policy is going to obviously end far too quickly at the drop off is going to drop very, very fast as we get towards there, you can just do it as top pops top ups, but you’re what you’re going to have to do is use them what’s known as an amortisation calculator, and then to the best of your ability, try and calculate what’s needed over the term. And when the money will start to complete. It’s, it’s fun. It’s not fun in the slightest to be doing it that way. But it is something that you should be aware of.

Kathryn Knowles  42:49

And also, it’s one of those situations is kind of like, well, again, what are the disadvantages? And the advantages? Well, the advantages would be well, we’ve covered for new mortgage, brilliant, but the disadvantage would be, it’s more expensive, again, are, you know, the advantage of this is that we’ve done it this way, because then you’ve been able to attain your original policy at cheaper rates, and then just top it up rather than doing something brand new. So there’s lots and lots to be thinking about with that. As I said earlier, commercially, we are sometimes episode a hit and miss, you know, you can start doing things and be reviewing and think, right, brilliant, I can do this for the client, this is happening as new mortgage, you know, I am going to get some kind of return on my that’s going to charge a fee, or I might get this commission from this insurer. And then you’d go into it, you start doing it, and I’m sure we’ve all had it where you get to the application and present goes, Oh, yeah, I’ve had that. At which point everything changes, and you might not be able to do anything, the need won’t have changed, but their openness to want that change could very, very much differ. And, you know, again, you might then go from there, we’ll just replace it all to a one, we’re gonna have to just do like a top appear on that top of as I say might be, you know, 100,000, it might be more than that. But sometimes it might be just 25,000, which is very, very different for you commercially, depending on what you’re doing, especially if you’re more commission based rather than fee based. You know, we do see for ourselves, we do this quite regularly with our clients, and obviously, based on my clients are generally people who will have had risk situations or health conditions in the past or still ongoing health conditions. And it is quite a mix between Yes, we can definitely do something and then actually old Well, this is also developed and something new is developed. And the original policy just really doesn’t need to be kept in place. Another thing to be very mindful of as well when you are replacing is the potential for clients to cancel policy. So as we say, a lot of the time people set these things up. It’s a PDF on the computer, it’s a piece of paper in the drawer and you remind them that they’ve got this insurance. Everybody is I think majority of people are struggling to at least some extent at the moment financially. You know, there is there was a lot of lots of people who are struggling financially and have, literally, you know, even if the policies five pound a month that five pound can make a huge difference to somebody. And I get quite frustrated when people are sort of like, Oh, it’s just five, you know, and it’s really everybody can afford that note, there are some people who literally cannot afford that it could be a choice between them eating dinner for a couple of nights or having the insurance which, from our point of view, the insurance is incredibly important. But for them being able to eat is going to be far, far more important. And I do appreciate that clients in those kinds of situations aren’t necessarily going to be the clients that a lot of people listening to this would necessarily have as clients due to potentially, you know, certain asset requirements to be able to engage with certain advisors. But things happen, and you never know, sometimes things could happen, and maybe a client that you’ve had something really, really bad happens workwise or health wise or something, and everything falls apart, and they become that person who was struggling even to find five pounds per month. So you get people in the centre, go look at it and ago, completely forgot about that insurance, is that what that thing’s been coming out each month, I don’t need that. And you then having to obviously see cancellations sometimes come in and you contact them. And it’s the case that there’s a few things that happen. The most positive one for them is that they just don’t need the insurance anymore. We’ve contacted people, sometimes we’ve gone, we’ve gone, we’re thinking you’re wanting to cancel the policy, can we just check it, you know, we just want to double check from our point of view that it’s the right situation for you and have gone paid off the mortgage, I literally don’t need it. So Oh, and you say to them well, okay, I mean, obviously, it can sometimes be worthwhile keeping, you know, it’s not too expensive, you know, it’s potentially a bit of even though it’s not family protection, how you would set it up it just just sit there a little bit, you know, with a bit of potentially for bit funeral cover or something. And some people are actually yeah, that’s that kind of makes sense. And some people will go now I don’t need it, I’m, we’re fine. And it cancels. So the brilliant thing is, is that they’re not paying for something they don’t need. And they’re going to be walking away with quite a positive outlook over the insurance boxes and girl got I had this when I needed it, I didn’t need it anymore. Nobody made it hard for me. And I’ve been able to make an informed decision myself, fine. But it also if those committed gives you a chance to review the client’s circumstances, it can be that you can help them again, maybe a scam has come along at the same time. You know, you might have said to them, oh, we need to review they’ve gone on somebody tried to do a search a scam has got the details and got in touch and you’re able to save them from from an issue we had quite a specific one actually where somebody’s been diagnosed, I want to say with Crohn’s disease, and we’ve got them life and critical illness covered it was very, very tricky to get them that. And this person, like I was saying before, you know, they were a manager, quite a managing quite a lot of people, they were in a quite respectable job. And they had a scammer ring them. And this person was saying anything and everything about us and all this stuff. And this person contacted us and he was just I’m cancelling How dare you have done this, and you know, and all this kind of stuff. And we established that the scammer was telling them that terminal illness, which is a part of life insurance was critical illness, and not what we had done, which was life insurance. Obviously, what this other person was saying to them was phenomenally cheaper. It’s a critical illness with it. And you know, we were having that situation of saying to this person look, do, you know, basically, completely understand that you’re angry, we’re here to just tell you that what they have said to you is available is not available at that price, it just cannot be available at that price. Because not even just because of there had Crohn’s just because of the very nature of the costings of life insurance versus critical illness coverage. It doesn’t look like we were like we think that they’ve told you that terminal illness is doing this. It’s not we’ve done this, here’s the key features documents, if you’ve never want to speak to us again, that’s completely up to you, if you really aren’t sure that we’ve done you a disservice. Please, please just read them, please read what they’ve sent you as well. And of course, the person came back to us and was just like, Oh, my God, I can’t believe that I just fell for that I’m not someone who would fall for that. And, and obviously immediately worked fine with us incredibly grateful for us, obviously still a client to this day, because of the fact that they almost lost this really valuable cover that had been very, very hard for them to get. And, you know, we again, it’s a responsibility to be there to make sure that people aren’t being caught by these scammers. And you’ve got to bear in mind as well. That as I say, with these, we’ve got the scammers were asking about, you know, potentially getting in touch with people that might want to cancel a politics that don’t need it, there might be a scammer involved.

49:30

Hopefully, we can make it a positive outcome for everybody involved. But you do need to bear in mind as well that you might be inciting. If you are commission based, you might be inciting a clawback by reaching out to them. Now, under consumer duty, inciting a clawback is not a reason to not engage with your clients and offer that service and offer them support. So you really, really do need to be looking at that. Obviously, if there’s a cancellation, it could be that you’re going to be getting an actual clawback properly from the insurer. It might be that you’re renewal commission might disappear. So you do need to think about the way that you’re going to be approaching it, you are probably going to hear arguments from people saying, well, it could affect my commission or it might affect this and might affect that. That’s not a reason. It sounds consumer duty you saying to them? Well, I’ve got a clawback is not going to stand up against any kind of complaint that you receive. So you do need to be super, super careful about it.

Kathryn Knowles  50:23

That’s the majority of stuff that I need to say. So we’ve been through quite a lot of things, you know, we’ve been through the positives, obviously, the client outcomes that positive the positives for us as well. And you know, you might be speaking to somebody that maybe just needed a little bit of life insurance before our income protection, we might now be in a stage where they actually need IHT protection, they might need gift protection, they might have set up a business instead of each shareholder and key person, you know, there’s so much that can happen in people’s lives. And they won’t necessarily think a lot of the time Oh, yeah, I’m gonna, you know, come and do this. And I’m gonna do that it’s also assess them actually realise that this is a bit of a risk area, do you know that you need this? Do you need that? And obviously, we’ve spoken through all the while the majority of the pitfalls and things that you should really be looking out for to make sure that you and your clients remain safe. But hopefully, that’s been interesting. And you maybe have some questions for me.

Lee Robertson  51:14

That’s great. Catherine really comprehensive as always. So we’ve got time for a couple of questions. So ones come in. It’s obviously my wealth advisor. So the question is, with consumer duty, how much time would you think that a financial planner or Wealth Advisors should spend on the protection element of the process?

51:36

really tricky, because I don’t know how much time they would spend on a pension and investment process. But you need to be doing it properly, you know, you really, really do certain things to stand up to my mind is, you know, sometimes I find this, I phase don’t necessarily know that, you know, the gift protection, the gift into V vos policies is still available. They’re not completely familiar with joint life. Second Death term policies, you know, there’s certain things that aren’t not saying that they don’t know about them, but that don’t necessarily have it’s not their usual routes to access the insurance and having them there.

Kathryn Knowles  52:13

What I would say is, is that you do need to treat it just as seriously as you would, the pensions and investments. A key thing for me, I always gone about this as income protection, I do appreciate that a lot of people when they’re speaking to an IFA are usually quite a bit older. So you know, they’re already getting more towards the retirement age already there. And some iPhones I speak to just say, like, this person is so wealthy, they would never ever need income protection, which, you know, sometimes that would be the case as well. But ultimately, things like income protection, you know, I always say to my face, when you’re doing your planning, you know, and obviously, as well, if you’re doing cash flow modelling, hopefully, there’s some cash flow modelling there.

52:55

have everything set up for your client as to what you think is going to be there and in two years time, make one of them false. So all that can never work again, just cut out that person’s income, and see what happens to the cash flow. And go from there to then say, right, well, if that’s what’s going to happen, should we be looking at something like income protection, you know, as an IFA, probably more than anyone else in the industry, you are seen as the ultimate experts in everything regardless of what you do, in terms of if you don’t do protection, he still seen as enough because you and I have a godly tier level of financial advice. So if there is somebody who’s going to have an issue, you know, you’re going to be thought of as somebody who should know everything about it. And so there’s no kind of thing for me as a protection adviser. I don’t do pensions, I’m not authorised to do them. I’m not authorised to do investments I know about them. I know about mortgages, I’m an authorised in any way, shape, or form. So I have someone I signpost to, or people I signpost to. So I can say why I’ve identified that I think there’s something here, they need to be speaking to someone and I’ve given them that information as to who they should be speaking to. So that kind of gives me almost a little bit of a barrier sometimes because I can say, well, that is not my area of expertise. So nobody could tell me off for not discussing pensions because I’m not allowed to those with an IFA, you are definitely allowed to talk about protection insurance, you should really, you know, you should if there is a potential for IHT planning, I appreciate that ifs do have weird and wonderful recommendations that they do that don’t always necessarily mean that something like a whole of life policy is needed. But it should be on the table to be looked at. It should be documented somewhere as to why haven’t I done it that way because, you know, a life insurance for whole of life, for IHT protection or gift planning for a lot of people’s pretty straightforward and it’s not phenomenally expensive life insurance in itself. I mean, obviously we’re talking it we are usually talking high amounts of money, but

Kathryn Knowles  54:52

in the grand scheme of things, it is ridiculously cheap for what it is. And you know, to the point that actually insurers have massive li underpriced each other, and is causing issues in some ways. Because it is so so cheap that yet the payouts can be so, so large. So just like I would do with my team, I will be saying to them, right, if you have doing this, this and that, I want to know, have you done waiver of premium? If you’ve not done work with premium? Why haven’t you done it? Have you RPI linked it? Why haven’t you done it? And I would, I would expect that to be documented? I’d be saying the same for ifs if you’ve not done protection, why haven’t you done it? And it’s not good enough to just say client didn’t need it, you know that there needs to be something say, well, the client didn’t need it, because I am doing this Did you know because again, if you have a complaint, you want to be able if someone comes in to go, here’s the file, I’ve explained exactly why I haven’t haven’t done this. So I will be personally I’ll be taking it just as seriously as anywhere else. You know, if you’ve got an area, which we know, could be a complaint issue. Why wouldn’t you if I go from from complaint issue, cuz I know sometimes people if they’re not going to do it, because it’s the right thing by the clients, then sometimes to say it from the commercial aspect of you could get a complaint? Sometimes that’s what works to go, do you want to face that? And we did actually help. We were approached by the false years ago, before consumer duty, I might have said in the previous one. So forgive me if I repeat myself. And we were approached by the false because and they said to us, we’ve had a complaint coming against the firm, wasn’t us, but a complaint against them. I don’t know who it was. And so if you are that firm, and you’re listening, I’m sorry. But obviously we have to answer the false truthfully. And the complaint was that this person had died, and that believe they’d had a mortgage setup. And the advisor didn’t do life insurance. And the family complained and said, Why didn’t you do life insurance? This person and the advisors couldn’t have it? Because of you know, this? And obviously the force was looking at, they’re going well, what did you do any research? No. Why didn’t you do it? Well, because they couldn’t have it because of this medical condition. And obviously, being the experts that they are they came to us and said somebody with this medical condition at this time, would you have been able to insure them? And unfortunately for the broker firm, and unfortunately for the family? The answer was yes, we would have absolutely been able to insure them. And so even before consumer duty, this was a complaint, the cost the area, and it’s only going to be heightened more now. Hey,

Lee Robertson  57:19

Brent, thank you that’s really useful. So I think I’ve got away lightly this time, Catherine, because we’re we’re at time. But I will throw in one final question. Because I think it’s important, you know, financial advisor, you talked about ifas in a very broad chart. So you know, as I come from that from that, know, for those advisors, less confident in the insurance side, because it’s such a dynamic moving part that advisors don’t always address on a day to day basis the way you do. You know, signposting. You know, we’ve talked about this a lot. How would, how would an advisor who’s less confident or should be doing what you’ve just said, on the on their, on their knowledge at that moment that that client may be uninsurable? How do they go on site? You know, how do they follow signposting to get help?

Kathryn Knowles  58:08

Yeah, absolutely. I mean, there’s, there’s a few things when we always say with anybody, and this is quite a thing with signposting. Everybody always says do it in house first, if you can do it in house, do it. If need be, you know, potentially get someone who is a protection. And I know there’s definitely some IFA firms out there who have now got someone who is just protection, and that is all they do. And every one of their clients got that protection person, which is brilliant, it works really, really well. But they’re not ever wants to do that. And everyone’s got the resources to do that. Not everybody wants to do protection. Some people just like, I do not want to get into that messy space, it’s just you know, because it can be very messy protection insurance is really, at the heart of it, what you’re doing is simple in many ways, you know, we’re protecting against death against the critical, but the amount of options are ridiculous. We’ve got about I think about 35 insurers that we use. And that’s UK, that’s International, that’s personal business group, you know, and each of them and then when he gets an IP and critical illness, the amount of options are phenomenal. And they change immensely as to what’s available depending on a client’s risk. And for a lot of ifas I would suggest that you’ve probably got clients who are maybe skiing or sailing there can make huge differences huge, huge differences amount of time outside the country as well if they’re going abroad quite a bit to those lovely villas somewhere that can make massive differences as to what we’re doing depending on what’s happening with our tax as well can really play into it. So you can potentially signpost obviously there is Kara, which I’m at which obviously anybody is more than welcome to chat to us. We do have lots and lots of people I face who come to us about about half of our business is from introduced situations. So this isn’t something like if someone’s never done this before. It’s not like a case of oh, you know, is this something to be ashamed of? I’m not doing myself you know, there’s anybody else do this. Huge amounts of people are doing this huge, huge amounts. You know, I think we’ve All over 1500 Introducing ifas. With those last count, that was the last time I checked it. So it’ll be more than that now because we’re just constantly more and more people coming. And so you can sign post. And what that looks like is you, you speak to a firm that you like that you trust. And you say to them, right? I’ve got a client, this is a situation, what can you do? And that’s the usual route. And then the firm that that firm Michaels would say, well, we can do this, do you want to introduce the client. And we would then step in and do that. Sometimes just go, Look, I’ve got the client in a situation, just chat to them. And they’re just that they don’t even want to know the next one, they just do it kind of thing, which is, again, it’s fine, whatever suits you. But I think you know, in terms of signposting, it’s not something to be scared of, because sometimes I think people can be quite worried that it will make them seem like they’re not smart enough, or they’re not good enough at their job if they need to signpost but the way that I say it is that if you spoke to your solicitor, and they said, Right, I’m setting up this will for you. And I’m doing this and I’m doing that and you need to speak to an IFA about your IHT potential, because you need to be doing that I have an iPhone specialist here can speak to you. You wouldn’t second guess it, you’d go oh, the solicitor said, I need to speak to this person, you might choose your own person, but you’d be like, they’ve told me that I have this need, I need to do it. It’s not their area. Someone else is doing it, who is their area. And I think that’s really, really key here. And you’d get it some of the accountants, you know, would do it with the ifas. You know, accountants and lawyers do it together. It is one of those things where you know, it, there’s nothing shameful, or you know, you’re not not doing your best job, if you don’t want to do protection insurance of you can’t able to do protection insurance, you need to be doing what’s right for the clients. And as long as you position it in the right way, and just go, Look, I’m here doing this, I do your pensions and investments, that’s what I do day in, day out. So you know, that they are going to be right on the money as to where they need to be. I don’t do that, I don’t have time to do that. Because I’m spending all my time doing this for you. That person over there is excellent use them. You do have things like if especially if it was like a medical or disclosure that you are unsure about, there is what’s known as B buzz trust the broker service, MC if you search online, B but find a broker, and you can go on there, and you can type in what you want. And it’ll find show up loads of firms that have been authorised by B but as people who are specialists in that area, and you can choose in terms of like location in the country, and things like that, it’s kind of like a random pop up and that and things like that. So you can do that as to who you don’t know who’s going to come up in the sense in the list. But there is that to potentially look to your network, if you’re part of a network could potentially be have someone that you’d signpost to we were involved with quite a few networks, it might be that keuro Naturally the one that your network says use Chiara and there are other networks that use other ones as well. But key thing is have that conversation before you even get to the point probably with that client. And knowing that a client needs that just have that conversation with a firm, find out what happens, find out what commercial arrangement is in place, there’s usually some kind of a commission splits. That happens. Some firms don’t want that, that’s fine. So it could be you know that you just do it. And I’m not saying loaded premiums, this isn’t anything to do with loaded premiums. It’s just the obviously some firms are commission based and a fee based. So it might be that you don’t do a commission split. But instead, sometimes we have it where some firms want us to donate to a charity. If that happens, which is you know, happy to do some say, well, obviously, you know, it’s commission based, just take a certain amount of commission of what the client pays, in a sense. So there’s, there’s lots and lots of different ways to do it. And find somebody that you’re comfortable with Go with your gut feeling kind of thing, and, and then it can really, really help and again, with the consumer duty, you’ve

1:04:01

then got a massive tick box, in the sense of why didn’t you do protection for this client. I didn’t do it personally, but I sent it secure or somebody or somebody and they stepped in and did it. That means that again, you’re putting a barrier in place to say, I’ve done what I can do based upon my limitations. So I’ve got experts in.

Lee Robertson  1:04:21

Thank you. Really comprehensive as always, Katherine. So I guess we’re we’re slightly over time, but it’s been a great session today. So thanks, everyone for turning up. Thanks for the questions. Thanks again, Catherine. And I really look forward to the next one. Fantastic.

Kathryn Knowles  1:04:35

Thank you, Lee, and I’ll speak to you soon