Friday, 22 March 2013

Professional Introducers

There is a nice comment piece in the March 2013 edition of Health Insurance Magazine (issue 184) pg15 discussing why IFA's shouldn't really accept offers from insurers direct to refer their PMI clients.

The conclusion of the article is that if every IFA did refer their business to the insurers direct then it would certainly grow the market but that if an IFA needs assistance with PMI (and many do) then referring to a PMI Specialist broker is a preferable solution.

I would recommend my IFA's and professional introducers to view this article and being a health insurance specialist I'd certainly agree with the article in its entirety.

To me the issue is two fold - firstly clients need cogent, professional whole of market advice centred around what is right for them as opposed to what is the right policy for a direct provider to sell them. This sounds like a subtle distinction but really it is not. Any direct insurance advisor (DSF, internal sales or franchise sales person) will usually give the best advice the can based on an expert knowledge of their companies products. Even perhaps with a knowledge of the competitors plans to 'sell against'. However, an independent like myself isn't 'selling against' other insurers in a way that direct sales people often feel they have to, which is a negative, lowest common denominator type of sales process. Having worked in sales for insurers from 1994 to 2008 I can confirm that 'selling against the competition' is an on-going and epic saga discussed in endless insurer sales meetings - some insurers even plot to sell against themselves when intermediary and direct parts of one business are not properly controlled and believe me, I've sat in that sales meeting more than once and it is a deeply unpleasant experience.
Rather, with access to and knowledge of the whole of market and independent advisor like myself is able to offer a very different type of advisory process. Yes, I always consider the budget of my clients but to me the more important question is not how much they can spend but what does my client  need/want - I often work within tight budget confines but I always look to include the most benefit for clients I can and often sell an unexpectedly more comprehensive plan following a discussion around some subtle lifestyle point the client or I has raised and this works both within the individual and corporate sectors.

Secondly, dare I say it, this is also about on-going  income stream for the IFA practice. Typically the deals offered by insurers for direct referral sit at around 20% to 40% of first year premium minus IPT usually with no trail commission. This means that in year one the IFA (whose client the insurer now has direct access to) receives a reasonable income - but in future years their income drops drastically and importantly their control over the client is reduced.

My introducer practice typically offers half of all commission due both initial and renewal for as long as the client needs PMI and the introducer agreement we enter into confirms that although they are using my agencies, the client, overall remains that of the IFA introducer. My view is that an introducer and client relationship is a long term one that should last for many years - so with regular reviews over a ten or fifteen year period the relationship with the IFA continues, they access half of the revenue driven by the client (whether new or switch commission), the client is reviewed and supported with independent advice when needed - at least annually - and a virtuous circle of advice, support and business development for both advisory parties is created.

This interwoven sales/support process is one I have put to many IFA colleagues and when properly examined with case studies and joint visits to clients is one that rarely fails to take hold with an IFA practice.

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