As we bring our ‘In Focus‘ series across New Insurance and Protection to a close today, Phil Nash, Chief Sales Officer at Shepherds Friendly, says advisers must ensure their clients aren’t focused only on external financial challenges to the detriment of having the right protection in place.
To say that Brits have faced a series of macroeconomic shocks over the past five or six years is something of an understatement. Brexit, Covid, and the cost-of-living crisis, to name just a few. Now we’re being warned about ‘Trumpflation’ hitting the UK economy due to the Iran war, with higher fuel prices and mortgage rates already evident.
In the midst of trying to mitigate all of these external events, it’s perhaps understandable that many Brits are neglecting to prepare for unexpected idiosyncratic shocks, in particular, health issues or injuries that might prevent them from being able to work.
This is, of course, not a new problem. Anyone who’s been in the industry as long as I have is acutely aware that the UK population has long been underinsured when it comes to products such as income protection.
Thus, some might question why we need to do something to change this right now, when consumers have so many other financial challenges to contend with. I’d say it’s precisely because of these challenges – with wider economic issues weighing on many consumers in the UK, their financial resilience may be lower than ever before.
A savings and awareness crisis
A recent survey by Finder revealed that 39% of adults in the UK had £1,000 or less in savings, while 16% had no savings at all. One would hope that to offset their lack of savings, Brits were becoming more likely to take out income protection, but numerous studies suggest take-up rates are stagnant at best.
The same is true of their awareness of it, with our 2025 Money Literacy quiz finding that income protection remained the topic Brits were least knowledgeable about, with just 18% passing questions on this topic.
Worryingly, this survey of 2,000 people, which covered ISAs, investing, insurance, income protection and general personal finance, revealed a sharp drop in overall financial literacy last year. Of those quizzed, just 23% passed, down from 49% in 2024.
Admittedly, financial knowledge was lowest among younger age groups, and many would, quite rightly, point out it’s typically those who are around middle age that make up the majority of a financial adviser’s client base. However, along with their higher salaries and net worth, these people often have larger commitments than those at the other end of the spectrum, so their outgoings are just as in need of protection – if not more so.
Plus, there’s growing evidence that younger people have become more willing to engage with advisers – research carried out for Shepherds Friendly last year found that those aged 18-24 were the most open to speaking with a financial adviser about income protection. Many IFA clients are parents of those in this age group, so raising the topic of protection for not just clients but also their offspring can be a good way to reach new age groups and forge intergenerational relationships.
Leveraging trust
In fact, feedback we receive from front-line advisers suggests those who have been referred by existing clients with strong trust in their adviser are among the most open to protection products.
At a time when many consumers are preoccupied with Inheritance Tax changes and regulatory shifts in historically popular wealth categories such as pensions and property, some advisers may be wary of using that trust to focus too much on products that are famously considered ‘sold and not bought’.
But they must because no conversation about growing one’s wealth is complete without a conversation about protecting it. Start a discussion by asking how much sick leave they receive from their employer, what cash savings they have and what their monthly outgoings are. Then tailor something that matches how long they’d need to be able to cope if they were ill or injured and didn’t receive their usual income from work.
You may well be selling them something you hope they won’t need, but if they do, they’ll certainly be immensely grateful you put the right protection in place for them and their families.
