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Protection matters: Why protection is the bedrock of sound financial planning

IFA Magazine talks to Adam Higgs, Head of Research at Protection Guru about the help which is available to advisers and paraplanners to support the research and advice process for clients on matters of protection

IFAM: Can we start with a brief background to Protection Guru? How and why did it come about? What does it seek to deliver?

AH: Protection guru is a technical information website aimed at the needs of advisers and paraplanners, to help them to better understand protection products and hopefully in turn have more engaging conversations with clients.

We do a lot of benchmarking of protection products, the features they offer and the overall quality of plans. This means we can help advisers compare plans. From the start, we’ve had advisers coming to us saying it’s great that we’re helping them to compare plans and understand which plans are more suitable for their clients based on their circumstances.

We enable advisers to compare policies based on many different features, some which advisers are very familiar with and know a lot about whilst some they aren’t. There are even some features that advisers have said they didn’t even know existed. To offer direct support in those areas, we started writing and posting a series of short articles. Each one would focus on a particular feature of a protection plan and explain that feature in terms of what it does, which types of clients it helps and how different insurers offer them. Ultimately advisers can see what the differences are and how those features are offered across different insurers and different plans.

We’ve accumulated a large bank of articles on all sorts of aspects of the features of protection products. Advisers can access them for technical information and help and to learn more about the different features. Protection Guru now has well over 250 articles all designed to help advisers better understand protection and to become more comfortable, hopefully, in discussing the wider features with their clients.

IFAM: Is protection advice the “Cinderella” figure within the financial planning profession? If so, why do you think this is and do you believe that it is to the detriment of clients?

AH: In many respects it is. Of course, it really depends on the individual but, advisers will understandably focus on the reason the client has approached them which may be investment, pension or mortgage advice and only have a glancing reference to protection if it is discussed at all. I believe that this is to the detriment of clients.

If we consider a financial plan which an adviser helps their client to create, it will predominantly be built around the client’s ability to continue to fund that plan in the future with a large part of that coming from their income. If due to unforeseen circumstances that income is reduced, or worse still ceases all together, the plan will fail. There is only a very, very small number of people who would be able to self-insure. For some of those too, if they lost their income, that would affect their ability to meet their financial plans.

Protection is always the foundation of sound financial planning. If you go back to basics with financial planning, looking at short term cash funds and protection against unforeseen circumstances then everything else follows.

With effective protection plans in place, it just means that client is more resilient to any changes to their health that may stop them or hurt their ability to earn an income. This means the financial plan is far more resilient and therefore more achievable in the long term. When we talk about protection, it’s not just life and critical illness cover which needs to be considered. Income protection is the cornerstone of financial planning, in my view as without an income, most people’s plans will fail.

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