[Opinion] Are life advisers required to be proactive?
Steve Wright asks; How proactive are life advisers expected to be with their existing clients? The answer is not straightforward.
Tuesday, February 18th 2025, 3:00PM
by Steve Wright
Are you expected to take action to protect your clients’ interests if something unexpected happens? Can you safely ‘file clients away’ until the next scheduled review?
Like a lot of issues these days, there are no settled answers, so here is my take on this.
I suspect your obligations to your client will depend in part, on what you have agreed to do for the client in your Scope of Service Agreement (SoSA). If you and the client have agreed to regular reviews, then I’d say you have an obligation to be proactive about initiating that process, just as you should be proactively initiating anything else you have contracted to do for the client in your SoSA.
So, what about stuff your SoSA with the client may be silent on? What if you hear that your client has just had a baby? When you last saw them six months ago, they didn’t tell you they were expecting.
Can you ignore that news until the next review in six months’ time?
I suspect that most advisers would say “no, you can’t wait, you must contact them soon” and I think this is correct.
It’s not just good business to contact your client, there is possible harm if you don’t. This is because many health insurers will allow babies to be added to a health policy, regardless of the baby’s health, if you do it ‘in time’ (typically within a few months of birth).
As an adviser you’d be expected to know about this time limit (your client probably won’t) which means you should take proactive steps to ensure your clients can take up that offer ‘on time’.
I would say the same proactive obligation applies if you become aware of other major events in your client’s life, for example, home purchase, marriage, etc
Nothing really controversial so far, so let’s consider another scenario your SoSA is probably silent on, maybe a bit more controversial.
From September 2021 to May 2023 the OCR increased from 0.25% to 5.5%. If you have clients with mortgage repayment cover, this rapid increase in OCR triggered the ability to increase their mortgage repayment cover when their mortgage repayments increased, without underwriting, with at least one major provider.
Would advisers be expected to know about this benefit? Would advisers be expected to contact their clients about a possible cover increase or increase strategy soon, before disability strikes and before the next scheduled review?
I think the answer to both of these is likely to be “yes”.
I wonder how many advisers with client’s insured under this provider’s product took advantage of this opportunity to discuss increases in mortgage repayment cover with their clients?
Steve Wright has qualifications in economics, law, tax, and financial planning. He has spent the last 20 years in sales, product, and professional development roles with insurers. He is now independent and helping advisers mitigate advice risk through training and advice coaching.
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