Can financial advisers comply with consumer duty without discussing income protection?

two people meeting on a sofa with laptop

As financial services marketers, not a week goes by where Consumer Duty doesn’t come up in conversations with our clients – and we’ll continue to support clients with their brand purpose and comms in connection to it.

But, as we reflected on the recent consumer duty deadline, we wanted to consider something well out of our professional remit on financial advice, purely because it might make for an interesting debate and because it relates to our purpose and some of our recent work with LV=. All of us in the industry – whether you’re in product, pricing, advice or marketing – need to be focused on better customer outcomes. And whatever financial services sector you work in, there’ll be plenty of parallels across other holistic advice areas like retirement planning – where we need to move away from products to overall customer outcomes.

What we cover

Income Protection: Why it’s overlooked

The fact is, Income Protection is still so relatively undersold compared to its popular cousins, Life Insurance and Critical Illness Cover. While they’re easy to sell and understand, Income Protection can get more complex and pricier (because it’s more likely to be needed!).

Are advisers doing the best thing for their customers by not mentioning Income Protection?

Some mortgage brokers and advisers may avoid talking about Income Protection because they fear losing a sale over budget or because they are less experienced in discussing it – and want to stick to what they know. Whatever the reason, when advisers shy away from discussing Income Protection, or any relevant product as part of a specific advice process, are they doing their customers a disservice and falling foul of consumer duty?

If you’re a mortgage broker or adviser discussing protection with a client, isn’t it your duty to make your clients aware of all the risks they face and the options available to protect their family’s financial security? Especially if it’s the risk that’s most likely to happen and will actually help pay for the other forms of cover if you were unable to work.

Yes, clients have different budgets and priorities, and having Life Insurance and Critical Illness Cover is a lot better than no cover – but a smaller amount of cover across all 3 will leave them better protected across more of their financial risks. Just having Life cover is like gambling on an outsider in a grand national race, and the same applies to protection.

Final thoughts: Income Protection and Consumer Duty

Whatever the customer decides is their decision, but if a holistic protection conversation hasn’t occurred and they take out a bit of Life of Critical Illness Cover, isn’t the adviser leaving the client exposed and themselves in the process?

What do you think? Can advisers have protection conversations without mentioning Income Protection, and still be compliant with consumer duty? And are there other product parallels where you see similar risks – whether it’s not mentioning Equity Release in Retirement Decumulation conversations or something else? Let us know your thoughts, as well as any ways marketing could help!