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2022 - Q2

The Quiet Revolution

Financial markets enter a new paradigm

Five ways financial advisers can beat the cost of living crisis

Greg Levine
Managing Director, Sales & Distribution. Vitality

vitality logoWith inflation at its highest level since March 19921 and energy prices skyrocketing, the cost of living crisis in the UK has put financial advice into a whole new light, writes Greg Levine, Managing Director, Sales & Distribution at Vitality.

With less money available to households at this time2, many clients are watching what they spend while weighing up the best way to save money for the future. Alongside this, encouraging them to purchase something they hope they never have to use – like life or health insurance - is not an easy task at the best of times.

Financial advisers are therefore having to work harder to demonstrate value. A transactional sale based purely on price to tick a box is no longer enough. Meaningful client relationships have always been built over time – and this is truer now than ever before.

Here are some ways that financial advisers can differentiate themselves during the cost of living crisis.

1.         Highlight current trends in the macro environment.

There’s a lot happening in the world. Whether it’s the rising inflation, interest rate hikes and the Chancellor’s latest measures to support the most financially vulnerable. These issues are no doubt playing on clients’ minds and featuring in the conversations advisers are having, as they look for guidance around social care, tax planning and long-term savings during economic uncertainty and investing amid market volatility. Financial advisers are perfectly placed to stay on top of current trends to give clients the support they need at this time.

2.         Help your client ensure their money works for them.

More than ever people are looking to ensure their disposable income is going as far as possible. The majority of clients are going to be negatively impacted financially by the National Insurance (NI) levy and those who are wealthier are getting pushed into higher tax brackets or breaching IHT thresholds. This is where a financial adviser can help ensure clients don’t fall short of future goals, especially where they might be looking to manage large sums of money as inflation rises.

3.         Raise awareness about the need for financial resilience.

Budgets might be tighter but having a conversation about financial protection is more important than ever. How would your client cope financially if they – or their partner – were unable to work due to sickness or injury? In the past, people might have expected to rely on cash savings, but with inflation higher than interest rates their money is less likely to go as far. It’s therefore crucial that clients fully understand the need for protection as part of a recommendation that offers the most comprehensive cover they can afford – especially at a time when financial insecurity is in the spotlight.

4.         Differentiate yourself by delivering value from day one.

Aside from the peace of mind and the reassurance financial advice can bring, intermediaries can set themselves apart by giving clients something they actually want to use. Most life and health insurance offerings only benefit clients either near to, or at the point of, claim. However there is an opportunity to deliver more than just additional services. Lifestyle benefits not only save clients’ money, but help them live a more productive, enjoyable life in a way that benefits all involved long before a claim is made.

5.         Don’t just protect them, make them healthier.

Some life insurers might talk about wellbeing, but very few – if any – use behavioural economics to improve health outcomes and help prevent claims as a result3. What better way to justify premium costs than offering clients more than just cover that pays out when something bad happens? Or lower investment product charges if they take steps to get healthier? A protection, health insurance or savings proposition that can help clients understand their health, access personalised tools, and form healthy habits through a structured behaviour change programme is not just innovative; it has revolutionised the market.

Find out more on our low investment product charges and latest enhancements to the Vitality Programme, which are encouraging your clients to take the ‘Next Best Action’ for their health and wellbeing.

Footnotes.

1 UK inflation hits 30-year high, Reuters, 23 March 2022

2 https://www.mirror.co.uk/money/cost-living-energy-bills-help-26609653

3 Members engaged with the Vitality Programme are at least 10% more likely to improve their health Across seven key lifestyle factors which include physical activity, sleep, healthy eating, alcohol intake, smoking, BMI and mental health, based on Vitality data