While advisers value the information provided on risk products by research and ratings software, they continue to use it predominantly as an explanatory tool for clients, a mode of reassurance for business partners, and as a back-up to already conceived opinions.
Veteran risk adviser Geoff Robinson, from Geoff Robinson Insurance Agencies, says research and ratings aside, the real question for advisers and clients is whether an underwriter will put a case through or not.
“What you really want to know about a company is are they any good, or are they going to run a country mile when they see claims?” Robinson says.
“In the end, you forget about price and you forget about all the marvellous wording. The reality is, it doesn’t matter what your BOSS or your Smart Comparitor or your risk research system says, if [the life company] is not going to pay claims at the end, or they’re going to give you hassle with the claims, you don’t put business with that company.”
PSK Advisers’ Des Roll agrees claims are an important consideration when choosing risk products, particularly income protection.
“You’re really looking at the claims, the speed at which they do them, and whether or not they are going to stress your client out. You can’t really get research houses to rate [the risk houses] on their claims processes, so you need to have some knowledge of the company that you’re dealing with,” Roll says.
He says an adviser’s knowledge of a company also needs to include underwriters and administrators, as the research tools “will look at the product, but not take into account the administration and people working behind that product”.
“You might sell the best product based on the research, but then get hit with underwriting and it’s the toughest underwriting,” Roll says.
Associated Planners’ Ian Satill agrees that an adviser’s own knowledge is more important than any software.
“In many cases, a particular product (particularly income protection) suits a particular type or category of person, and that is not reflected well in the research material. You either know what you’re doing, or if you don’t, you could land in trouble.”
But what suits one person may not suit another, which is a factor Roll keeps in mind when looking at ratings.
“You’ve got someone who is analysing a policy document to make their assessment, and they’ve got parameters they use to allocate somebody into a B or A. But it’s still that person’s perception — it’s their opinion. It’s subjective, and it’s hard to validate what parameters the person who’s categorising a feature or product is using. Not knowing that, if you disagree, it’s hard to justify why they put that in.”
Ritchie and Partners’ Bruce Ritchie, however, says the biggest challenge for the researchers is the currency of their information.
“Products are changing all the time. You need to make sure everything you’re looking at is current. You really need to have that level of comfort that the information they’re throwing at you is the latest offering,” he says.
Ritchie suggests research houses include in reports the date the product was actually researched, which is something not typically done.
“They’ll give you the date the product changed, or was last modified, or when the brochure was issued, but not necessarily the date they did the research,” Ritchie says.
On the issue of timeliness, Roll says some research houses can be “a little bit slow getting all the rates on when you’re about to do a costs comparison”.
“I’ve done cost comparisons with what [the research house] is saying and what my individual companies are quoting, and there’s differences, so I guess it throws you off using that part of it.”
Which raises the question — how much of the research tool offerings are advisers actually using?
Satill says he only really uses his software for its premium and definition comparisons, and doesn’t take much notice as far as the ratings are concerned.
Ritchie and his partner Mike Goodall say they know the detail in the product is there if needs be, but they don’t go in-depth on a regular basis.
Roll says “the research houses are very good with what they do, but the software is primarily a supporting tool”.
“They spruce [the software] up to sell it, to justify the price, but it’s really just a product research tool.”
He says the research houses could break the software down into a research product, rather than trying to come up with needs analysis reports and the like, “because you would hope that most advisers have already got that”.
“It warrants consideration that they do become solely a research system,” Roll says.
