The SME market should be on the radar of financial advisers as 20% of small business owners who buy life insurance direct would likely use a financial adviser if they knew one, says Asteron Life
The firm’s SME Insurance Index 2020 reveals that cultivating referrals and strong word of mouth is the best path to attract new customers, with half of its survey’s respondents saying they would ask a friend, colleague, or family member for a recommendation of an adviser.
Word of mouth referrals were even more powerful among those actively considering an adviser, according to Asteron Life. It says more than half of this group (52%) would ask friends or family for a recommendation, compared to 44% of those who were uncertain about whether they would use an adviser.
SMEs who buy life insurance direct are much more likely to have only basic life insurance…
“The research highlights the importance of a solid referral strategy as part of an adviser’s marketing plan,” says Graham Hill, Executive Manager Life Distribution at Asteron Life.
Hill says SMEs who currently buy direct are an untapped market, both in terms of getting advice and the breadth of the life insurance products they are buying.
“SMEs who buy life insurance direct are much more likely to have only basic life insurance, with far fewer having products like trauma or income protection compared with customers who are buying through an adviser,” he says.
“There’s a real opportunity to build understanding of our insurance beyond basic life cover and it could ensure good customer outcomes in the event of illness or injury as well.”
Expertise is the main reason cited by direct buyers as to why they would consider using an adviser, with price, convenience and personal service also ranked highly, says the insurer.
…advisers should focus on the value of the expertise that they can deliver…
“This illustrates that when communicating with potential clients, advisers should focus on the value of the expertise that they can deliver, and show how SMEs can feel confident that they have the right cover.”
Hill says a strong adviser-client relationship built on expertise and regular communication is arguably even more relevant to SME customers during difficult periods such as Covid-19.