Richard Kateley of Legal & General discusses the advantages of close cooperation between accountants and financial advisers
More than half of the UK’s small businesses lack any kind of business protection insurance. For a small minority, this is a conscious decision. Having calculated the risks and evaluated their options, these organisations have decided that, for now, business protection is an unnecessary investment. But for many, this could prove a fatal oversight. Whether underestimating the risk associated with the illness or death of a key employee, or being unaware of the cover which can provide respite in such an event, these firms are putting themselves in a vulnerable position should the worst happen.
A case for cooperation
When facing major decisions, small businesses commonly turn to experts with whom they have worked previously and built a relationship of trust.
Often, these experts are accountants. Accountants are certainly equipped to advise on such issues, possessing a knack for big-picture thinking and understanding the precautions needed to keep a business in good shape. But while an accountant’s skillset transcends number-crunching and book-balancing, there are areas where a client’s queries might be better directed elsewhere.
This is where financial advisers come into the equation. Boasting keen insight into the human side of business operations and possessing a wealth of relevant research and case studies, financial advisers are well-placed to communicate the value of business protection to SMEs on a personal and professional level.
With a complementary blend of skills and knowledge, a strong case can be made in favour of increasing cooperation between accountants and financial advisers. In most cases, these networks can be easily formed. Many small businesses have both an accountant and financial adviser, and those that do not are at least aware of reputable firms working in either sector. With this in mind, accountants and advisers sharing a client should consider increasing communications with one another.
This suggestion is grounded in sector feedback. When put in place, these networks are proving effective in illustrating the values of business protection to small businesses. Of those in possession of Key Person insurance, the majority of SMEs reported that they were encouraged to take out cover by either their accountant, their adviser, or both.
Helping hands
Cooperation is not just good for clients. Working together to provide a consistently high standard of tailored customer service, accountants and advisers can build a shared reputation larger than the sum of its parts. With customers satisfied and word spreading about their services, both parties are more likely to retain clients, and even attract new ones.
To be clear, in agreeing to cooperate, accountants and advisers are by no means signing away their independence. Indeed, by working closely with an advisory firm, accountants can acquaint themselves with a new set of clients and market their services to interested parties. The same applies when the roles are reversed. In this respect, cooperation is a good way for accountants and advisers to expand their portfolios, without compromising their organisation’s individuality.
Ensuring you insure
Add the client into this symbiotic network, and everyone is set to win. In many respects, accountants are protecting themselves by encouraging clients to take out business protection. When a small business loses a major stakeholder and isn’t covered, it faces hardship, if not potentially total ruin. If the company folds, accountants find themselves without a client. Turning the situation on its head, were this client to have taken out protection, their immediate future would be secure, and their name would remain on the organisation’s books. Moreover, looking to plan its long-term recovery, the client would inevitably seek counsel from experts. In doing so, it provides accountants and advisers with lasting demand, and the revenue which comes with it.
Furthermore, in no way does this mean that the client is being exploited. Clearly, it is SMEs who benefit the most from being covered. Most realise this, and a resounding 90% of small business owners have reported that they would like to seek advice about insurance from accountants or advisers. But for those that do not, cooperation will prove most valuable. By encouraging small business owners to consider how their organisation would respond to the loss of a major stakeholder, accountants and advisers can stress the value of business protection. Meanwhile, by asking them to consider the impact which this loss would have on the families of those affected, they can promote lesser-known but equally valuable Relevant Life Plans.
Everyone’s a winner
Clearly, we all benefit from cooperation. Accountants have a duty of care which goes beyond processing finances. By working with advisers to make SME clients better-informed of the risks which they face, they can fulfil that duty of care, consolidate their interests and build a network with which to look towards the future. By pooling their efforts to promote protection, we all become that bit more secure.
Richard Kateley is head of intermediary development at Legal & General.