A risky little number

Occasionally, news stories will break free of their humdrum headlines and create an unexpected buzz. Even so, it was a surprise to me that this, seemingly innocent little piece, has generated such vibrations.

What I had thought would pass unmolested through the collective consciousness of the insurance industry has instead racked up over 20 comments in a vigorous to-and-froing of opinions.

In essence, the story simply asked whether mortgage brokers make good life insurance advisers (but not vice versa) and was a more-or-less balanced look at the question. The outrage it sparked can partly be explained by the commercial, and often personal, rivalries in these competitive sub-worlds of the financial services universe.

But there's a real issue here too concerning the extent of specialised knowledge and experience necessary to sell insurance or mortgages. I think you can mount a convincing theoretical argument that both products are almost commodities: mortgages are merely the price of credit determined by higher financial beings while life insurance is the cost of mortality as written in actuarial death tables.

However, in practice the sheer volume of products on the market and the subtle, and sometimes gross, differences between the offerings make it difficult, if not impossible, for the average consumer to negotiate their way to the best possible 'solution' for their needs. Complexity creates confusion, hence the flourishing advice industry.

Consumers should expect competence from their advisers in whatever field they deal in but have had to take that on faith. Pretty soon advisers are going to have to prove their various competences so the arguments about whether mortgage advisers can sell life insurance may just become academic - but I hope not.

David Chaplin