This is a common mistake that we see. When recommending that clients switch financial products, advisers typically list out features of the product being recommended. These are presented as ‘benefits of the new product’ and the adviser is thinking that listing out these features will be sufficient to justify the switch.
The problem is that all-too-often the old product had the same or similar features. The adviser is simply recommending replacing apples with apples.
This is not what is required when a switch is recommended. Advisers must do more than say why the new product is a good one. They must demonstrate how the new product is materially better than the old one.
To do this, the adviser needs to compare the features of the recommended product with the existing product and thus make obvious why the switch is being recommended. This is often done in table form, along the lines of the following:
|Old Product||New Product|
|Benefits payable to age||65||67|
|Tax deductibility of premiums||Yes||No|
And, of course, the adviser cannot simply ‘cherry-pick’ those features where the new product is better. He or she needs to compare all of the features of the two products. Failing to do this makes it very hard for the adviser to demonstrate that he or she has properly considered the product being terminated.
Put simply, the adviser should never come across as advertising or spruiking the new product. The adviser should be able to present the two products and let the enhanced features of the one being recommended speak almost for themselves. A useful method is to imagine that the advice is being read by someone who thoroughly understands the products being compared. If that were the case, would that expert agree with the recommendation to switch? If not, then the switch should not be recommended. After all, remember that if you wind up in Court trying to justify your advice, there will be one or more experts there to comment on your advice and advise the Court accordingly.