Recognising and addressing the importance of the Finance Director in benefits decisions
The recent history of the Income Protection market has been well-documented. For two decades or more, nothing particularly radical came along to shake the status quo, and IP has, for many advisers, remained an after-thought to discussions around other, higher-profile benefits. Consumer advertising has finally changed that. New research shows that the industry’s approach to employers also needs to change.
To date, all major players in the market have targeted their employer communications at HR decision makers, who are the gateway into most companies. Getting these professionals on-side has been seen as the highest priority, to introduce Income Protection. However, our own recent research shows that in 33% of companies, HR Directors have the most influence on the benefits offered to employees, but in 28% of companies it’s Finance Directors or Chief Financial Officers1 . But companies have generally not been able to adapt their messages to a Finance audience, whose needs are subtly different to those of HR. To shake up the Income Protection market we need to be communicating effectively to all employee benefit stakeholders. We must ensure we have the right messages and evidence to support what we’re saying, that will be persuasive to everyone: staff, HR and Finance alike.
To help hone our messages to the finance community, we recently conducted a survey with Financial Director magazine, of their FD readership. We looked at a number of areas such as FDs’ attitudes to employee benefits, how closely they work with HR, how much time they spend on benefits and how well they understand Income Protection. We found that more than 70% were heavily or moderately involved in defining the employee benefits package, strongly reinforcing why this is an important audience for our industry. This means FDs are actively making suggestions about what should be included, and in a quarter of cases actually leading the process: a key audience indeed.
While this is the case, the time they do spend on employee benefits is limited, with around 65% spending less than a week a year working on this area. Our messages therefore need to be short, sharp and to the point. Supporting evidence needs to be carefully targeted, with case studies from similar companies, and recommendations from their peers in the Finance community being particularly influential in their decision making process.
When it comes to Income Protection in particular, almost 90% had heard of it, but there is still a significant level of confusion around what the product covers. Only around 40% knew that it does not cover redundancy, which shows there is still a large education job to be done. Debunking the myths around Income Protection has been an important strand for our consumer campaign and it is clear we need to extend this to the employer-focused media too. Unless all parts of a company from HR to Finance are aware of exactly what Income Protection covers, and the benefits it offers both employers and employees, this confusion will remain a significant barrier to market growth.
So both insurers and advisers need to connect better with Finance, and to help their HR clients do the same. The protection industry often works in silos, and that can extend into how we think about clients. We tend to consider that “client” = “HR”, but what this research shows above all, is that this is not an effective mentality. We need to take a much more holistic view, and break down barriers to make that happen. We need to demonstrate the value of Income Protection to each group, in their own terms.
To make that happen, insurers need to provide all the necessary tools, and clear and compelling marketing materials, appropriate for HR and Finance. Advisers need to take the case for IP to both audiences. Together.