Using MI to get PI

10th November 2019 Adam George

As we are all aware, appropriate professional indemnity (PI) insurance is crucial to be able to offer a comprehensive service to clients. With risk being talked up all the time, along with the prevalence of final salary pension scheme administrators trying to offload responsibility through tempting CETVs, insurance premiums are rising significantly for IFAs across the UK.

It's even getting to the point for some where it's ceasing to be viable to advise on final salary schemes at all. One of our customers recently told us privately that they were seriously considering not offering advice on these such plans in the new year, simply because of the difficulties experienced in renewing their PI insurance.

It's not just final salary schemes that have caused this trend, however. The FCA raised the limit on compensation payable for complaints about actions by regulated firms from April 2019 by £200,000 per complaint, which naturally makes insurance companies more cautious due to the impact of a successful claim.

Luckily, there are ways you can use management information (MI) to demonstrate the credibility of your advice process and give yourself a better chance of obtaining competitive PI insurance quotes.

At PowerPlanner, we're all about metrics and MI, not just so that we can ensure our services are as good as they can be but also to help our clients with challenges like this. In particular, we track the following key metrics, which can be especially useful when stating your case to insurers.

1. TVC/APTA Data for All DB Cases

Performing critical yield analysis for DB cases gives an assessment of how valuable a guaranteed pension is relative to the open market. Although this figure is no longer the be all and end all when it comes to giving sound advice these days, it's still an industry-standard measurement of the value of an existing scheme. We recommend tracking a DB pension's critical yield alongside a client's risk profile and anticipated term of investment, so you can quantify the likelihood of a client achieving the required returns to attain comparable benefits in a new plan.

2. The Value of Pension Guarantees

If a client has an old pension plan that contains special benefits - such as a guaranteed annuity rate or protected tax-free cash - then it's worth objectively evaluating these guarantees too. The software we use at PowerPlanner is designed to calculate a critical yield for all kinds of guarantees, so the value of a prospective new plan relative to the benefits on offer in the existing scheme can be demonstrated clearly for such cases. More often than not, this metric actually shows the guaranteed benefit in the existing scheme to be of little value, and therefore helps prove that your pension transfer advice is in the client's interest.

3. Client Servicing Records

Having this data helps prove that your client reviews are happening as they should, in that you can show when client meetings took place, as well as what advice was given at a particular time and for what reasons. With some of this being sensitive information, it's also a good idea to ensure this data is securely backed up and encrypted to mitigate the risk of a data breach.

4. Having a Clear and Well-Documented Process

Each IFA operates uniquely and it's important that the advice process can be clearly shown to be compliant. When building PowerPlanner this was a key consideration, so we have ensured our systems can be tweaked to align with an IFA's advice process, giving confidence that the correct information is being captured and included in all suitability reports where appropriate.

5. Be Open about Risks and Rewards

Complaints are far less likely if clients fully understand the advantages and disadvantages of the advice they're following from the outset. One way we like to guarantee this is to use automation when generating suitability report content, which ensures that the appropriate product features and risk warnings are always included where appropriate. Of course, you still have to take the time to ensure that the client understands what's written, but a systematic approach that guarantees the presence of such content in the report can mitigate the risk of claims being made.


Your submission to the PI insurance provider is all about demonstrating that your business is as low-risk an operation as possible. It's easy for a potential insurer to question an application based on just history and anecdotal evidence, but it's much harder for them to do so when they're presented with concrete numbers and documented systems to back up your claims. Including these metrics wherever you can will always help strengthen your case.

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