Over a third of small to medium enterprises (SMEs) lack a succession plan in place and almost half say their business would only be able to operate for up to a year if they were unable to work, according to a new report by life insurance company, MetLife Australia.
The MetLife Adviser-Client Relationship Report 2018 examines attitudes to purchasing life insurance through a financial adviser, surveying 200 SMEs with up to 20 employees as well as consumers (1,000).
Positively, 63% of SMEs surveyed have income protection insurance, while 58% have death cover and 55% are insured for total and permanent disablement. However, a much lower number have key person (35%), trauma (30%) and buy/sell insurance (27%), leaving their businesses vulnerable.
Commenting on the findings, Mr Matt Lippiatt, MetLife Australia head of retail sales, said while SMEs were more engaged with their insurance than consumers generally, there were signs that underinsurance was still a worrying issue. “SMEs are the lifeblood of the Australia economy, making up almost 40% of GDP , but these results show that many are leaving themselves exposed to financial hardship or even business failure if they experienced any business interruption,” he said.
The MetLife Australia study found regular reviews with a financial adviser can help SMEs to be better prepared. Eight in 10 have a better understanding of insurance as a result of seeing an adviser, while over half of SMEs who have had an annual review with an adviser altered their insurances as a result. Furthermore, a third of SMEs are ‘somewhat likely’ or ‘very likely’ to purchase cover they don’t currently have in the next two years.
Overall, the study found that SMEs have higher expectations than consumers when it comes to service from their adviser, particularly given many are reviewing their own business on a regular basis. Over four in 10 have intentionally stopped using an adviser, citing price, poor advice, lack of contact, difficulty dealing with their adviser, and a lack of value for money, compared to a quarter of consumers. While it’s clear from the research that SMEs see the value of advice, if they aren’t happy about their advice experience, they aren’t afraid to make a change.
However, SMEs are also a loyal group when they find the right adviser. A high number (40%) of SMEs have been with their adviser for five or more years, with many likely to recommend their adviser due to their trustworthiness, honesty, genuineness, effective advice, experience, accessibility and overall responsiveness and communications.
“Small business owners are time-poor, and they’re looking to their adviser to show them genuine care and give them value-added services such as home / office visits (including after hours), negotiating with insurers on their behalf, regularly reviewing their cover and putting in regular calls and emails to ‘check in’. Providing excellent, personalised service makes this group more loyal and helps them get real value from their adviser. SMEs need to find the right adviser, one they can trust, that understands their needs and helps them future proof their business through effective plans,” Mr Lippiatt said.