The new IP product is in addition to Scottish Widows’ existing Term, Multi-Benefit and Mortgage Protection products on The Exchange.

Iress’s global head of product for sourcing, Jacqui Durbin, said: “As long-standing partners of Scottish Widows, we’re delighted to support its launch into the Income Protection space through our extensive distribution network on The Exchange. It also supports our commitment to offering the broadest range of products to brokers and advisers.”

Scottish Widows’ Protection Director, Rose St Louis, said: “Our goal is to help people to be better prepared financially if they were not able to work. Our new IP product is the next step on our mission to help people build their financial resilience and make it easier for advisers to serve more of their customers’ needs with a streamlined process and slicker experience through tech partners like Iress.”

In its annual survey of 200 paraplanners from across the UK, Scottish Widows has revealed that this group increasingly sees the potential of AI in making their workloads lighter, dispelling myths that it will replace their jobs.

64% of paraplanners believe AI tools will be useful in their role up from 42% a year ago. This rises to 84% in the under-30s bracket, indicating greater positivity around AI in the upcoming generation of paraplanners.

While general sentiment has improved, actual usage has also edged up. 13% of paraplanners are now using AI tools, up from 10% last year, while 57% are interested in using AI. When asked what they were using AI tools for, the top answers were client reporting (35%) and the recording and documenting of meetings (35%). Data mining and analysis was next at 19%.

Nearly 1 in 3 (30%) surveyed paraplanners now see AI tools as an outright opportunity, compared to just 19% last year, while only 7% see them as a threat to their roles (versus 9% last year). However, 85% of paraplanners are not yet using AI and of that number around a third (28%) said they do not plan to. With the emphasis on value for money mandated by Consumer Duty now baked-in to advice firms day-to-day work, AI tools could present an opportunity to go above and beyond in providing even better value for clients.

The positive shift in attitudes towards AI could help paraplanners comply with new regulations, which the survey has found to have resulted in increased workloads. Some 73% of paraplanners stated that their workloads had been negatively impacted by regulation.

With repeated changes to savings and tax allowances in recent years, the survey also shows there is appetite for a more stable landscape. More than two-thirds (68%) of surveyed paraplanners believe that there should be an independent body setting long-term policy for pensions and investments. With 25% unsure, fewer than one in 10 (7%) paraplanners disagree with the need for an independent approach.

Ranila Ravi-Burslem, intermediary distribution director, Scottish Widows said: “Our survey reveals the increased confidence in and positivity around the potential of AI, and the possibilities presented by these new technologies for the industry.

“AI has the potential to give paraplanners a competitive edge, and increase capacity in the advice market, so it’s important that early adopters are supported with the right technology. From our side, we’ve put technology innovation at the forefront of our platform development strategy, committing £150 million over three years to streamline paraplanner and adviser workflows.

“Complying with regulation and changes to savings and tax allowances is understandably a priority for many paraplanners. An independent body setting long term policy for savings and pensions would be a positive way to ensure consistency for the sector and benefit customers by improving the nation’s financial resilience.”

The Scottish Widows Investor Confidence Barometer has shown that the confidence gap on stock markets between advisers and investors remains high on a five-year review.

Cautious investors

Further data from the pension provider has shown that high interest rates, mortgage rates, food and energy prices are fuelling investor uncertainty.

Of those surveyed, 63% of non-advised investors and 62% of advised now believe inflation will remain an ongoing feature for the next few years.

The firm has also reported that there is evidence to suggest that investor pessimism has been damaging to returns with 28% of surveyed advised clients reporting that they initiated an increase in cash holdings with their adviser.

To read more on this topic, visit: Advisers responsible for closing advice gap, survey reveals

Barry MacLennan, chief executive at Embark Investments, said: “It’s understandable investor confidence has taken a knock given the current economic and geopolitical uncertainties. However, stock markets typically look through the gloom, so it can be damaging in the long run to take portfolio risk off the table due to short-term, negative news.

“With investors admitting that ‘taking too little risk’ has been one of their biggest mistakes, a key part of the adviser role is to keep their clients on track from a risk-reward perspective, by focusing on long-term outcomes.”

With nearly half (44%) believing that advisers themselves play the largest role in shrinking the gap.

A further one-in-five (20%) believe that technology, including Artificial Intelligence (AI), can shrink this gap.

Access gap

The access gap for investors with sub-£50k portfolios has historically been limited.

However, Scottish Widows found that over two in three (68%) advisers provide ‘specific proposition’ for investors with smaller portfolios.

As the majority of surveyed advisers believed that retail bank D2C propositions for these portfolios helped introduce consumers to investing.

For non-advised investors with £100,000 plus portfolios, the cost and value of financial advice are the main barriers.

Some 40% said that high costs put them off seeking financial advice while 28% are not convinced advice would save them any money.

In response, 87% of surveyed advisers believe they add between 2.1% and 4% in value per annum to clients’ portfolios.

As confirmed by 80% of advised clients who believe the advice they receive is good value for money.

This suggests there is a perception gap between the advised and non-advised, meaning that advisers must influence the non-advised by making advice more affordable and communicate its value more efficiently.

To read more on this topic, visit: 25% of Brits would not take financial advice even if it was free

Head of intermediary sales at Scottish Widows Jamie Drewett said: “The advice gap is a particularly pressing issue in times of high inflation, when some investors with lower-value portfolios are at risk of seeing their predominantly cash-based savings slowly erode in value.

“It’s great to see advisers stepping up to the challenge by building out lower-value portfolio propositions.

“The latest evidence from our survey supports the view that advice is demonstrably valuable and advised client satisfaction remains high.

“However, there is a perception gap around value with some non-advised investors, and we’re looking at ways of supporting our advisers in championing the value of advice to bridge that gap.”

Over half (57%) said that they only expect to retain services for a minority of their clients’ dependents on the death of the client.

Nearly 74% of adviser respondents said that they had a dedicated intergenerational planning strategy in place for most of their clients.

To read more on this topic, visit: Just 26% of advisers have wealth transfer strategy

The survey also revealed that while 75% of advisers believe it is important to foster a relationship with their clients’ children, only 17% have built a relationship with the majority of their clients’ offspring.

This figure drops to 12% when it comes to clients’ grandchildren and only around a quarter (26%) of survey respondents had established direct contact with spouses for most of their clients.

Scepticism of younger generations

Some 70% of advisers cited the scepticism of younger generations towards the value of financial advice as the greatest barrier to dealing with clients’ dependants.

However, nearly half (48%) of advised clients surveyed said that they were willing to pay for their children’s financial advice.

The survey also revealed that many advisers (65%) find it difficult to discuss the client’s death with the client and their spouse or dependents (69%).

It also showed that 41% of advisers only talk about estate planning at or after retirement and that 16% wait until their clients are into their 70s or older.

Nearly a quarter (24%) of advisers wait until the client initiates the conversation themselves, while one-in-five (21%) discuss it only when the client becomes seriously ill.

More than half of both advised (59%) and non-advised (56%) investors surveyed said that the need to fund health and care costs in later life was a barrier to passing on wealth to dependents.

Ranila Ravi-Burslem, intermediary distribution director at Scottish Widows, commented: “Our survey results suggest that there is scope for advisers to dial up engagement with clients’ dependents. Crucially, the results also emphasise the need to have earlier conversations with clients about estate planning.

“Given that clients can pass pension wealth down the generations, advisers must ensure their clients not only have their beneficiary nominations in place, but that these are regularly reviewed as circumstances and priorities can change. Advisers should also to look to engage with named beneficiaries early.”