pre-need plans

Here’s the hot news:

“… we can today formally announce that we have initiated legal proceedings against the UK’s largest provider of pre-paid funeral plans, Golden Charter, seeking substantial damages for their actions against Safe Hands Funeral Plans.”

Yes, the Yorkshire terriers have gone for the throat of wee Big Dawgie, and they ain’t stopping there:

“Further claims against other companies are imminent and will be announced at a later date.”

Blimey, what’s this all about?

It seems that Safe Hands “recorded video and audio footage (presented, in January 2015, to the perpetrators via our solicitors) that shows representatives of most of the major plan providers launching vicious, unprovoked, verbal attacks – primarily against Safe Hands, but on each other as well…all in a desperate and shamefully unprofessional effort to get an edge over the competition.” Looks like a sting.

While the lawyers order trebles all round and get ready to enwrap both parties in litigation for as long as legally possible, the good citizens of Funeralworld tremble. A lot of heavily soiled linen looks like being washed in public. God forbid that the public learn just how much of the money they spend on a funeral plan gets divvied up among sundry predators in the form of commissions, sales and marketing costs, directors’ wages, you name it.

Golden Charter describes itself as “owned by and run entirely for the benefit of independent funeral directors”, a claim a great many independent funeral directors now reject. On its website, GC confesses “We work on behalf of more than 3,300 independent funeral directors throughout the UK.” Why on earth would anyone want to buy a funeral plan that works in the service of the very people who stand to make money out of them? Beats us.  

But GC has achieved a market share great enough to enable it effectively to act as funeral broker, and that’s seriously worrying. So: praise the Lord if the hullabaloo has the effect of concentrating minds and curing funeral directors of their dependency on this lousy financial product.

So far as we are concerned at the GFG, the present squabbles are between businesses with a failed business model.

Going forward, we recommend that funeral directors subject a funeral plan to the Lynch Test before endorsing it. The Lynch Test? Yes, the Lynch Test. It goes like this:

Does this plan facilitate face-to-face accountability between the buyer of the funeral– the personal representative of the person who has died — and the seller — the funeral director?

The only good funeral plan is one that restores the lost link between buyer and seller.

Again: The only good funeral plan is one that restores the lost link between buyer and seller.

Can this be achieved? Yes, it can. Shortly, we’ll show you how.

UPDATE 12-02-2015: I wrote to David Latham at NFFD HQ asking how Safe Hands had funded its prime-time ad slot on ITV on 09-02-2015. He replied as follows: 

“The advertising campaign is limited to the Yorkshire area only and was a special introductory package for a new advertiser. Consequently, the amount spent was minimal. More importantly, the cost was met by the NFFD, so I can state, categorically, that it most certainly WILL NOT affect the long term investments of Safe Hands’ plan holders. Whereas some other providers use their clients investments to advertise their services, you may be interested (and comforted) to know that Safe Hands most certainly does not.”

“The ‘buy now, die later’ brand of package deal has meant a lost connection between the sale of funerals and the delivery of them, and with it the loss of face-to-face accountability between buyer and seller that used to provide reliable consumer protection. Now the recipient of the services (the bereaved) and the provider of same (the funeral director) are both perilously out of the loop of the original transaction: a deal often brokered years before, between a commissioned salesperson and the now newly deceased. In such an environment there can be little real accountability.” – Thomas Lynch

Over at the Oldie magazine agony aunt Mary Kenny is talking about funeral plans: JR from South Wales warns that, even when pre-paid, there can be a hefty bill – “she was appalled by the undertaker’s charges after her husband’s recent death.”

Here at the GFG we were invited a couple of days ago by the Institute and Faculty of Actuaries IFoA) to contribute to a consultation which will “address concerns regarding actuaries’ involvement with pre-paid funeral plan trusts” and “help them develop a mandatory Actuarial Profession Standard leading to members playing a stronger role in “assessing the financial viability of such trusts and in helping trustees and plan providers ensure that they can continue to provide the funerals they are contracted to provide to planholders.”

Down in Bristol, according to the Daily Mail, “Barbara Graham, 72, was left in tears after salesmen from Golden Charter funeral planners asked her if she wanted to pre-plan her own burial. Despite telling them she was currently battling cancer, the firm called back again a few days later to try and sell her the same service.” 

We’ve had quite a lot of angry reaction to this, so we asked Golden Charter to respond. This is what they said:

Golden Charter do not cold call. Any agency from whom we receive leads complies fully with all relevant legislation and codes of conduct. Despite what you may have read we did not contact her after being told she had cancer. We did not call her twice in a week. We contacted her on the 20^th October. Erroneously we left that lead in the list that could be called, as she informed us that she had arrangements in place. On the 6^th November we called her again at which stage she informed us of her health issues. Our representative apologised and removed her from our list.

It seems Mrs Graham took part in a third-party survey and indicated that she was interested in funeral planning. A third-party survey is “a survey done by a third party research company sometimes by phone, sometimes online, sometimes on the high  street or in retail shopping centres where people are asked if they are interested in a specific range of products. If they indicate they are, and the person consents to being contacted, then these companies offer those details for a consideration to organisations who sell those services.”

It goes without saying that Golden Charter deplore the Mail’s failure to get in touch and check facts.

What do we think? We think that funeral planning is inherently a vexed business. There are people passionately for and people passionately against.

Over in the US, Thomas Lynch is passionately against:

“The aggressive pre-selling of funeral wares is a late-twentieth-century invention, driven entirely by vendor interests and the cash hunger of consolidators”

Boomers “love these things. Planned parenthood, prenuptials, prearranged funerals – always this hopeful notion that we might pre-feel the feelings … the sense that these unpredictable existential events might be turned into manageable retail experiences.”

“’You don’t want to be a burden to your children, do you?’ Why shouldn’t I be a burden to my children? My children have been a burden to me. Lovely burdens, every one of them … And they will be paying for [my funeral] emotionally, financially, actually. Since they have to live with the decisions, why shouldn’t they make them? … If the burden of my death, borne honourably, makes them feel as capable as bearing the sweet burden of their births has made me feel, I can do them the favour of leaving well enough alone.”

“The pie of funeral expenses and revenues, formerly distributed among providers of goods and services, rarely provided more than single digit profits. Now the slices were many more and accordingly narrower – a commission for the contract seller, a piece for the referral and finder’s fees, something for the marketing and management of the pre-need account and, of course, a profit for the financier … These transactional expenses, which paid for neither mortuary services or merchandise, came out before the funeral director and the clergy, the florist and newspapers, the soloist and cemetery, stood in line for theirs. It was money spent on the shuffling of paper.”

“The junk-mailed, telemarketed, bargain-in-the-briefcase brand of pre-sold funeral service that has turned every sadness into a sales-op and every funeral into a retail event has not been good for the funeral, the funeral consumer or the funeral director. Nor has it been good for their [professional] associations.

“… there ought to be no profit in in pre-need transactions … the buyer, not the seller, should initiate the transaction.”

Finally, Lynch quotes Howard C Raether: “If funeral directors insist on soliciting preneed funerals, they are in fact prearranging the funeral of their profession.”

Do feel free to sound off. Passionately.

There’s a wide and growing measure of agreement that the next big scandal to hit the funeral industry is going to centre on pre-need funeral plans.

On the one hand, there is intensifying anxiety concerning the robustness of trust funds. There are dark and disturbing rumours flying around about plans coming in underfunded.

On the other hand, there are rising fears of greedy or desperate small funeral directors pocketing money paid to them by clients for funeral plans. In America, scarcely a week goes by without some wretched undertaker or other being dragged off to court to answer a charge of embezzlement. 

With the Ponzi word being murmured ever more loudly, it’s no surprise to see one funeral plan provider seeking to gain a competitive advantage among undertakers by playing on fear: 

With increasing focus on the financial security of pre-payment funds, you may feel that now is the time to find out more about how your current provider operates. For example, do you know what guarantees are in place … you may be aware that the Actuarial Profession has set up a Working Party to review the prudential regulation of funeral trusts…

For consumers, a funeral plan’s attractions obscure its inadequacies. It gift-wraps money in a way no other financial product can. It’s an easy sell — which is why Age UK can get away with flogging pricey Dignity plans to its less well-off clients. 

It’d be interesting to know how many financial advisers have bought a funeral plan. And yes, how many of you undertakers and celebrants out there have bought one, eh? Come on, hands up. 

In the present climate Golden Charter has been dissed more than most. The perception is that it has grown increasingly aggressive in its selling methods to both undertakers and the public; that it is overheating and riding for a fall. There are some who mutter that Golden Charter is a hubristic bubble business. 

Unverifiable smears and rumours, exacerbated by industry factionalism, muddy the waters. They create fear and despondency; they are unfair. But they also serve their purpose. They intensify scrutiny; they compel plan providers to exert themselves to demonstrate their viability. They stimulate openness. 

So it is valuable to be able to publish the following communiqué from Golden Charter to its member funeral directors: 

As we are all aware, the funeral planning industry is founded on trust and confidence. We need the public to have total faith in the certainty that the money which they have laid down is secure and will provide the benefits that they have been promised when the time comes. 

Equally important in this equation is for the funeral director to know that the money secured in an insurance policy or Trust will be there when required and will produce a meaningfully relevant sum which will enable their services to be carried out profitably and in full. 

In recent years, inflationary growth has been low and has been considerably outstripped by funeral cost inflation. The wider economic picture is no different where wage growth has struggled to match inflation. This issue is one of the reasons why Golden Charter has grown a legal services business, providing a way of generating profits which can be added to the maturity values of our contributing funeral director’s plans. We will be making a further annual distribution of this surplus very shortly and, while this helps to address potential shortfalls, it is only useful if the underlying funding arrangements remain completely secure.

The ramifications of the banking crisis continue to rumble on and the financial regulators remain the recipients of much criticism, currently over the appointment of the former Chairman of Co-operative Bank. As a result, public confidence in finance companies remains fragile. With the media screaming about a multi-billion pound black hole in the Co-op Group’s balance sheet, it would be surprising if some plan holders weren’t concerned and that anxiety may also spread to holders of other plans. 

To avoid any possible doubts arising in the minds of our plan holders and your customers, Golden Charter will make a series of announcements about the strength of the Golden Charter Trust. The details will emerge following next week’s SAIFCharter EGM as it is only proper that we inform our owners first. We can, however, announce today that the Trust currently holds more assets than it requires to fully meet all of its forecast liabilities and, furthermore, it is in its strongest position ever. That calm progress through the financial storm has been achieved by following a cautious investment policy and adding prudent levels of growth on plans. Reassuringly, the Trust remains a firm foundation for all of your plan holders. 

More detailed figures will be released around the end of this month and any plan holders seeking more information about the Golden Charter Trust can be guided to the Trust’s website at www.goldenchartertrust.co.uk.

An undertaker passed on to us the email below. Anybody know anything about Liviana? It’s difficult to believe that any outfit marketing itself in such sub-literate terms could achieve any sort of credibility. The netherworld of pre-pay funeral plans just got murkier.  

Dear Sirs , Just a quick introduction email from me today. Allow me to introduce Liviana an our Pre-paid funeral plans! If you are already acting as an agent or have not yet been approached by other providers, please let me explain why you are better off recommending Liviana.

Firstly, we offer a commission of 40% of the profit and operation fund which is equivalent to approx 16% of the total sale value of the plan! Our trust fund is the strongest and most secure in the industry and is managed by Morgan Stanley and right now we can provide the most affordable plan available in the UK which is offset against the most expensive! This pricing structure is unique within the industry, with a large variant between our basic and our most inclusive plans! Will writing companies and funeral directors have the greatest success rate when it comes to selling pre-paid plans and many companies actually consider the plans as the most valuable part of their business! We see ourselves as THE market leader within 3 years. Along with the co-op we are the only company that operates with a 3 tier security net for its clients which we believe is necessary for any self regulating industry. With public interest in mind we urge our competitors to do the same! Our website is still under construction and our launch date is October 30th this year. We also have over 50 plans underwritten by Axa and Sunlife, which offer high commissions. For more information, a copy of our brochure or to arrange an informal meeting please reply to this email or contact us on the number below.

Regards,

William Anderson
————————-

Liviana UK
19 Heddon Street
Mayfair
London , W1B
Contact Us: 0207 1833193
info@livianafuneralplans.com
william@livianafuneralplans.com
www.livianafuneralplans.com

It’s been another very bad day at the office for the financial product known as the funeral plan, demonstrating its attractiveness to cheats and scammers. Sooner or later some devious little twerp is going to do a runner with a shedful. Some reckon they know who that twerp is. 

Yorkshire Asset Protection, a financial services firm offering ‘specialist advice’ and ‘bespoke solutions’ for people’s estate planning needs, has folded, leaving widow Lynda Madden £6,500 out of pocket. What she and her husband were told were Golden Charter funeral plans turned out to be nothing of the sort. 

Read the whole sad story here. 

Meanwhile, allegations concerning the growing power of Golden Charter (the real Golden Charter) as funerals’ broker is something we’re increasingly aware of here at the GFG. Funeral directors write in to sound off. A typical account arrived a couple of days ago.  A funeral director who is not signed up exclusively to Golden Charter tells us he was offered £1958 to arrange a funeral which, had he been exclusively signed up, would have yielded him £2686. He says the family had paid over £3000 for the plan, which included provision for a willow coffin. 

Why shouldn’t a £3K plan buy you a £3K funeral? I put this case to Golden Charter and was told that the company rewards those who support it and help it grow the business — why should FDs who don’t commit to it benefit from the hard work and commitment of others? 

I also took the opportunity to ask Golden Charter about its telesales operation in the light of  reported case where a vulnerable old person was distressed by what she felt were pressure sales tactics. I was told that any report of anything other than ethical conduct by a telesales operative would be dealt with swiftly and surgically. 

Golden Charter has invited me, in a spirit of openness, to go and see them at their HQ in Glasgow to lay before them all the concerns that consumers might have about its funeral plans, and I am minded to accept the invitation. If there’s anything you would like me to ask them, please let me know. Drop me an email or leave a comment. 

Of all the products dreamt up in the secret, black and midnight minds of financial services sorcerers, the pay-now-die-later funeral plan must rank as one of the rankest. It stinks. It’s idiotic. 

A funeral plan purports to benefit consumers by enabling them to buy tomorrow’s funeral at today’s prices (or thereabouts). But it wasn’t invented to benefit consumers, it was invented to benefit funeral directors. It addresses a problem peculiar to funeral directors. The problem is this: however brilliant you are (and caring, dignified, etc), there’s absolutely nothing you can do to induce more people to die, and you can’t sweet-talk them into doing it more than once.

If you want to steal a march on your competitors, therefore, you need to stitch up tomorrow’s market by bagging the biggest share you can get of it in advance — by taking tomorrow’s clients off the market today. 

What a pity it ever started. As soon as one funeral firm does it, everyone else has to join in, like it or not. There’s even a formula to work to. If your sales of funeral plans are greater than 20 per cent of your sales of at-need funerals, you’re okay. Less, and you’re in doodoo.

The only way you can achieve this increased market share is by offering a product riddled with deficiencies and anomalies. In this, the age of the bespoke, personal funeral offering a high-value emotional and spiritual experience to the bereaved, you offer packages of the crudest, most mechanical sort — it’s the only way to do it. Package one: Crudholme coffin (4 handles), no viewing, hearse straight to crem. Package two: Greyfriars coffin, viewing, hearse and one. Package three — but you know all this.

The problem for funeral directors is that if you ask people to buy a funeral for themselves, they tend to buy the cheapest. What price superb personal service in all this? Zilch. Experiential value to those left behind? Irrelevant. Funeral plans offer nobbut disposal in limited and highly unimaginative cosmetic options. Its appeal is highest to the put-me-out-with-the-rubbish brigade.

The last person you should ever ask to arrange a funeral is the recipient.

Memo to the living: we mustn’t plan our funeral. All we can do is be available for it. Write your funeral wishes in pencil. Hint, don’t prescribe. Die. Butt out. 

There’s a lot more that’s wrong with funeral plans, as you well know.  Money hasn’t grown since 2008 and the economy isn’t recovering. Funeral costs — they double every ten years — are rising faster than RPI. As the battle for tomorrow’s market share becomes more strident and overheated, the battleground is looking more and more like Syria. Plans are coming in underfunded and funeral directors are having to bear the brunt of that (to the incidental benefit of the plan holder). Independent funeral directors are in danger of surrendering their independence, because there’s a real danger that some plan providers will, in desperation, be forced to become funeral brokers, offering work to the lowest bidder. Funeral plans aren’t regulated by the FCA. 

Never before has there been so much talk of a plan provider going bust. The Ponzi-word is much muttered these days. All the while, new products are coming onto the market, and new providers, and new enhancements, like legal services. It’s getting frenzied. Is there a big bust a-brewing? Consensus says yes.

If one of the plan providers does go bust, what happens? Do the others get together to bail it out? Up to a point, perhaps. If the provider is a member of the Funeral Planning Authority, its members “shall co-operate and examine ways in which the FPA might assist in arranging delivery of the funerals of customers of the insolvent Registered Provider.” If you bought a funeral plan from the heavily despised Avalon, you don’t even get this reassurance. Avalon is not a member of the FPA. 

No wonder funeral directors, for whom these plans were designed, fear and loathe the bloody things, today more than ever.

Where, you might ask, is the media now that the gelignite is beginning to sweat? Where are the expert, investigative journalists when you need them? Out to lunch. 

Perhaps the best we can hope for is that there will be PPI-style megascandal and we can all start from ground zero with a consumer-focussed funeral plan. 

What would a consumer focussed funeral plan look like?

Well, first of all, it would pay out to the family, not direct to a funeral director. 

Second, there would be change, a sum left over, if an executor decided not to spend it all. (Whoever got change from one of today’s plans?)

Third, the rights of the dead person would assume their rightful legal value — zero — and the bereaved would be empowered. People should get the funerals they deserve, not the funerals they want. We’d get much better funerals as a result. 

Fourth, the sum would not be assigned to any particular family member. If Granddad doesn’t go first because Wayne (17) drives into a tree, Wayne gets it and we top it up for Granddad — or whoever’s next. 

So, fifth, the family funeral fund does not expire with the death of any particular family member, but lives on and is handed down. 

What would be the best repository for a family’s funeral fund? A trust? 

We don’t know, but you probably do. 

Let’s not be daunted. There has to be a better way than the self-reinforcing shambles we have today.