Not so cunning after all?

Charles 11 Comments

Posted by Charles

Money’s fallen on hard times. It’s not breeding like rabbits any more.

What’s bad news for savings has got to be bad news for funeral plans too. 

Pay now, die later was never going to be a good way to go for the funeral trade because when a person buys their own funeral it is generally more modest than that which he or she might buy for someone else. But if you can’t improve your market share today by encouraging more people to die and afterwards give you repeat business, what’s a poor undertaker to do? Tomorrow’s market share it is. Sell ahead, grow the cash, hope it pays you back.

In present low-growth conditions, the longer a plan takes to mature, the more it’s likely to lag behind.

The April edition of the Funeral Service Journal carries a heartsinking analysis by Ronnie Wayte, managing director of Golden Charter. Given low interest rates, these, he says, are the most disturbing factors:

*   Funeral price inflation tends to outstrip RPI. (At the present rate, funeral directors’ costs tend to double every ten years.) Says Wayte: “Put bluntly, parts of our model don’t work in these conditions.” 

*   People are living longer, increasing likely shortfalls.

*   People are buying when they’re younger, extending the maturity period. 

*   Sure, the death rate will rise soon. But the fruits of this will be shared among increased numbers of funeral directors. 

*   “As financial services giants become more involved they will squeeze returns.”

No wonder Wayte concludes by saying “we need to step back, have a good look round and decide in what direction we need to move.”

I’m sure he’d welcome some advice from readers of this blog. 


  1. Charles

    Er, how about stop selling them?

    I was never convinced by these things. Any financial product offering guaranteed returns is highly risky? To the uninitiated, some of these pre paid plans don’t look too different from ponzi schemes? They are usually very carefully worded.

    The plan sales organisations have unlimited cheek. Often offering fd’s a few hundred pounds to conduct a full service funeral when their plan holder dies. When they do this to me, I ask the family to pay the difference in the cost of our current at-need price. Why not? I didn’t sell the plan and won’t make up the plan sellers shortfall.

    So far, none have objected nor to my knowledge has asked the plan seller about the guarantee given to the plan buyer.

    I’m sure it’s only a matter of time before some awkward questions do get asked.

  2. Charles

    I saw that letter too!

    Now, call me old fashioned, but I’ve always understood that there’s no such thing as a free meal.

    All things financial (investments, pensions, stocks and shares etc etc) are good news, indeed, Great News – until it all goes horribly wrong.

    Is Ronnie Wayte bravely hinting that the funeral planning “rug” is approaching a slippier floor than we’d all like?

    I was discussing funeral plans with a client some days ago. She asked me about the stability of the various funeral plans available. I gave her the most honest answer I could – that whilst there were some excellent plans “out there”, in this current World financial situation, there are very few “absolute” investments.

    How can funds invested on behalf of funeral plans be without risk, when every other form of investment appears to be deep in the “manure”?

    Are some forms of todays funeral planning going to be tomorrows “PPI” scandal?

    Am I being over-cautious?

    I’d love someone to put my mind at ease!

  3. Charles

    I too would like some reassurance. As I understand it, should the investment performance not keep pace with rising funeral costs, the plan seller would need to ask funeral directors to carry out the funeral for far less than the (then) current price? I think this already happens. For example, Dignity have in recent months asked my firm to carry out plan-holder funerals at less than 50% of the current at need funeral price.

    Funeral Directors, acting as agents for enthusiastic plan sellers have always run the risk of the client saying ‘But Mr FD, you told me this was a good idea. Your firm is responsible.’

  4. Charles

    Some 17 or so years ago, I used to offer plans from a well known firm based north of the border.

    As I recall, for each individual plan I sold, I had to sign a guarantee that should the funeral plan company / trust be unable to fund the funeral for whatever reason, I personally guaranteed to carry out the plan and underwrite the costs.

    No idea if this is still the situation…. but if it is, you can appreciate that far from being a major plus, those FD’s that have sold a sizable number of plans could find themselves facing crippling future costs should a funeral plan trust collapse.

  5. Charles

    H’mm, this is more complex than I thought. I was in the midst of cheering that the whole lousy idea was unravelling, when this discussion alerted me to the fact that it might be FDs who pick up a bill that should be the responsibility of the provider of funeral plans. That seems grossly unfair – unless of course the FD was doing the heavy selling in the first place. As for the guarantee that Nick signed – outrageous. Could such a guarantee stick, under law, I wonder?

  6. Charles

    You pay today for a product you won’t need until an indefinite date. Could be tomorrow; could be next century.

    It then hangs like a cloud of methane around the spectre of your death, promising some magic peace of mind for you and anaesthetic balm for your children’s grief at a time of unbearable darkness, misery and agony. That’s the pitch it was advertised on. That’s why you bought it. More fool you.

    Whoever you are, one thing’s certain: it wasn’t your original idea. That man’s dead by now. It was dreamed up and sold to you. You fell for the trick, forked out the cash and had, instead of peace of mind, an uneasy feeling that you had nothing to show for your investment; you’ll never know if it paid off. And now you look in the papers, and the methane is beginning to choke you.

    Yet, in this business, there has to be a sugar coating of solicitude about the retailers themselves or their product won’t work; they have to provide a funeral come what may, or look inhuman. So to discover that the salesman himself carries the can when the money doesn’t materialize is hardly surprising. That’s business; that’s money; that’s how it all works in the conventional world of capitalism. Even the death of a human being represents an opportunity to exploit others by deception.

    Steer well clear of the whole murky world.

  7. Charles

    I’m pleased that Ronnie Wayte’s article sparked some debate on this topic, but disappointed to find that some pessimistic view chose to read it as funeral plans are dead and don’t work. What Ronnie said was that one bit of the traditional model is not going work as well as it has in the past and we had all better find a way of filling that gap. Golden Charter’s solution includes making money from later life legal services, and we are working on other ways to increase further the plan maturity payments. The challenge was to funeral directors suggesting they ask their plan provider what they are going to do if inflation recedes while costs continue to ramp up steeply.

  8. Charles

    Today, I had a taste of what is already happening – as a celebrant I was asked ( by a branch of a large national chain) to take a reduced fee, as the prepaid plan didn’t allow for my full fee. There was no mention of the FD taking a reduction in his – percentage wise much larger – fee to compensate me the small amount I would be missing…. I didn’t sell anyone a prepaid plan, why should I take a portion of the hit?? Beware fellow celebrants, and get ready to be tough.
    I was told: “The trouble is, you see, we not allowed to pay you more than was specified in the plan”. This was the C of E fee at the time.
    The family argued: “He wouldn’t want a vicar, we didn’t know the fee wouldn’t cover a civil celebrant/humanist, it’s not our problem.”
    I beg to politely suggest that it’s not mine either!

    1. Charles

      ‘Not allowed to pay more than specified in the plan’. Well perhaps we’re not allowed to officiate at funerals for a reduced fee. It’s like when they accidentally send us a cheque for an amount lower than was agreed. Or say that they told the family we charge a certain fee (eg £30 less than we actually charge) and now that can’t be changed because the contract was signed in blood.

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