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Are funeral plan allocations from funeral planning companies beneficial or detrimental to the independent funeral sector?

The debate as to whether funeral plan allocations are good for the independent funeral sector or not has raged for at least the last decade, possibly for even longer than that. And in a sector that is so very fragmented, with so many differing types of business operating within it, all of whom have different localized issues, varying levels of local competition and diverse commercial opinions- clearly this debate is, unfortunately, never going to offer up a single, simple or universally agreed upon answer.

As with all difficult and heavily contested questions in commerce, it is helpful to simply set out the background upon which a sensible and measured response can be constructed. Free of all emotion and preconceived prejudices.

Why was the purpose of the pre-need product?

It is important at this early stage to understand why the funeral plan product evolved in the first place. It was essentially sold to the general public by funeral directors for two primary reasons:

1/ To ensure that they wrestled future funerals in the region away from their competition and as such, protected their future existence as a business.

2/ To ensure that they were paid for the funeral service in question.

There are of course many other lesser commercial and more consumer centric reasons, but I think that we can probably all agree that the two listed above, really were at the core of the strategic thinking behind why a funeral business would sell such a product.

The central reasons behind marketing the product and selling it were purely opportunistic commercial decisions and for the benefit of the business. It had a little less to do with the consumer – it essentially was a client acquisition strategy for funeral companies and little more.

It is also important to recognize how this product was sold. It most certainly wasn’t a financial product in the eyes of the FSA, and it wasn’t an insurance or a financial investment either, so funeral companies could sell it without fear of being exposed to the rigor of regulation and all that those restrictive codes brought with them. But with limited marketing budgets, promotional, sales or marketing and experience, most independent funeral companies offered the product to existing clients next of kin, when they were asked for a plan and occasionally embarked on very limited and basic marketing activities in the surrounding areas  and outlying communities that they served.

It is appropriate at this stage to recognize that the large funeral groups, for example Dignity and the Co-Op funeralcare with extremely large marketing budgets and available funding did not approach the market in the same soft shoed manner, rather they took advantage of the sectors gentle approach and marketed actively and robustly to the wider public and society at large en-masse.

So we have established that the funeral plan product was sold purely to capture future clients and ensure future income and business streams were protected.

Funeral businesses are and always have been primarily social care companies who are skilled at looking after bereaved people and conducting funerals. Owned and staffed by individuals who, overall, usually were (and still usually are) inexperienced at constructing and marketing funeral plan products efficiently and effectively, selling them and growing their own market share. Funeral planning companies evolved to do precisely this for them, albeit on a national scale – opening new channels of distribution and delving deeper into the population to educate and activate consumers.

As the market grew, so did public interest and the product (which is essentially a product comprised of a bundle of goods and services) evolved and became simple, modular and more commercialized.

Funeral planning companies nationwide marketing activities were pivotal in growing the market beyond the doors of the funeral home. Apart from selling directly to the public utilizing their own resources and marketing budgets, a major development in this sector was the selling of the funeral planning companies branded product to the public by non-funeral businesses. The affiliate or marketing agent channel, as they are also known. These companies sell to their own existing client banks and across their incoming new business. This is and was always a significant change in the structure of the market, as these plans were then allocated to localized funeral businesses, providing them with future funerals and helping them compete in their localized areas of operation against those competitors with larger marketing budgets, whose brands were far more visible and that had far more resource.

What is sub-contraction, outsourcing and procurement?

In these situations, (whether a plan is sold by the funeral planning company or by one of its contracted non funeral resellers or marketing agents) the funeral company is commissioned as a supplier and agrees to deliver these wholesale or trade funerals at a contracted lower price than their own sold pre-need or the at-need funerals which they deliver to their own clients.

This sub-contraction, outsourcing and procurement framework is extremely well known, not only in the world of business but in society as a whole and has been utilized in its basest form for thousands of years. The funeral industry is no stranger to these types of business models either and subcontracts, outsources and procures on a regular basis itself. Whether it is hiring in casual labour, additional chauffer bearers, hiring modern or vintage limousines, horse drawn carriages and hearses, buying collection and removal assistance services or the use of additional facilities – all these items are procured, outsourced or subcontracted and marked up to the client.

Industries and institutions that have historically used this commercial framework to deliver their contracts and to operate and develop their sectors, include some of the below, which is by no means an exhaustive list:

  • The NHS and the wider Medical profession
  • The Legal profession
  • Automotive Industry
  • Retail industry
  • Grocery, Food and beverage industries
  • Farming
  • Education
  • Building and Construction
  • Insurance industry
  • Scientific Research
  • Information and Technology
  • Security and Defense Industries
  • Central and local government itself.

The funeral and funeral planning industry is clearly not in splendid isolation in this case.

In all the above sectors, portions of contract deliveries are in many cases sub-contracted and specific services procured and outsourced, sub-contractors and suppliers in such arrangements receive a lower trade, contract or wholesale price for their product, goods or services.

Income and opportunity

It is important at this stage to recognize that funeral businesses deliver funerals that are funded in an array of dissimilar fashions:

  1. The At-Need; They may be a walk in at-need funeral, or a client that has come directly to the funeral home after finding them locally via their own marketing endeavors and as such these services are priced accordingly. This will ordinarily be the most lucrative type of work and provide the highest level of net profit for the business. The funeral company will fund their own client acquisition costs and sales and marketing fees from the profit gained from these types of services. The funerals are priced considerably higher than those delivered across other types of redeemed funeral service. The client pays the funeral invoice.
  2. Their own sold Pre-need; These services deliver significant value as they are usually priced competitively at outset either by the planning company or by the funeral company themselves and deliver at least a return inline with RPI or CPI as added growth. These plans pay out the full value minus the Funeral Planning Company’s basic administration fees.
  3. Allocated Pre-need; These are funerals that are delivered at an agreed ‘trade’ rate to the clients of pre-need companies and their reselling agents. This is essentially additional funeral service business that would most probably be serviced by a competitor of that funeral business. Allocated Pre-need represents “free” incoming business albeit at a lower margin.

There are several other types of incoming business streams for the funeral business, whether they be welfare funerals, or coroners’ contracts but it is also extremely important to recognize that these funerals are delivered at much, much lower margins than redeemed allocated pre-need and are done so as the business in question recognizes the delivery of such funeral services signifies valuable commercial brand building opportunities as well as offering up a source of welcome additional income and a bank of potentially new future clients.

It is sensible to assume that most UK funeral businesses service funerals that fall into all the above categories in varying proportions. This will be driven in no small part by the socio-economic demographics of the region they operate within and of course, the level of localized competition from corporates, large national funeral groups, independent funeral businesses and large Insurance groups. Consequently, a funeral companies net income will be comprised of servicing varying types of incoming business as varying rates – which as we have already eluded to earlier, this is an extremely common occurrence across most industries operating in the United Kingdom today. The concept of being paid different rates for the same delivered funeral or any other project for that matter, the rate being entirely dependent upon whether it is your own acquired business or a trade piece of work is a widespread practice throughout British industry. This is even more widespread in extremely competitive or growing markets.

The market to sell end of life products into the over 50’s populace has never been more saturated or fiercely competitive. Business is harder to come by as consumers are marketed to by an ever increasingly sophisticated group of determined competitors, some with enormous marketing funds available to drive nationwide campaigns into all localized communities – including your own.

Considering the level of heavy competition – it is understandable that funeral companies would be concerned about their future and would want to secure as much market share as possible to protect their future levels of incoming business and their ongoing re-investment activities.

One of the clear solutions to this problem is the receiving of allocated business from funeral planning companies.

Consumer behaviour.

We have established that the funeral business of today is operating in a market that most probably, has never before in its history been so saturated, competitive, or so unpredictable. The world that existed where all people that lived in a specific community area, grew up and remained there until they died has gone. The population is transient and fluid.

Companies that have based their business growth and survival solely on locally engineered reputations have, in this generation, begun to witness the national mobilization of the workforce and through it the slow erosion of community brand loyalties.

This issue has also been compounded by changing in attitudes to religion and with it the views on what was always considered to be the expected and traditional style of funeral.

Finally, changes to consumer behavior in terms of how they view and purchase funerals, what they consider to be value for money and where and from whom they wish to purchase these services from now and in the future, is beginning to modify the funeral product of today, into more of a considered future planning purchase – rather than a distress one, always purchased at need, at the time of the death and in the funeral home.

The population at large has also an impression that the funeral industry has been charging unjustifiably high fees for funerals for decades and the non-loyal 50+ consumer of today is more than educated enough, with access to the internet, to shop around for the best combination of both convenience and perceived value.

This has and will heavily affect the funeral business locally now and, in the future, – the days when a local resident was to be immediately considered your future client or even that they would still be living in the area in ten- or twenty-years’ time, can certainly no longer be counted on as expected.

Research commissioned by Golden Leaves in 2018 via PR Agency “Make More Noise” was one of the largest independent surveys on consumer attitudes conducted in the history of the pre-need sector.

Whilst interviewing well over a thousand members of the public, it’s results clearly showed that most consumers that purchased a funeral plan via a funeral home were aged in their mid 70’s. Whereas the overwhelming majority of consumers that purchased funeral plan products from planning companies and their networks operating outside of the funeral home were approximately 12 years younger and in their early 60’s.

This research also clearly indicated that individuals under 70 would rather buy outside the funeral home and that almost half of those over 70 would rather that be the case too as they were frightened of the prospect of entering those types of establishments.

The reason this is incredibly important, is because it underscores the fundamental importance of accepting reputable allocated pre-need for the independent funeral business. If consumers purchase from funeral homes when aged in their mid- seventies but on average purchase from Funeral Planning companies approximately anything up to 12 years earlier, you have a market that whilst not buying from the funeral business is being marketed to regularly and efficiently for over a decade prior to it potentially buying a product from a funeral director.

If the client doesn’t purchase from a Funeral Planning company, they are more likely to do one of the following over that 10 or 12 year period:

  1. Purchase from a corporate or large funeral group that can afford to market en-masse outside of the funeral home.
  2. Purchase a “guaranteed over 50’s” life insurance, over which most of these enclaved legal charges are secured by the corporates or large funeral group.
  3. Not purchase at all and decide where to have the at need services placed at the time of need. Once again, consumer choice in this area can be affected by a number of variables – current brand visibility and marketing locally and nationally, localized convenience and price being just a few.

In all the above scenarios, it is true to say that the local independent funeral business would most likely not deliver the funeral for that consumer at the time and if this trend continued, the local independent funeral businesses future market share could be decimated over time.

Part of the solution of course is the allocated funeral plan, for if the independent funeral business does not secure this allocation and its future funeral service, these services that have been won in the open market from corporates and the larger funeral groups by funeral planning companies and their reselling networks– will just be allocated back to the corporates and larger funeral consortiums    rather than the independent sector, with equally damaging outcomes over time. Simply put, allocated reputable funeral plan business is absolutely essential to the future survival of the independent funeral sector.

What are core benefits of accepting allocated Pre-Need?

The benefits of accepting reputable allocated pre-need are plentiful:

Guaranteed increased Income; It is true to say that allocated pre-need delivers significantly less income than that enjoyed from the services delivered from non-self-sold pre-need or walk ins (as it is a trade delivered service) but its importance cannot be underestimated. Valuable income is delivered on allocated pre-need on top of all the benefits listed below and of course the funeral business is also guaranteed to be paid, so bad debt is eradicated.

Increased Brand Visibility; The best advertisement for funeral businesses is to be seen conducting funerals in the community. The more often the business is seen performing funeral services, the noticeable its brand becomes. Referrals, walk in at-need and local reputation can be intrinsically linked to the volume of funerals conducted in the community.

More efficient use of staff; With efficient diary management, down time of staff can be minimalized and with more funeral services to perform, maximum utilization of staff resource and those associated cost efficiencies can be enjoyed.

Increase the profitability of your own at-need; Delivering pre-need funerals at a lower trade rate, on top of your usual quantity of at-need or maturing self-sold pre-need can maximize your profit levels by helping to absorb your fixed cost base.

Secure future funerals and protect your business; with competition fierce in both the funeral sector and pre-need space, accepting allocated pre-need is a simple and cost-free way of acquiring future clients and business. The planning company and its network of marketing agents are doing all the hard work of securing clients – so that you do not have to do so much work in this fiercely competitive and very expensive area in direct competition with the corporates and large funeral groups.

Reach clients you would not ordinarily conduct funerals for; Funeral Planning companies have the capabilities and experience to be able to reach deeper into communities to attract consumers of a younger age or those who just do not wish to engage with a funeral company. This deliver more attractive incoming clients who ordinarily would not have ventured into or even engaged with a funeral company. The overwhelming proportion of clients signed by Funeral Planning Companies are NOT the usual future client of the funeral home. These clients have also been acquired in competition with the much larger funeral companies and corporates at considerable expense. But they are secured future business that would otherwise be lost.

Golden Leaves disbursement guarantee; It is true to say that guaranteed plans have been marketed in the past by Independent planning companies, but the primary difference between these types of plans and the new golden leaves construction, is that the disbursement guarantee is being provided by Golden Leaves and not the funeral business. Once again, a better product being sold in larger volume in direct competition with the larger funeral groups and corporates. No difficult questions concerning additional sums to pay and no having to chase clients for those sums.

Security of funds; The security of a secure trust fund is paramount and providing you are using a reputable company like Golden Leaves you know you are in safe and secure territory. The Golden Leaves is fully funded with an extremely healthy surplus over its liabilities. A reputable Trust is independently and annually scrutinized, and able to meet its liabilities regardless of stock market fluctuations. Accepting allocated plans from reputable FPA funeral planning companies will ensure that fees will be paid swiftly removing bad debt from funeral companies, some of which are not well equipped to shoulder and chase volumes of bad debt. Well run and mature Trust funds can and will return good investment returns annually, increasing the payout to the funeral business.

So future allocated plans from reputable FPA registered funeral planning companies = future secure guaranteed business and guaranteed payment.


For many years the funeral industry itself has been heavily criticized by the general public at large, consumer champions and the British media amongst others for what has been perceived as a policy of charging prices that have been set unjustifiably high for at need funerals, to the vulnerable next of kin of the deceased.

The Competition and Markets Authority have commenced a full and intrusive market investigation into the pricing of both funerals and crematoria services. This, along with well-publicized arguments between large funeral companies over their own pricing has significantly affected consumer confidence in the funeral industry in its entirety.

It is also true to say that whilst consumer confidence in the funeral industry over its pricing may be lower than it could be, the funeral planning sector is also undergoing a period of severe criticism too. Although this criticism is almost completely driven by funeral companies and not the generalized public, which is extremely unfortunate, it has caste clouds over all planning companies by the funeral sector itself.

There are reputable and quality funeral planning companies operating in the sector and it would be un-informed and naïve to suggest otherwise, although I appreciate that like some funeral businesses- some funeral planning companies haven’t exactly covered themselves in glory and some criticism of us all, is more than fair and to be perfectly clear, is to be expected in any industry including the funeral sector.

The point of this short paper is not to caste aspersions on the funeral sector, far from it, but rather to attempt to explain why reputable funeral planning companies and their allocated business are so very important to the survival of the independent funeral sector. The funeral planning product does provide an immediate solution to any customers’ concern that they will have to leave their loved ones to tackle a large or perceived to be unfair funeral invoice.

The attitude towards accepting allocated pre-need is largely divided. Many forward-thinking businesses can clearly see the opportunities and advantages of this type of incoming business and that accepting allocated pre-need from quality brands like Golden Leaves is essential to the future success of their business in this saturated and extremely competitive marketplace.

Sadly, some others cannot seem to see past the fact, that delivering a trade funeral to someone else’s client means you will receive a different payout than that you would enjoy providing services to your own clients. This is extremely unfortunate, especially at a time when the funeral sector is under increased scrutiny specifically because of the level of price it charges consumers for its services is considered by consumer groups, the general public and the nationwide media to be unjustifiably high.

It is also very unfortunate that some funeral planning companies have, for their own commercial and strategic gain, run active campaigns to advise the independent funeral sector that they should not be accepting allocated pre need from planning companies who sell product directly to the public and via their networks of resellers. An extremely short-sighted view that is completely to the long-term detriment of the independent funeral sector. Adopting this approach will arguably damage large swathes of the independent funeral sector beyond repair over time and put large number of companies eventually out of business.

Not the best advice then.

Consumers will still purchase outside of the funeral home and that is an undeniable fact. Consumers will be sold to up to 12 years before a funeral director can sell a pre-need plan or deliver the at-need service to this particular consumer. These funerals can either be won by pre-need companies and allocated to the independent sector or lost indefinitely to the larger groups, the corporates or the insurance lobby. Extrapolate this scenario out over a 10-12-year period and the future incoming business into an independent funeral home seems to disappear at an alarming rate.

Of course, Independent funeral businesses are precisely that, independent. Consequently, business decisions, whether they be short or long term are that businesses to make. We believe in this regard that the decision shouldn’t be to not accept allocated pre-need but rather to understand that it is pivotal to the future success of your business, but be realistic that you will receive a lower payout than pre-need sold by your own endeavors and at a lower margin than your own at-need.

We believe that the real decision here is not whether to accept allocated pre-need or not but is rather who to accept allocated pre-need from and who not to. It is also our belief that this decision should be based on the reputation and quality of the funeral planning company in question as well as the the strength of its Trust fund.

It is also of paramount importance that the company in question demonstrates the correct style of sales behaviour and operates rigid and demonstrable compliance structures to ensure that consumers are happy with all aspects of the product that they have purchased.

In short, some basic due diligence into funeral planning company in question should at the very least be conducted to provide reassurance and comfort that they are a reputable company with the correct credentials, are financially viable and demonstrate the correct levels of compliant operations.

So, are allocated funeral plans beneficial or detrimental to the Independent funeral sector?

The clear answer to this is that they are not only beneficial but are (we believe) absolutely essential to the competitiveness and future survival of the independent funeral sector itself.

Any company or individual that advises to the contrary are either mis informed, have little understanding of the market, are advising in such a manner purely to promote their own commercial enterprises or live in a remote part of the country, where competition simply does not exist.

Let’s be brutally honest, the large funeral groups and corporates would prefer to absorb all of the independent funeral sectors current at-need and future funeral business. Refusing allocated pre-need from reputable funeral planning companies just ensures that this business will find its way to a competitor of yours.

To protect your businesses from irreparable mid to long term damage, independent funeral homes must be able to win and secure current and future business.

Allocated pre-need support from reputable and quality funeral planning companies form an integral part of an independent funeral homes current and future strategic defenses against the loss of future funerals, market share and of course – the loss of future income and growth opportunities.

(From left to right) BSI HR Director: Angela Paradise. Golden Leaves Chairman: Steve Rowland, Managing Director: Barry Floyd, Quality Standards Manager: Kaylah-May Brown


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