Hello everyone and welcome to this week’s protection update.
It was good to see so many of you over the past couple of weeks at the final round of our roadshows and we ran with a theme of ‘limitless’ opportunities that clients need advice.
That sounds like a soundbite but it’s really true because when we look at the numbers across the whole of the network; we know that there are lot of advisers who write mortgages but write barely any protection.
The situation for general insurance is even worse and I do find this strange because there is a mandate for general insurance to be set up when you arrange a mortgage?
I remember back in the early 2000’s when I was running my mortgage and protection business where interest rates were higher than they are right now.
When we got to the point where the market crashed, I could name several mortgage broker businesses that went under and could not survive because all their eggs were in the basket of ‘mortgages’ and they didn’t have a steady stream of other incomes from other sources – such as protection and general insurance.
So I think we would all agree that it’s good to have a diverse proposition of services we can offer to our customers.
You’ve heard the expression ‘one stop shop’? We should have a situation where we are the first port of call for all those different things:
- Mortgages
- Protection
- General Insurance
- Wills
- Trusts
- Equity Release
- Private Medical Insurance
- Buy to Let
- Secured loans
And the list goes on…
Are those things in your shop window? Are they on your website?
Its good sometimes to test the water in terms of what your clients believe versus what you think.
We saw a good example up in Huddersfield this week where one adviser told a very recent experience of a customer getting in touch with him to ask him whether he could recommend an adviser who specializes in equity release?
The only problem; he is an equity release adviser and his email footer says he’s a member of the Equity Release Council.
Sometimes it’s not always clear to clients so that’s definitely worth keeping an eye on to make sure you can maximize every opportunity.
AMI Viewpoint 2021
Last week I shared the very latest output from the AMI Viewpoint report 2022.
On the roadshows, I shared one or two bits of survey feedback from customers who had recently had a mortgage arranged for them by a mortgage broker. This was from the previous report for 2021.
55% of customers said they have never purchased a protection product from their mortgage broker – remember, these are people who have gone to their mortgage broker for the mortgage.
18% could not remember. Again, just think about that… they couldn’t remember whether they bought a protection product?
Together, that is about 3 quarters.
Having done the job myself and worked with mortgage brokers for many years; I’ve come to the conclusion that what it takes to be successful is being assertive, confident, believing in protection yourself and having a process that works and appreciates customers.
Process is key!
Customers buying their first home know you are important to help them get to what they want. We established on the roadshows by consensus that most customers don’t bring up the subject of protection with you.
That means you must bring up the subject of protection.
But we also agreed that most customers aren’t sure they need it when you mention it?
When we have got the mortgage agreed; that means buying the house is becoming a reality.
Do you remember when you bought your first house or your last house.
We’re usually excited about the prospect of our new home and we start thinking about what life might be like there; what are our plans for the kitchen, the bathroom, the garden, the flooring, the décor and all those other things where you can put your own stamp on it.
But with all that potentially flying around the head of an excited customer; if we have not established that the conversation about protection should be taking place, we’ve sign posted it and we’ve and got an agreement that we need to do this; the client will be distracted and it’s less likely it will happen.
Our data at the network does show that we (as a collective) miss too many opportunities to write protection business alongside the mortgages we arrange.
So how do we join the dots?
How do we have a process that helps put protection on the agenda during the mortgage meeting?
And actually; with consumer duty in the stages of being interpreted and implemented across our industry; we are going to have to do something different to get us to where we need to be.
The new principle 12 says:
A firm must act to deliver good outcomes for retail customers
A firm? – that’s you, that’s us (the Right Mortgage and Protection Network), that’s providers
Must act? – must do something… have something demonstrable
Good outcomes for retail customers?
Its not going to be possible to ensure that every customer takes protection but how about making sure every customer is made aware of the risks they face when taking out a mortgage?
The risk statements have appeared on mortgage illustrations and on the mortgage offer for years.
For me, that is a huge opportunity to signpost and set up the protection meeting.
Your home is at risk if you do not keep up repayments on your mortgage or other loans secured on it…
There is a mandate that this statement appears and is clear for every customer who takes out a mortgage.
Who mandates it? The FCA – the regulator for financial services.
Explain that it’s your duty of care to make them aware of the risks they face when taking out a mortgage.
Your job is to help them buy their home with the most suitable mortgage on the best possible terms; but it is also to make sure they do not lose it should the worst happen; is that ok?
We agreed by consensus this week that an opening gambit like that sounds good. Nobody would be offended by that. They might be wondering “how might I lose my property”?
But if the customer agrees that this is ok; then right at the start, the customer is buying into the idea of something else beyond the mortgage which is what they came to you for.
The risk statements are an anchor in your sales process and it’s another big opportunity to remind them of your mission about making sure they don’t lose their home.
We can explain what we mean…
“This statement appears on every mortgage illustration as mandated by the regulator for financial services (the FCA). This is because it’s very important”.
It’s talking about the risk of your home being repossessed if you can’t keep up mortgage payments…
Your mortgage is, for most people, a very long-term commitment and it’s secured on your property for all of that time.
What sort of things could happen during your lifetime where you or your family might find themselves in a position where you (or they) can’t keep up those mortgage payments?
I think it’s good to get your customers to have a think because they will be able to work it out; although they might never have contemplated this ever before.
Now on the roadshows this week and last week, we had a bit of debate about the language we should be using at this stage…
I wouldn’t use terms such as:
- Life insurance
- Protection
- Insurance
- Income protection
- Critical illness cover
Those are all the names of solutions to address a problem.
But in the mind of the customer, you have not proved that there is a problem just yet.
As people; when we feel we’re being sold something we don’t think we need; we put the barriers up and we don’t like it.
So we’ve been looking at framing this slightly differently where we ask whether certain scenarios are important or not important to them.
Here’s a few from this week’s roadshow:
- If you died during the term of your mortgage; how important is it that your family are in a position to pay off the mortgage and keep the home?
Is that important or is that not important?
Nice and simple for the client to answer. And remember; this question is not about life insurance.
It’s about how they feel and what they would want for their family. We can get to the solution later on.
- If you are sick and cannot work; how long would you receive full sick pay for?
- How long could you live off your savings?
Again, we’re not talking about Income Protection or insurance. It’s putting the risks on the agenda during the mortgage process and getting some basic feedback from the customer.
One more…
- If you were seriously ill at some point during the mortgage term; how important would it be for you to be able to repay some or all of your mortgage so you can focus on your recovery?
That is either important or it’s not important…
But how would most customers answer those questions if you were brave enough to ask them during the mortgage process?
If they say, it is important, they can maintain their mortgage payments for themselves and their family; what happens next?
Is the client a little bit warmer and receptive to have that protection conversation than they were before?
We are going to continue talking about these ideas and I’ve got an actual sales aid based on this which I’ll share with you very shortly.
Let me know what you think?
Income Protection Webinars – November starting next week!
Last thing from me; we’ve got our income protection webinars starting next week.
We’ve got a diverse set of providers and I will be topping and tailing these sessions as per usual.
Here are the dates for you:
- Next Wednesday 16th November @ 10am – we have AIG, MetLife & Royal London
- Tuesday 22nd November (same time 10am) we’ve got Cirencester Friendly, LV= and British Friendly.
- And then the last webinar of the year is a different format. This is called “A Smarter way to underwrite IP” and this is a collaboration of The Exeter and UnderwriteMe. That will take place on Wednesday 30th November.
So please book onto these sessions. They will be good and these are the last protection development sessions of 2022.
So that’s it from me once again. Good to see so many of you across the country. Have a great weekend and I’ll see you on the IP webinars!
