Across the mortgage profession, brokers are often referred to as mortgage and protection advisers.
I would hazard a guess, though, that many are far more comfortable with mortgages than protection.
After all, they live and breathe mortgages every day; they are fully engaged and will know very quickly where best to send a client’s case.
If an adviser is not as confident advising on something, then it’s only natural that it will take a back seat – especially in a busy brokerage.
Rather than being a fully embedded part of the mortgage process, it can start to feel like an afterthought.
As a result, protection can all too often feel like a poor relation to mortgage advice. However, it is hugely significant - not just for the sake of clients and their health and financial wellbeing, but also for the future prospects of advisers.
Given the financial commitments in play, the demands of the market and the regulatory requirements facing advisers, it’s never been so important to embed protection advice early in the mortgage process.
The common sense reason
A mortgage is likely to be the single biggest financial commitment a person makes in their lifetime.
It’s becoming a longer commitment too with terms now reaching into retirement age for many.
The problem is that life is unpredictable - personal and financial circumstances can change dramatically during this time, whether it’s job losses, illnesses, accidents or family changes.
All can have a major impact on a person’s ability to keep up with payments.
For this reason alone, embedding protection advice should be an absolute priority to educate clients about the significant risks.
The issue is that is can often be a fleeting conversation, or one that takes place much later in the process.
If the conversation feels like an afterthought or too much like an ‘upsell’, we shouldn’t be surprised when clients don’t engage or struggle to commit.
The regulatory reason
Increasing consumer understanding is a massive topic across the entire mortgage market, but particularly when it comes to protection.
The FCA’s most recent Financial Lives survey tells us more than half of UK adults (53 per cent) had no form of protection in the previous two years.
Just as worrying is the nearly 13mn adults that have low financial resilience – the ability to cope with a financial shock.
With Consumer Duty now in force – placing emphasis on good outcomes and minimising potential harm – this is not compatible.
Rather than just a regulatory exercise though, the new rules present a tremendous opportunity to have those in-depth conversations about protection – not just during the mortgage process itself, but throughout the lifetime of the product.
The bigger picture reason
If we can frame value early and sell protection on benefit rather than price, we are in a far stronger position to encourage clients to commit.
