Altering the protection conversation – Hyndley

Unfortunately, protection is often more of an afterthought, and this needs to change.

Advisers need to see protection advice as central to their role. Ideally, each mortgage conversation should automatically include protection, embedding it in the advice journey to normalise it for clients and clarify that safeguarding the mortgage is inseparable from securing it.

The state of protection cover in the UK is concerning, with recent studies showing that almost a third of young mortgage holders have no cover. These stats highlight the precariously dangerous position held regarding the financial burden on loved ones and the regulatory pitfalls for advisers.

Today, we are seeing regulation push brokers to shift gears on the way advice is given.

The Financial Conduct Authority (FCA) is active with Consumer Duty and, crucially, the need for advisers to identify foreseeable harm. In other words, do brokers ensure the right conversations are had and the best advice is given so that loved ones can stay in the family home?

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The failure to do so can leave advisers as vulnerable as their clients – opening them up to regulatory and reputational damage as well as significant financial liability.

While a few firms successfully bridge this gap, they remain the exception. Advisers should consider establishing a repeatable, recordable process embedded in the mortgage journey. Such a process can deliver superior client outcomes, reduce regulatory burdens, increase client satisfaction, and boost revenue growth. Good technology can facilitate this.

Here are some tips on how firms can approach establishing protection advice processes:

1. Identifying the gap – The protection conversation isn’t difficult (as many would have you believe), but it does need to be structured properly. The starting point, to close the gap, could be as simple as a documented, structured protection conversation mandated for all mortgage cases. By adding in a client ‘risk report’ to the mortgage workflow, it helps both the adviser and the client quantify the ‘risk’ and inform the ‘identifying the gap’ conversation.
2. Create accountability – There can only be three outcomes of the protection conversation: 1) The client says ‘yes’ and advice is given by the mortgage adviser, 2) the client says ‘yes’ and is referred to another adviser or firm, or 3) the client says ‘no’ and signs a declaration to confirm their decision. Once these outcomes are measured, the protection gap will start to close.
3. Fulfil needs – Once a ‘need’ is identified, a client can be triaged to the right advice channel. Busy mortgage advisers can choose to give advice, refer their client to a protection adviser within their own firm, or refer them to a network or specialist firm. Protection advice is complex and, by its very definition, should be comprehensive. All a client’s needs should be identified, captured and shared, as should the outcome – especially if a client chooses to decline one or more of the proposed products.

The protection gap is real, but it can be closed.

By reframing how protection is introduced and embedding it naturally into the mortgage journey, advisers can help more clients recognise its importance and access the advice they truly need.