In response to a Mortgage Solutions poll where over two-thirds of respondents said they were having more conversations with clients about protection, Tom Davies, group financial services managing director at Mortgage Scout, said these conversations were not suddenly new, but the result reflected the direction of travel across the market.
The results also mirror a recent MetLife UK study, which found 77% of advisers reported more protection conversations with clients over the last year.
He said: “Good advisers have always talked about protection. What has changed, and what the Financial Conduct Authority’s Pure Protection Market Study reinforces, is the need to make sure protection is considered early, clearly and as part of a broader and ongoing cyclical review of the client’s financial position, rather than as an add-on after the mortgage is arranged.”
While the regulator ruled out any major intervention, it did say it would consider addressing the protection gap.
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management, said the same was true for his firm, as protection was always a core part of the firm’s advice process and embedded into every stage of the client journey with multiple touchpoints to help clients understand the value of cover.
“That approach has not changed and continues to see us protecting mortgage clients every day,” Taylor-Barr said.
Neil Mulhearn, head of sales at Echo Finance, said the firm had seen a “big uptick” in the number of protection conversations brokers were having with clients, which had led to an “increase in sales across protection”.
“Consumer Duty has always dictated that we need to offer clients a protection review. We have moved to a position of integrating this into the sales process, rather than tacking it on at the end and hoping for the best,” Mulhearn added.
Mulhearn recognised that not all brokers wanted to or were comfortable with selling protection. In response, the firm has recruited a team dedicated to handling protection leads from brokers.
He said: “Starting just before Christmas, we recruited Michael Chike to head this up. He has since become so busy, we have added David Andrews to the protection team in the last few weeks, and we anticipate growing this department further in the coming months.”
Positioning protection correctly
The MetLife UK study revealed that while some clients said they planned to take out a policy, they did not follow through with this intention. Advisers agreed that the way protection was positioned and advised on had a significant influence on a client’s response.
Ahmed Bawa, CEO of Rosemount Financial Solutions, said that, unlike mortgages, protection was about selling and advisers were often considered “order takers”.
To ensure the advice given is effective, Rosemount Financial Solutions has invested in training advisers to “articulate the value of protection and sell it effectively,” Bawa added, saying an example of this was telling clients: “My role isn’t just to help you buy your home; it’s to ensure that you can stay in that home, whatever life may bring.”
Selling protection was also about confidence, Bawa said: “By having meaningful conversations with clients and explaining the importance of protecting not only their mortgage but also their family, advisers can help clients understand the value of protection.
“It’s about encouraging clients to consider what would happen if the unexpected happened to them or their loved ones, and how they would cope financially.”
Social media can help with client awareness, Bawa said, as clients engaged with the educational content his firm made available online.
Davies said his firm had also strengthened adviser support and introduced a more tailored approach to protection advice.
He said most clients were mortgage-led rather than protection-led, so it was Mortgage Scout’s job to not only help them understand the importance of getting a home but also staying there if illness, injury or death affected household income.
He said: “Cost remains the biggest barrier that’s compounded by poor positioning and inadequate advice.”
“We have carefully examined where each adviser adds the most value. Some advisers are strong across both mortgage and protection, so they continue to handle the full conversation. Where an adviser is excellent on mortgages, but protection is not getting the time or focus it needs, the client is introduced to a protection specialist instead.
“That gives the client a proper, detailed protection conversation, while allowing the mortgage adviser to focus on where they are strongest,” Davies added.
Bawa said Consumer Duty reinforced the adviser’s responsibility to broach the topic of protection, but suggested some training practices across the sector fell short.
He said: “Sadly, the days of spending three weeks training advisers specifically on how to sell protection are largely behind us.
“What we are seeing now is advisers completing CeMAP 1, 2 and 3, qualifying as mortgage and protection advisers, but often with little practical experience or dedicated sales training.”
Women, refinancers and people living in the North more open to protection
Mulhearn identified “several factors” leading to the rise in insurance business.
“Firstly, we have implemented a significant amount of training over the last 12 months, in conjunction with various providers, to make sure our advisers have the necessary knowledge and skills to have that conversation with their clients. Being able to concisely explain the benefits to a client has helped to get the message across, and when a client understands the benefits of a recommendation, they are far more likely to buy.
“Secondly, I do feel that clients are becoming more cautious; the events happening across the globe focus the mind, and therefore they are in a more receptive mood to hear the message,” he added.
Taylor-Barr’s firm has arranged 304 mortgages and 119 protection plans over the last 12 months, and a significant proportion were product transfers and remortgages for existing clients who had policies in place since they first arranged their mortgage.
“While we review protection alongside every mortgage recommendation, there is not always a need to amend or replace existing cover where it continues to meet the client’s needs,” Taylor-Barr said.
He noted it had also become “increasingly difficult to place non-standard protection cases”, saying more insurers were focusing on “straight-through processing”, meaning underwriting delays caused by resource constraints and the challenge of obtaining medical evidence.
Taylor-Barr said that “as a result, less straightforward cases are often taking longer to place and get on risk, despite clients being keen to proceed”.
Other advisers suggested that interest varied depending on the demographic of the client.
Davies said there was a “clear North/South divide in uptake”, as mortgage and protection payments typically took up a smaller share of monthly outgoings in the North, leaving people with financial room.
Meanwhile, Rosemount Financial Services has seen more women engaging with advisers and recognising the importance of protecting their partners and themselves, Bawa said.
