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Advisers should stick their toes in the protection pool

by: Richard Adams
  • 28/08/2012
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Advisers should stick their toes in the protection pool
A recent survey to gauge adviser sentiment found that protection is predicted to be the biggest growth market over the next three months.

Securing just shy of a third of the vote in the poll, protection outstripped buy-to-let (25%), remortgages (16%), purchases (15%) and general insurance (7%) as the biggest driver of sales.

The study also found that 45% of advisers expect business levels to pick up in the next quarter and that more than three-quarters of clients are adopting a similarly upbeat frame of mind.

This last statistic is particularly pleasing given that it is consumer mood that drives demand for financial services products and that people will postpone purchases if they feel unsure about the economic climate.

The shift towards protection is certainly one we have noticed and is one of the reasons we have not only worked hard to ensure that our panel is as strong as it possibly can be, but also why we opened it up to directly authorised brokers as well as our appointed representative firms who were already taking advantage of it.

Mortgage brokers are within their rights to concentrate solely on home loans, but more and more we are seeing advisers incorporating cover into their propositions to offer their clients a more complete package as well as reducing their reliance on one type of business.

The percentage of survey respondents opting for buy-to-let, remortgaging and purchases as the niche to watch suggests that pure mortgage advisers should have enough business to keep themselves ticking over, but it doesn’t do any harm to at least consider complementary sectors.

Indeed, one of the reasons for the relative optimism may be the high hopes placed on the government’s Funding for Lending scheme to get things moving again – but until that fully kicks into gear advisers will need to keep the wolf from the door.

With networks such as ourselves not only assembling protection panels for our members, but opening them up to the wider market, much of the legwork is effectively done for brokers, so diversification needn’t be a hassle.

It is not always advisable for mortgage brokers to jump on the latest bandwagon – the reluctance of most advisers to dip their toes into the bridging loan market being a case in point – but when it comes to a sector as established as protection, the risks are practically non-existent.

Advisers may choose to stick to what they know, but with such growth expected in the protection sector they may live to regret overlooking it.

Richard Adams is managing director of Stonebridge Group

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