The protection provider pointed to common changes in personal circumstances as chances for brokers to develop client conversations when the mortgage term stretched over five years.
The firm’s research showed that of UK adults with a mortgage taken out through an independent adviser, 49 per cent had experienced a change in circumstances since completing the loan.
Of these, 20 per cent had a child, 18 per cent saw a change in employment status, 10 per cent developed a long-term health condition and an existing health condition got worse for 9 per cent.
Further, 9 per cent moved in with a partner, 9 per cent acquired an additional dependent and 6 per cent stopped receiving workplace protection or benefits.
The survey found that 39 per cent of those experiencing life changes had not updated their protection policies — potentially providing an opportunity for advisers to contact clients.
“We’ve seen a major shift to five-year fixed rates, from two-year fixes, to fit with client affordability and prevention of uncertainty. The broadening of that gap by three years is a key challenge to brokers in their communication strategies,” said Mike Allison, head of protection at Paradigm Mortgage Services (pictured).
“Brokers need to continue to reinforce their value, especially related to the work they do analysing the market for mortgage and protection products. Brokers’ recommendations go beyond price in many cases taking a considerable amount of time and effort.
“Ongoing, informative contact can make a huge different to customers’ perceptions of what a broker can and does do for them, especially where life changes occur during that gap,” Allison said.
“We work with Canada Life and others promoting added value services around work, health and wellbeing and reinforcing the differential value brokers bring to the party. We’ve seen huge uptake in these services where they’ve been correctly promoted,” he added.
Risk of disengagement
The survey discovered that 32 per cent of people who organised a fixed deal through an adviser aim to go elsewhere when their fixed term ends. Of these, 15 per cent plan to take out a new product directly with a bank or lender, 10 per cent will review with a different mortgage adviser and 6 per cent will turn to comparison websites to take out a mortgage.
Further, 42 per cent of homeowners say their adviser hasn’t contacted them to review their mortgage since taking it out and 61 per cent have had no contact from adviser to review protection needs since the initial meeting.
“With longer fixed-term mortgage deals on the increase and nearly half of customers confirming their personal circumstances have changed since they took out a mortgage, there are plenty of opportunities for advisers to re-engage,” said Natalie Summerson, head of sales, individual protection at Canada Life.
The research questioned 1,003 UK adults with a mortgage who took out their product with an independent adviser, in October 2019.