It is becoming increasingly important for mortgage brokers to embrace protection.
Not because the market is depressed and protection represents a significant income stream. And not because of the new Consumer Duty. But because our clients need protecting.
Brokers have a responsibility to ensure their clients understand the risks they take when borrowing to buy property, and the steps they can take to mitigate these risks. It is not acceptable to avoid these difficult conversations when discussing mortgages with clients.
When clients sense you are genuinely invested in their wellbeing, they are more likely to take your recommendations seriously
Having a thorough protection conversation is a win-win situation for broker and client. Clients take out appropriate insurance to protect themselves should the worst happen, and brokers are (generously) compensated financially for their time and effort.
Insuring clients who are not mortgage ready
Implementing a robust process that encapsulates protection recommendations even before clients have secured a mortgage not only helps mortgage businesses with cashflow, especially in the early stages of a start-up when building a client base, but also addresses a significant gap in the market.
According to Legal & General, 73% of renters have no protection, highlighting the need for this conversation to take place early on.
The most critical factor in becoming comfortable with the protection conversation, and achieving the best outcomes, is having the right mindset
Consider this: in our business we help over 40% of our clients who do not have a mortgage to protect their family by taking out insurance. We help them with will writing, lasting powers of attorney, income protection and family protection, and all of this happens before they find a suitable property or in many cases before they have even saved a deposit.
Of course, we protect close to 100% of those who go on to purchase, but the real opportunity is with those we can’t help with a mortgage in the short term.
Mindset
Throughout my career I’ve had the privilege of hiring and coaching a diverse group of brokers, ranging from novices to seasoned professionals. I’ve learned that the most critical factor in becoming comfortable with the protection conversation, and achieving the best outcomes, is having the right mindset.
It is not acceptable to avoid these difficult conversations when discussing mortgages with clients
This entails being passionate about protection and truly believing in the value it offers. When clients sense you are genuinely invested in their wellbeing and committed to safeguarding their financial future, they are more likely to take your recommendations seriously.
Process
Having a process in place, even as a sole trader, is crucial, especially when scaling.
Having a thorough protection conversation is a win-win situation for broker and client
Tools such as UnderwriteMe, which provides terms before application for most insurers, are integral parts of our process, both from a time-saving perspective and to ensure clients are getting the best terms for their cover.
In conclusion, protection is not just an additional revenue stream; it’s an obligation we owe to clients.
This article featured in the April 2023 edition of MS.
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