By John Scrivens, Sales Director
When you first speak to a potential borrower they’ve only got one thing on their mind: their mortgage.
Given the current volatility in the market, it’s no surprise urgency is dominating borrower behaviour even more than usual. Data from Stonebridge shows mortgage submissions surged by around 50% in the wake of the Iran conflict, with advisers racing to lock in rates.
Your lending advice has the potential to dramatically impact a borrower’s household finances and it’s all very time sensitive. And because of that, it’s easy for both the customer and the adviser to delay thinking about anything less urgent, even if it’s just as important. Protection falls into that category.
In recent weeks, we’ve seen the strain advisers are under while supporting borrowers. Protection conversations can get pushed back but this can have unwelcome and unintended consequences. The danger is that conversations about protection never happen, leaving borrowers exposed and without a clear understanding of the risks they face.
Also, geopolitical events can have real knock-on effects for borrowers, potentially impacting their income, job security or wider financial resilience, making the need for protection even more relevant. Market conditions may change but the customer experience shouldn’t.
Perception is everything, and borrowers are much more likely to see the value of protection when it’s discussed alongside the mortgage, not after the event.
Why is this? It all comes down to ‘persuasion bias’ and other retail sales habits. Left too late, and advisers end up framing protection purchases like retailers frame the insurance products consumers are frequently offered at the last minute, and which they rarely want. Remember that mobile phone insurance you declined?
The persuasion bias is the suspicion people have that something is being pushed on them that they don’t need. To the borrower it feels like an afterthought put forward by an incentivised sales person, not a critical piece of financial armour recommended by a wise and knowledgeable adviser.
Beyond timing, it’s also about personalities and trust. This may go some way to explaining why only 39% of borrowers remember the protection conversations that 99% of advisers say they have, according to AMI, highlighting how easily these discussions are forgotten if they don’t fully resonate.
What should be happening is that even basic conversations about affordability should look at not just whether someone can afford to buy a property, but whether they can protect their ability to stay in it.
If you do that, and have the two conversations side-by-side, customers are more likely to understand the merits of protection, and the potential consequences of not having it. Behaviour psychology dictates that if advisers can help the customer understand why these products matter, not just what they are, they’ll recognise their own real need through the perceived pain they’d feel if they lost their incomes.
It’s only by reframing protection conversations that advisers are going to have a meaningful impact on the protection gap identified by the FCA in its interim Pure Protection Market Study earlier this year. There’s no excuse not to make meaningful inroads here, after the regulator’s own research found fewer than 8% of consumers cited cost as a reason they hadn’t bought it.
We often say protection is a product that is ‘bought not sold’. That’s only true if the manner in which we raise it creates a sense in borrowers that they’re seeking advice, not in a hurry to get off the phone.
If you’re a mortgage and protection adviser looking to support your customers with a market-leading level of support and technology, contact us here to discuss how our proposition can help.
