First published by Financial Reporter
The inevitable focus on COVID-19 and the impact it is having on the economy, businesses and jobs, also draws into sharper focus the ways and means by which individuals can protect themselves from some of the risks which are heightened at the moment, not just in terms of employment prospects, but also their ongoing health and that of their families.
AMI recently launched a report on this very sector, and mortgage advisers’ role in it, called ‘The New Protection Challenge’. It shouldn’t shock firms with anything they didn’t already know, but it very helpfully highlights the potential issues advisers could be storing up for both themselves and their clients, if they are not 100% active in talking about protection options.
Even if advisers think they are covering protection sufficiently, the report – which asked 5,000 consumers and 500 mortgage advisers about their protection experiences – suggests there could be a major discrepancy in terms of what advisers believe they are achieving, and the takeaways (or otherwise) consumers get out of those conversations.
For instance, while 97% of advisers said protection was discussed as part of their client interview, 36% of consumers said they didn’t recall such a conversation, which as Robert Sinclair points out, reveals that the message advisers think is loud and clear, isn’t necessarily getting through.
And, of course, when it comes to protection advice, this isn’t just about the delivery of an advice process and a product, but it’s also about mitigating risk for both the adviser and the firm. Due to the fact there is the potential that the client might feel they have not received the advice and/or offered policies to cover their wants and needs, leading to complaints being raised, which could ultimately escalate to the Ombudsman for resolution or may even invoke a PI insurance claim.
That’s clearly an even greater risk to advisers and firms if they can’t muster clear evidence that the protection conversation has taken place. If complaints rely on a, ‘he said/she said’ defence, then that case is unlikely to be found in the adviser’s favour.
The proof has to be there, whether it’s having the customer provide a written declaration to confirm they have had the conversation, or ‘positively declined’ advice in this area, or perhaps it means utilising technology such as our own Revolution system to ensure this part of the advice process is not only covered off, but you can show categorically the conversation was had, and the customer chose not to accept any recommendations for action.
At Stonebridge, we also combine this technology with unlimited support from our BDMs and hold webinars throughout each year on this very topic. However, despite the support available, understanding that some broker firms are not as successful as they might wish to be in this area, or are too busy with other services/products to give protection their full attention is key. More and more networks, for example, are mandating the protection conversation and insisting the firm formally refers the customer to a central protection advice solution.
For instance, we have Stonebridge Protect within our group, meaning AR firms (from any network) can introduce their clients to a specialist, where they can be certain they’re actually having that conversation and they are being given the very best, specialist advice. It’s a very attractive commission-share model and – crucially – the advice risk doesn’t sit with referring broker
In a way, it’s the best of both worlds, for advisers who – for whatever reason – can’t or are not able to have those very important protection conversations. And, perhaps at this time in particular – when the mortgage market is incredibly busy – more and more brokers would benefit immediately from an outsourced specialist to deliver this protection advice solution. Because, if there’s one thing we all know, it’s that mortgage advisers often prioritise writing new mortgage business over other client product/service needs during times when they are inundated.
Simply from our own 2020 experience, while we’ve seen our mortgage business quickly exceeding transaction levels compared to pre-Lockdown 1, the growth of protection business is taking longer to return.
We fully understand why this is likely to be happening – which is why we promote the Stonebridge Protect solution – but in terms of the wider market it certainly needs to be considered in the context of the potential threat to advisers and firms if they are seen to neglect the protection needs of their clients, and do not offer a robust solution which ensures that all clients get the thorough and knowledgeable advice they deserve.
Being too busy to fully and adequately advise on protection isn’t a defence which will stand up to regulatory or Ombudsman scrutiny. And, when there are plenty of service solutions which mitigate this risk for yourself, your firm and your clients, there’s no excuse not to grab it with both hands.
Rob Clifford is Chief Executive of Stonebridge