"When framing protection as a means of helping customers to keep up repayments on their mortgage, there’s a greater level of understanding as to why this is being brought into the conversation."
Did you know that there are more similarities between a dentist and a protection adviser than you think? Much like going to the dentist (who wants to!), many customers don’t want to deal with a protection adviser, associating the appointment with feelings of anxiety and adopting the “out of sight, out of mind” approach. Notably, regulators state that advisers should create “justifiable anxiety” with customers during conversations around protection - in other words, helping them think through the consequences if something was to go wrong. However, it’s often a case of easier said than done when it comes to helping customers adopt this mindset.
Sticking with the above analogy, just as a dentist will analyse our teeth and gums and fill in any gaps they may encounter, a protection adviser spends time undertaking a detailed analysis of the customer’s current income and outgoings, addressing the gaps with a suitable protection solution. Furthermore, ongoing annual dental appointments are required to identify any problems before they deteriorate any further. Regular protection reviews should be implemented to review the customer's circumstances, which are likely to change over time, and require new advice as a result.
With this comparison now firmly in mind, we must consider how effective we as advisers are at delivering on the following:
● Helping customers understand their level of risk and the problem this may cause,
● Conducting a detailed protection analysis,
● Explaining the solutions and bridging the gaps,
● Regularly viewing outstanding and changing customer needs.
Delving into the customer mindset
Before we go any further on this, let’s consider protection from the perspective of a typical mortgage customer. Predominantly, they want an adviser to secure the most suitable mortgage to enable them to purchase their new home.
Customers rarely ask about protection, yet it’s in the interests of the adviser to want (and need to) put protection on the agenda. However, when framing protection as a means of helping customers to keep up repayments on their mortgage, there’s a greater level of understanding as to why this is being brought into the conversation.
This is why the statement written at the bottom of every single mortgage illustration ('Your home may be repossessed if you don’t keep up the repayments on your mortgage’) should be used to start protection conversations. From there, advisers can look at what resources customers have in place to keep up these repayments, such as savings, support from their employer, and any existing policies. This, in turn, enables us to see under which circumstances they might struggle to keep up the repayments on their mortgage, with the right protection policy designed to tackle this risk head-on.
Regulatory considerations
While we’re generally well versed in educating and raising awareness of protection and risk among customers, the analysis and ongoing review of their needs requires additional work. There are a number of regulatory frameworks that are integral to this: Consumer Duty, the new FCA Protection Market Review (TR24), and ICOB rules around suitability letters.
Consumer Duty outlines that the ‘consumer understanding outcome’ requires firms to give customers the information they need, at the right time, in a way that they can understand. It also states that we have to go on a ‘journey’ with the customer around the ‘lifecycle of the product’. The FCA Protection Market Review looks at price versus commission versus value, with the regulator wanting to see the value that we as advisers add for the commission we receive, and how we demonstrate this. Furthermore, ICOB Suitability Guidance says we should ‘inform the customer of any demands and needs that are not met.’
When all of this is combined, it’s clear we as an industry need to focus on:
● Customer understanding: presenting information in a way that makes sense.
● Customer needs: which needs are not met/remain outstanding post-advice?
● Customer outcomes: what does good protection advice look like?
While each of these areas should be our focus when positioning protection to customers, there’s an overarching theme. In essence, we need to think about how we can enhance a customer’s education and perception around protection, both in-person and virtually between appointments, to ensure they get the best possible outcome for their needs.
How can we enhance our advisory approach?
Protection is never a one-off conversation. It’s an ongoing journey, whereby the customer and adviser must work in tandem to achieve tangible results. This is why the concept of protection should be introduced from the outset, during the beginning of every mortgage appointment. Thorough analysis is paramount, delving deep into each customers’ unique circumstances, vulnerabilities, and long-term goals. Transparency is equally important: customers need clear, jargon-free explanations of policy terms, exclusions, and potential claim processes.
While it should go without saying, ongoing communication is vital. Regular reviews ensure policies remain aligned with evolving needs. In the interim, email communications are the ideal opportunity to place protection at the forefront of the customers’ mind - especially if gaps have been identified, and not all of their needs have been met. This can prompt them to recognise and identify any changes in circumstances, which in turn highlights the need for protection advice.
If the best possible customer outcomes aren’t being achieved, we need to gain a solid understanding of the ‘why’ - a process which, admittedly, can be multifaceted. Perhaps the initial analysis wasn’t as detailed, leading to unsuitable product recommendations. Alternatively, the communication around policy terms and conditions may have been unclear, resulting in misunderstandings and unmet expectations when a claim was made.
By monitoring and regularly reviewing these outcomes, we can identify reasons why this was the case, shifting our approach accordingly. This could include enhancing communication output or materials, providing additional/refresher training, or even adjusting product offerings. Learning from these experiences can only help us improve, lessening the risk of similar outcomes occurring in future.
While the protection industry continues to make great strides, the challenge is to now build on this momentum, addressing the remaining gaps in customers’ protection needs and ensuring they can achieve the best possible outcomes. By adopting a more dynamic, forward-thinking approach towards protection advice, we have a much stronger chance of enhancing customer understanding, and ultimately, safeguarding more individuals and their loved ones. If we spend time reviewing and checking our teeth with a specialist, surely all customers should do the same in relation to their own lives and far greater risks posed?
