Canada Life: Mortgage advisers risk losing clients after a fixed term

Michael Lloyd

November 18, 2019

Independent mortgage advisers face the risk of losing their clients as a third (32%) of homeowners who organised a fixed deal through an adviser are likely to go elsewhere when the term nears its end.

Canada Life found of those who intend to take a different route when their fixed rate mortgage ends, 15% will take out a new product directly with a bank or lender.

In addition, 10% will review with a different mortgage adviser and 6% will take out a mortgage via a comparison website.

Natalie Summerson, head of sales – individual protection at Canada Life, said: “Our research has highlighted the importance of mortgage advisers remaining in regular contact with their clients, particularly as many customers will not necessarily feel the need to revisit their mortgage deal for a number of years after 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 their mortgage there should be plenty of opportunity for advisers to re-engage.”

With two in five (42%) homeowners saying their adviser hasn’t contacted them to review their mortgage since taking it out, Canada Life claims advisers would benefit from opportunities to stay in touch with their clients.

One such opportunity reportedly lies within protection policies, often sold alongside mortgage products.

Almost half (49%) of homeowners have had a change in personal circumstances since taking out their loan, but 39% of those did not update their protection policies.

Common changes in personal circumstances include having a child (20%), a change in employment status (18%), developing a long-term health condition (10%) or an existing health condition worsening (9%).

Mike Allison, head of protection at Paradigm Mortgage Services, added: “Paradigm Mortgage Services has seen a major shift in the move to 5-year fixed rates from 2-year, to fit with both client affordability and prevention of uncertainty given the current economic climate.

“We see this as a key challenge to brokers in their own communication strategies, given the broadening of that gap by three years.

“We feel that brokers need to continue to reinforce their value, specifically related to the work they do to analyse the market for mortgage and protection products before they make recommendations to their clients.

“In many cases those recommendations go beyond price and take a considerable amount of time and effort.

“Constant informative contact can make a huge difference to customer perception of what a broker does and can do for them, especially where lifestyle changes happen during that gap.

“One such area we are working on with Canada Life and others is the promotion of the added value support services such as life works and other health and well-being services which can reinforce the differential value brokers bring to the party.

“We have seen huge uptakes in usage of these services where they have been correctly promoted and this can only help in the bonding of the move from a transactional to a relationship driven approach.

“This is not only vital for customer retention but also plays a part in driving better customer outcomes.”


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