Preparing for the future with greater ancillary product penetration
Rob Clifford is chief executive of Stonebridge
Speculation about what the future might bring for the mortgage market, particularly at the likely end of the stamp duty holiday next March, continues and – despite a very busy sector currently – brokers are rightly thinking about what might come next.
The good news is that mortgage activity is high, transactions are working their way through the system, and if all stakeholders can maintain their service levels over the course of the next six months, then there seems little reason to doubt we will have a very good couple of quarters.
And it is during this period that we can also prepare ourselves for whatever happens from April through December 2021, and beyond. This will be especially pertinent if there is no stamp duty holiday extension, and if we do see activity levels begin to fall slightly as a result.
Clearly, this involves taking advantage of the mortgage market opportunities that currently exist, but it should also mean firms ensuring they are also making the most of the other ancillary income opportunities that will be presented to them via their mortgage clients.
I am well aware that this might sound easier to say than do. Indeed, advisers tend to have a history of arranging less protection and general insurance (GI) work when they are busy with mortgages. Plus – and let us be honest here – advisers who are not specialists in this market might well view protection and GI as rather dull; there are reasons why some firms have penetration rates as low as 10% in these areas, even when consumer need exists, not to mention the income they can generate.
And that is the rather important point to consider here, especially if firms are concerned about a potential reduction in mortgage business in the future. Of course, it is not set in stone, however, a firm which can increase its penetration rates considerably during this period, is giving itself the very best chance of getting through a further difficult period in the market.
Lest we forget the current political noise regarding Covid-19 is all about the potential for ‘circuit breaker’ lockdowns. As I write this, Wales and Northern Ireland have already announced theirs. Can we really say with certainty that other countries or regions within the UK will not have to follow? Or that eventually we may have a further national lockdown, however much we do not want this?
Interestingly, the likelihood is that any regional or national lockdown would see demand from clients increase, as they seek to protect themselves and their incomes against the potential of a threat to health and life, against future periods of lower or no income, for whatever reason.
But the fact of the matter is those concerns exist right now for many (if not all) clients. Despite protection and GI being regarded by many as dull or advisers feeling they do not have time to cover off these areas or there being a lack of proactive interest from clients, it has perhaps never been easier than today to be active in these sectors and to set out the clear benefits to clients.
Technology has come on at some pace – next month at Stonebridge we will be integrating our Revolution system with Legal & General’s SmartQuote which, only asks the client five questions and provides a home insurance quote in seconds. The technological development they and other insurers offer should deliver a much ‘stickier’ proposition for advisers, one with less friction points, and allow advisers to offer highly-competitive pricing for excellent products that (rather crucially) pay out.
So, it is not a difficult proposition to work into an adviser’s service and we know that some firms have employed individuals within their firm to solely look after this type of business and to ensure no client falls through the gaps. Even then, if firms feel like they don’t have the time, or the expertise, or the access, then they can also refer that business on, securing referral income and ensuring the client does have the protection and policies they need. We offer all Stonebridge AR firms access to a referral partner, Stonebridge Protect, which delivers a focused and specialised service day in, day out.
Nobody knows what the future will bring, but it is possible to prepare for a range of outcomes. Ensuring advisers have the tools, technology and provider access is crucial to ensuring stronger protection and GI penetration levels, and ultimately building firm business foundations for whatever the market might do next.