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The Perception Gap

AMI Senior Policy Adviser Stacy Penn discusses the findings from AMI’s latest Protection Viewpoint – The Perception Gap, in this article written for TMA Club

In November 2023, The Association of Mortgage Intermediaries (AMI), alongside sponsors L&G and Royal London, launched its fourth Viewpoint report on the protection market. Featuring the views of 3,000 UK adults and 436 mortgage intermediaries, ‘The Perception Gap’ focuses on practical ideas to help grow the market and ensure more consumers are protected.

As firms put 2024 plans into motion, Viewpoint should be seen as a useful tool for all mortgage intermediaries. Whether reviewing protection propositions for the first time, identifying new opportunities or seeking inspiration on how to tackle common barriers, our aim is to help firms translate the findings into day-to-day business activity and practices.

Introducing protection

Are you one of the 47% of mortgage advisers who do not have a protection section on their website?

In a digital age firms are at a disadvantage if they advise on protection and do not have protection related content on their website. A firm’s website should be seen as its shop window and by including protection related content, it signals to consumers from the outset the importance of these products and crucially the role they play alongside a mortgage.  

If your firm already includes this type of content, it may be worth reviewing to ensure it is a) engaging and b) helps consumers begin to identify the potential risks they may face and the solutions that could be available. A useful task could be to ask family and friends outside of the industry to provide their honest opinion on whether website content ‘hits the mark’.

When it comes to protection, do your clients understand your firm’s role? Is this articulated clearly enough to customers? Or do your customers fall into the 22% of UK adults that struggle to identify any benefits of using an adviser for protection advice?

We can’t expect the average consumer to recognise the potential benefits of using an adviser for protection advice unless we bring this to their attention. The value of advice is likely clearer on the mortgage side as customers can visualise their new property but less so when it comes to an intangible product like insurance, where a more proactive approach is required by industry.

AMI Viewpoint research provides inspiration on messaging that may resonate with consumers. Of the 21% of consumers that would prefer to buy protection face to face (the second most popular answer, after ‘online via a price comparison website’), 52% say it is because this route allows them to ask questions and around a third (31%) say it is because it gives them reassurance.

Only 21% of consumers say it is because a face-to-face route provides support and only 16% say it is because it provides different options. Providing help and guidance and reviewing solutions are the core principles of good advice and therefore it is clear we need to do more to amplify these benefits to customers as there is a perception mismatch.

Nearly a third (31%) of consumers say they would prefer to buy protection via a price comparison website. In AMI’s view, the risk to a consumer of not understanding the potential benefits of advice is they could buy protection online based on their wants and not their needs.

At AMI we recognise the responsibility to raise awareness of the value of advice should be a shared one. We are keen to engage with insurers to ensure they are considering how they position the value of advice within their activities. In addition, in 2024 we plan to launch a Viewpoint on the value of advice which aims to demonstrate the lifetime value to consumers of having a mortgage adviser, and the benefits to industry delivered by the intermediary sector – far beyond the facilitation of product sales.

Advising on protection

At what stage of the mortgage process do you raise protection with your clients? Are you one of the 40% of advisers that initiate protection discussions during the introduction?

A colleague recently shared a story about her sister, a first-time buyer, who felt she had been ‘sold’ insurance by her mortgage adviser. It appears that whilst protection had been mentioned during initial interactions, the positioning and messaging clearly lacked impact. She had walked away from the conversation feeling sceptical rather than recognising the vital role insurance can play alongside a mortgage.

This is not an isolated example as AMI Viewpoint research found 47% of consumers believe their mortgage adviser only suggested they take protection to increase commission and not to ensure they were financially protected. In AMI’s view it is important for advisers, where they hold insurance permissions, to ensure protection is portrayed as an integral part of the mortgage advice process. Delaying discussions until fact find or mortgage offer stage risks diluting the message. It also creates a more challenging environment for the adviser – you are asking the customer to consider how protection fits within their expenditure, yet the monthly mortgage cost has already been presented.

Are you missing out on opportunities? 28% of consumers that didn’t recall a protection conversation with their mortgage adviser said they would have been interested in a conversation.

Protection provides an important revenue stream for mortgage intermediaries, yet advisers are ignoring opportunities from consumers that are telling them they want to hear more about what is on offer. Interestingly, if we look at the data in more detail a third (33%) of Gen Z and half (52%) of Millennials said they were keen to engage on the topic but were not presented with the chance to do so.

There is a risk that consumers may go elsewhere, perhaps online, to another adviser or to educational sources that may be less reliable. Moreover, AMI Viewpoint research found a house purchase is the main trigger for those with protection and therefore the greatest risk of all is that consumers may not have a chance to discuss protection again until it is too late.

Let’s not underestimate the vital role mortgage intermediaries play in the protection space. Be loud and proud about what you can offer and deliver.