Protecting Your Mortgage

Hi everyone, on this episode Andrew Montlake of Coreco, is joining us to chat about mortgages. We are talking about the need to discuss protection insurance, when a mortgage is being arranged.

Andrew is the Chairman of the Association of Mortgage Intermediaries (AMI) and brings a very open mind over how mortgages and protection should mix. Amongst other things, we are discussing how the current explanation and marketing of protection products isn’t always the easiest for people to understand outside of this area, and how Rishi Sunak’s furlough scheme is akin to income protection and how we can use this as a positive example to explain the product.

The key takeaways:

  1. Statistics over how many clients believe that their mortgage broker has mentioned protection insurance.
  2. Some tips on when to bring the protection discussion into your advice process.
  3. The importance of signposting clients to protection advisers, if you are unable to spare time to do it yourself.

Next time, Matt Rann will be back hosting with me and we will be chatting about the latest underwriting risk, and what you can do to understand it and help your clients more.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website.

Kathryn:       Hi everyone, today we have Andrew Montlake with us, also known as Monty.  He is a mortgage adviser extraordinaire.  Hi Andrew!

Andrew:       Hi, thanks for having me.

Roy:            Hi Monty, how are you?

Andrew:       Not bad, I’m delighted to be here.

Roy:            Today, we are focusing on how mortgage and protection insurance mix, the value of signposting and generally having a good old natter.  This is the Practical Protection podcast.

Kathryn:       So hi everybody, well hi both of you.  You know, how has your weekends been?

Andrew:       It’s been – well it’s been a fun lockdown weekend obviously.  I haven’t been out partying.  We didn’t go out and have a romantic Valentine’s Day meal.  It was just [laughs] a normal day in lockdown paradise.  Actually, do you know what I did Valentine’s Day?  I put up some blinds for my son.

Kathryn:       Aw.

Andrew:       And a shelf.  Not by myself I hasten to add.  I had help from my wife who is much more practical than me.

Kathryn:       Well I think that’s good.  It’s a Valentine’s Day activity together, you know, sort of like you’re doing something, there’s a goal, brilliant.  And how was your weekend been, Roy?

Roy:            Yeah, no, good.  It was good to see England finally win a game at rugby and my football team won as well so a sporting tick tick.

Kathryn:       Who’s your football team?

Roy:            Arsenal.

Kathryn:       Arsenal, okay.

Roy:            So we’d better not get into that because –

Andrew:       No, better not.

Roy:            This young man supports a slightly better team.

Andrew:       Well – ooh, not sure at the moment.  Liverpool but anyway.

Kathryn:       Yeah well we’ll move on from the football side of things, yeah, ‘cos I have no knowledge of football so that’s good.  So I’m really excited about doing this because we – well I certainly don’t do mortgages so I’m going to find it really interesting to have a chat.  I mean I’ve obviously had my own mortgage, I do understand how mortgages work to a certain extent but obviously clearly not from an adviser’s point of view or anything.  I think it would be a good idea for us to sort of give like everybody – ‘cos I know that usually a lot of people that are listening from the protection space, but there’s possibly going to be some people from the mortgage space listening in on this, so it’s probably a good idea to give us – everybody a bit of a rundown about ourselves so very, very quickly, I’m a protection adviser, I advise on personal, group and business insurances which is life insurance, critical illness cover, income protection in the UK and internationally.  So Andrew, can you do sort of like a similar kind of like little snippet of yourself please?

Andrew:       Yeah, little snippet.  So yes, I’m a mortgage broker at heart basically, always have been, so I’ve been doing that 26 years so our job is basically to help people along their home-buying journey and we look after first-time buyers, re-mortgages, buy to let, many time movers, anyone really.

Kathryn:       Brilliant, and Roy.  Just give your rundown please?

Roy:            I’m probably more of a general IFA.  We do lots of protection but also we are wealth managers and we do lots of corporate advice.  I used to do mortgages a long, long time ago but for reasons we’ll come onto, decided to use a third party for them.

Kathryn:       Yeah, I think that’s probably quite a standard thing really, isn’t it?  I’m seeing this more and more in many ways that, you know, we’ll all sort of like start off in a bit of a space and then we kind of specialise or move into other areas and different things.  So I think it’s probably a good way to sort of like start off then ‘cos I know that obviously you have very, very significant involvement with AMI, Andrew, and there was some research recently I think that showed that – ‘cos we’re talking about how mortgages and protection mix and I think, you know, they are very, very intertwined in many ways and in that report it showed that there was a lot of mortgage brokers that sort of like think that they are talking about protection but then when they actually were then speaking to a client, they couldn’t really remember those discussions happening.  I suppose it would be really interesting to hear from a mortgage broker kind of how that discussion of protection kind of comes in or, you know, with how busy everybody is, is it something that’s maybe just not being – people just aren’t able to give the kind of time to it?

Andrew:       It’s really interesting.  It’s something we’ve debated ever since I’ve been a mortgage broker really and I used to do both and I’m passionate about protection and life insurance and all of that but I just found that it became really difficult to be a mortgage expert and an expert in protection and everything else as well.  So I thought actually, it’s much better for my clients if I signpost it correctly and make sure I pass it on to a protection specialist.  It’s really interesting to see this – so the AMI viewpoint, the new protection challenge is really interesting and it did – the research was 5,000 UK adults so it’s a really big piece of research that we undertook and it was really interesting that it came out that 97% of advisers reckoned they spoke about protection in the mortgage process but only 36% of customers remember it being mentioned.

So there’s a massive disconnect there immediately and it’s trying to get over that barrier, making sure that your processes are absolutely spot on, that you are talking about it and different people have different approaches.  I like to approach it that I refer it to a specialist.  Others like to do it – the most successful ones I’ve seen actually – one of the first things they talk about is protection.  They do say, “Look I’m not here just to talk about your mortgage and getting a new home, I’m here to talk about how I’m going to keep you in your new home and protect you.”  And that’s one of the very, very first things that they talk about and they make sure that’s embedded into the process.

I think the reality of the issue is, especially when you’re a busy mortgage broker, mortgages are really not complex but hard in terms of paperwork, especially when you’re busy, when you’ve got people calling you up, you’ve got lots of enquiries coming in.  The most important thing for that client immediately coming into you is they just want that property.  They want that home, they want to start building their dreams and move.  That’s what they’re focused on and for a broker sometimes it’s really hard to take a step back and slow down the person who just wants to buy the property and actually really, really get into a proper explanation of protection and how it works and why you should have it.  So it’s about really getting the process right and I would suspect that a lot of – I do believe that probably 90% – 97% of advisers are talking about it but it’s just a passing mention rather than something that’s embedded deep into their process and that’s the point that we need to get to.

Kathryn:       I think it’s really –

Roy:            But it sounds like –

Kathryn:       Sorry, go on Roy.

Roy:            Sorry, I was going to say Monty, it sounds like the positioning is imperative here as in we’re in the process of advice, you know, there was I guess a charge that was always thrown at particular industries was that if you had a 35-page fact find and bottom of page 35 was, ‘Have you got any insurances?’  By the time you got there, a) you were knackered and b) the position was –

Andrew:       Yeah, absolutely.

Roy:            It didn’t have that importance.  Is it as simple as that sometimes in bringing it, you know, sort of further up, you know, the checklist effectively?

Andrew:       Personally, I think so.  I think it’s in – as I say, it’s in an explanation of what I am going to do.  So when you first sit down with the adviser it’s, “This is why you are sitting in front of me.  I’m not just here for the mortgage.  I’m here for everything else as well.”  And making that clear up front is probably the simplest change which actually would probably bring up that figure of 36%.

Kathryn:       I think it’s sort of like – it kind of mirrors in some ways I think a little bit in sort of like the process, as you say, it’s really, really pivotal in the process where it’s positioned because, you know, we can have it especially in the protection space where somebody comes to you because they want life insurance and, you know, they want the life insurance for the mortgage which obviously generally absolutely fine but then you as an adviser will be seeing that they actually probably really need income protection as well and it’s just then a matter of making sure that you bring that kind of conversation and how you position it kind of straight away and I know one of the ways that I kind of train our team is to sort of say, “Right, if somebody comes to you for life insurance, that’s fantastic, support them, but if you are already identifying that they need something like the income protection in the very beginning of that conversation, you know, probably saying to them, “Right, well you’ve come for life insurance, brilliant, I can do that for you but I have also identified this and I will be giving you options for that.”  Just so that it’s – straight away it’s in there and it’s a case of not kind of like really asking permission to put in front of them and not obviously being forceful in the sense of, “You must have this if you’re having life insurance,” but just to say, “I am the adviser, this is what I need to do to make sure that you are fully protected and here is what everything is and then it’s your choice in a sense as to what you want to do.”  So I think, you know, the idea of you said it being how it’s framed at the beginning is really spot-on.

Andrew:       Yeah, absolutely and the other thing that came out from the AMI research was talking about income insurance, is less than a third of UK adults can correctly identify what income insurance is.

Kathryn:       Well it’s confusing.

Andrew:       So that’s an education piece, yeah, it is confusing and that’s an education piece and the other thing is a trust issue which is quite concerning so over half of consumers don’t believe the protection claims stats and that’s something we as an industry have to get that message out better.

Kathryn:       Absolutely.

Roy:            On that subject Monty, do you think part of the problem actually isn’t necessarily the consumers, sometimes it’s the adviser weirdly?  What I mean by that is, if the adviser’s sitting there, particularly a mortgage adviser or wealth adviser and they don’t believe the claim stats, they’re almost not going, you know, they’re almost not starting that conversation because there is that worry that, “I’m actually going to talk about a product that I don’t believe is going to pay out,” so do we need to take almost a step backwards here and educate the advisory community first of all that claims do get paid out?

Andrew:       Yeah, I totally think that.  I think most advisers now, they do understand it, they do get it but it’s not something they talk about.  I just think there’s an assumption.  I think there are too many assumptions with protection along the process.  Some advisers are busy and just give it a cursory mention, some will go into it with a bit of detail and assume that there’s a level of knowledge and the ones that really do it well will go into detail.  I think we all have to take a share of responsibility and without getting on my soapbox, I think the protection companies themselves need to take a long, hard look at what they are doing, how they are marketing these products and the type of products that they are offering and I think there needs to be some fundamental changes in the way that the products are sold and marketed and are constructed in order to improve the understanding and the sales of these types of products.

Roy:            Have you got an example of where that might be the case in particular?

Andrew:       [laughs] No.

Roy:            It’s alright, I’ve put you on the spot there.

Andrew:       I’d have to think about that.

Roy:            No, but as in – is part of it just that mortgage brokers sometimes are ignored maybe by some of the protection houses?

Andrew:       Yeah, I think so.  I think there’s been a level of arrogance from some of the protection houses in that, you know, “This is what we do, we know what we’re doing, this is it,” and I haven’t really seen – apart from – there are some recent changes in things like Vitality etcetera, but the way that these products are advertised and marketed, they’re very – a lot of them still rely on things like the widow’s story and that type of thing and I just think we need to have to change the way that these things are done and we need to connect with a whole different brand of consumers now who want something different, need to understand something different.  You know, maybe it’s focusing on the mental health side of things, what are the products doing for that kind of thing?  So it’s something that we, you know, we at AMI have actually got a steering group around protection to investigate all of these things which has been really good and there’s some really good ideas coming out of it in terms of how we can make sure that when we next do a survey like this, the figures are drastically different.

Kathryn:       It’s interesting I think as well, like you were saying there about the mental health side of things because obviously I really work in that space and like you say, you know, trying to understand it and all the different things.  I think what’s amazing is as you say like, you know, critical illness cover, income protection, there are so many options now and, you know, with critical illness cover you don’t just get, you know, kind of critical illness cover any more.  There’s core and there’s enhanced then there’s children’s cover – not children’s cover and there’s like the extra bits in it as well and with income protection, you’ve got such a difference as to what’s available based upon, you know, sort of like – I’d say more the mainstream insurers and the mutuals and how sometimes especially with the mutuals you can potentially tweak things and again there’s so many policies within each of those kind of insurers as to what’s happening, what’s going on that it’s absolutely amazing and it’s offering so much option but to be able to do and to know all of those areas and routes on top of all the knowledge and everything as well that’s needed for the mortgage side of things, you know, it’s quite a hefty ask really of advisers to be able to really do it all at the same time.

Andrew:       Yeah, absolutely and what we’ve done at Coreco is we split it out so we’ve got a protection-only broker and probably about seven or eight of our guys and girls will do both but they’re people who have proven that they do it time and time again.  Otherwise if you’re not doing protection regularly, it’s really hard to keep up to date with everything and actually I’d argue if you’re not advising on protection and your clients are taking out policies every month then you’re not really doing the job properly.  So actually we say that, you know, we’ll take a licence away from someone and make sure that they refer their clients to a protection specialist.

Roy:            On the income protection specifically, if I may, we did some training with some mortgage brokers a few years ago and one of the situations that used to come up quite a lot is, we would say to people, “Why are you not doing as much income protection?” and immediately sometimes a response would come back that, “Oh most of our clients are covered by their workplace.”  Now an interesting experiment here is to go and ask the broker to go and check that fact and there are numerous anecdotes where they actually went off at half time and came back and sort of said, “Ooh, I’ve checked it and actually they don’t have what I thought they did.”  The point being, do you think sometimes we – and we all do this – assume that people might have cover that they don’t actually have?

Andrew:       Yeah, absolutely and we get that all the time and it’s something I’m guilty of in the past of saying, you know, it’s really hard especially working in London because when you’re dealing with someone from one of the big investment banks, they have excellent coverage but they don’t necessarily have that part because they’re flexible benefits.  They might choose this, that and the other and you just assume they’ve got everything and it is just so dangerous to assume and that’s a problem.  There’s too many assumptions being made so you do actually have to ask the question and dig that little bit deeper which some people just don’t like having that type of conversation and I certainly got to the point where actually, do you know what, I didn’t particularly enjoy having the conversation of asking the real personal health questions and so actually I just thought it was better to leave that to a specialist.

Roy:            Yeah.

Kathryn:       I think it’s really important though, you were saying as well that, you know, obviously you didn’t necessarily feel comfortable asking the questions but also, you know, we look at these stats and everything but, you know, it could be that a lot of people have turned around and said, “I don’t want to look at this and I don’t want to do this,” and, you know, we can’t just assume that the advisers aren’t doing the job.  You know, obviously when you look at the stats –

Andrew:       Absolutely, yeah.

Kathryn:       It does seem as if maybe more than not are maybe not looking at it but, you know, there are going to be plenty of people – as I say like, you know, we have it at times as well, as I say using that life insurance and IP example I did before where, you know, we can give people an option but, you know, if somebody doesn’t want to have it then you can’t force them to have it and you can talk until you’re blue in the face sometimes about, you know, how important it is for somebody to have something but ultimately it does come down to where – for some people as well where their priorities are because when we are talking about some protection policies, depending upon health and different things like that, the pricing can get pretty high and, you know, ultimately if people can’t afford it, no matter how much they need it, then they’re going to turn and look elsewhere or just ignore it.

Andrew:       Yeah, and that’s where the skill of the adviser – there’s an old adage that gets some people angry where it’s, you know, a mortgage is a need basically.  No one wants a mortgage, they want the home but the mortgage is a need so that’s – you’re not really selling a mortgage but the protection side needs to be sold and a lot of people don’t like that ‘cos protection shouldn’t be sold it should be the same thing.  But yeah, we definitely get that and especially being in London, it’s an excuse I guess that we’ve fallen back on quite a bit where actually the person that, you know, thinks they’ve got their protection from work, they think they’re indestructible generally and they’re just enjoying life and actually why do they need this and they don’t need the extra cost because they just want to make sure that they can afford the mortgage and they’ll discuss that later down the line.  But that’s where the skills of the adviser come in to actually carefully point out that you do need this kind of thing.

Roy:            Fascinating you should mention the word indestructible.  I think lots of commentators are saying one of the lessons we’ve learned from this dreadful crisis is that the indestructibility that we all think or feel that we have has been brought, you know, sharply home.

Andrew:       Absolutely, yeah.

Roy:            And maybe, you know, one hastens to call it an opportunity but there is one out of all this horrible mess to maybe talk to people about, you know, let’s face it, the greatest objection to protection was always, “This won’t happen to me,” and unfortunately I don’t think there’s anybody listening in to this who hasn’t been touched by this in some way.  Do you think this is something we should focus on more going forward?

Andrew:       I think it’s about focusing about, you know, about real life and the realities of the situation.  I was always passionate about it because both my parents sadly died of cancer so it’s – it was something you can talk about personally and understand the value of it and actually if – I saw that actually my Dad years ago didn’t have cover on my Mum and actually all her cancer treatment – just all the savings went on that.  So that was something that really stuck with me actually, you know, for a few quid, to have that protection is incredible.  So it’s – yeah, using personal stories is obviously really good and helps and yeah, advisers – it’s just training and skills and we’re lucky that actually we’re part of Mortgage Advice Bureau and they do fantastic – they’re really passionate about protection, they’ve got some fantastic courses around that but until that, I didn’t see many – we used to, in the old days have loads of good training about spin and disturbance and that type of thing so yes we’ve moved on from that but I don’t see too much of that type of training coming through where mortgage brokers are concerned.  Some firms are better than others but a lot of them, they get into a rut where actually, “I just do mortgages and that’s paying the bills and that’s what I’m going to do.”

Roy:            So part of this solution, Monty, is something that you and I have been talking about for years.  I mean obviously it has been going on signposting but, you know, it’s been a bit under the carpet a little bit, you know, because you and I know some very good examples including your good selves and people who effectively have always signposted but generally the mortgage industry and the protection industry don’t talk as much as they should.  We now have an opportunity where signposting has suddenly become very prevalent.  Do you think there’s a sort of a seize the day moment where the two industries should come together because to your point, there are some mortgage brokers who quite understandably just say, “Look, I’m either too busy to do this or I haven’t got the skillset or I haven’t got the time,” should we be bringing the two industries together more?

Andrew:       Yeah, absolutely.  I’m a big believer in collaboration and working together and that’s something that’s really enthused me probably over the past 12, 18 months.  It has got a lot better and a lot of – there are a lot of really good companies out there doing some really good things, trying to put the two things together really well and yet now it’s definitely an opportunity coming out of – using everything we’ve learned over the past 12 months, it’s definitely an opportunity to work together more, to really bring the two industries together in a really meaningful way, not just for us but something that actually really means something to the consumers and the clients that we’re talking to.

Roy:            I think the other point to be made here, particularly to any mortgage brokers that are listening in, is that this signposting works both ways.  I mean, we’re a very good example.  We, you know, offload our mortgages to a third party and I think it’s not just about mortgage brokers doing protection, it’s about protection brokers doing mortgages and I think there’s plenty of protection brokers out there who would love to meet some mortgage brokers and say, “Here’s some mortgages for you guys to do as well,” so signposting is very important – that should point out goes both ways, works both ways, we’ve seen examples of where that happens.

Andrew:       Yeah.  It’s important to, you know, that we don’t just say that someone’s doing a crap job.  They’re not doing a crap job, they’re just – it’s just they have to embed everything into their process and yes you’re right, if I can refer some protection business to a protection specialist or, you know, we also have an IFA we refer to so if we identify some pensions or some investments and we’ll refer to that ‘cos that’s not an area that we have the expertise on or even if it’s later life lending, so equity release mortgages, that’s not something we do but we can refer that to a specialist and vice versa.  So we get referrals from some banks for example who can’t do a certain type of mortgage but they will refer it into us and the same with some IFAs who we’ll pass on some IFA business and they’ll pass us mortgages back.  That’s really important.  If you get that working really, really well, then why would a customer go elsewhere?  If you’re talking about keeping your customer long-term and turning them into clients and then advocates for you, if you can offer all that by just coming to you, whether you do the business or not, you’ve got a trusted pool of advisers who do different things, then that’s brilliant.  You’ll definitely keep that client for life.

Andrew:       The one-stop-shop.  It makes oodles of sense doesn’t it?  It’s interesting you also mentioned later life borrowing.  Again, people are – I’m sure you’ll have the stats, are buying houses much later and borrowings are going up much longer than ever before. Mortgages are going into peoples’ 60s and 70s.  When I first started, obviously most life insurances stopped when the person was probably 50 to 55 and our industry is very, very worried about the fact that maybe we’ve got that wrong to a certain extent.  What are the messages there from your side of the fence in terms of the need for protection probably being longer than was anticipated?

Andrew:       Yeah it is.  I’m a great example of that actually.  I took out [laughs] – I just looked at my policies the other day and they’re all running out next year, 2022, 2023 and I’m thinking, “Oh my god, I’ve got to review all of them,” and obviously I’m not a spring chicken anymore.  So I’ve got cost implications there so definitely it’s something that we have to look at and that has to frame part of the conversation because I think there’s a lot of people we might be advising on at that age who think they’ve got cover but actually haven’t checked when that cover expires and if you’re, you know, people are working longer, they want their mortgages for longer and yes, we’re seeing a lot of people borrowing into their 60s and even 70s so yes, it’s something that has to be reviewed at that time ‘cos I bet you I’ve got clients where actually they say they’ve got cover but if they checked them, they’d probably expire in three or four years.

Kathryn:       It’s a really hard one ‘cos you kind of feel like – and I know the answer is absolutely no, it couldn’t work that way but it kind of feels almost as if protection should be, you know, if someone’s going to be taking out like a later life lending of some sort that really protection there for the mortgage is kind of an essential, you know, it kind of almost feels like it shouldn’t be an option that it actually must be there but obviously we couldn’t do that because if somebody can’t afford the protection, that shouldn’t mean that they should have not be able to get their home based upon a potential fictional circumstance.  But that kind of leads on to another sort of like random bit of question that I have.  We sometimes get it – and I do know the answer, but I’m asking for obviously the listeners, so we’ve had it quite a few times where people have come to us and they’re really upset because they want to have – they’re wanting to get a mortgage, obviously they’ve found their dream home and they maybe have a health condition and the original adviser or the bank, you know, hasn’t been able to get them the protection insurance and they’ve been told that they can’t have the mortgage unless they have the life insurance in place.  So, can you help me to kind of dispel this myth hopefully once and for all and just say –

Andrew:       I can dispel that.

Kathryn:       Is having life insurance an actual requirement of a mortgage?

Andrew:       No.

Kathryn:       Thank you.

Andrew:       It’s not.  It used to be, a long time ago.

Kathryn:       Used to be.

Roy:            Yeah, when we first started out.

Andrew:       Yeah, yeah it did.  It used to be part of it.

Roy:            And it is in Ireland I hear.  It is in Ireland I believe as well isn’t it?

Andrew:       I don’t know.  I don’t know the answer to that.

Roy:            I think it is.

Andrew:       I think it might be.  But yes, you do not need life insurance in order to get a mortgage so anyone telling you otherwise is telling a little porky pie.

Kathryn:       I thought that you’d, you know, I was going to say, my instinct had always been that that was the case ‘cos, you know, I’d just never come across where that was actually but obviously not being a mortgage adviser, you know, you’re always careful but I think one of the things that, I mean I always say to people is straight away when they come to me, I just say, “Look, just don’t worry.”  I was like, “You don’t have to, you should, you know, you absolutely should in your circumstances but you don’t have to have it so don’t worry, you’re still going to –”  But then it’s really hard because obviously you’re then coming in as a second adviser.  They’ve just had the person who’s arranging their mortgage who they trust, hopefully, really trust or the bank or whatever and, you know, they’re saying to them that they have to have – or their interpretation at least of what’s being said to them is that they must have this and then you kind of – it then kind of makes us all kind of seem, you said the word before, like disconnected in a sense, you know, and again because it’s like, “Well hang on, why is that person telling me this but they’re not a specialist in mortgages so what do they know?”  And you’re kind of going backwards and forwards and stuff and luckily obviously people – no matter what, you’re just happy ‘cos you’re just like, “Well I’m just really happy because, you know, you do really need protection insurance so I’m going to help and let’s just, you know, let’s not dwell on this for too long.”  But it does make you wonder sometimes, you know, when you do hear that, you think, “Well who’s been telling somebody that?”

Andrew:       Yeah, and you don’t know if it’s for – I think probably because I like to believe the best in people, I think a lot of that is probably just in communication.

Kathryn:       Yeah.

Andrew:       But within that, there will be some where, do you know what, people have got sales figures and they make up all kinds of stuff just to flog something and that’s a problem and that’s what we have to stamp out because that in turn leads to, you know, another thing – one of the things that came out of the research was that a lot of people think people are selling insurances just because of the commission rather than a need and that shouldn’t be true.  It’s not about that, it’s about protecting people properly and giving good advice.  It’s not just doing it just for the sake of getting more commission.

Kathryn:       Absolutely.

Roy:            And on that subject Monty, it’s probably worth just helping us educate some of the protection listeners.  When someone is off long-term ill or has, you know, something horrible happen to them, I know some banks and building societies will have some leniency but, you know, in your experience, how far does that go?

Andrew:       Lenders have got an awful lot better at understanding.  You’ve seen someone like Nationwide who did something around people with cancer in terms of the help.  I’m pretty sure it was Nationwide and lenders have got a lot better at understanding individual circumstances.  What I would say to anyone is, if you think you’re going to have a problem, if you are going through an illness then don’t be afraid to talk to the lender about it.

Roy:            That’s actually very important that you should do that.

Andrew:       It’s really important.  Don’t stick your head in the sand.  Don’t think they’re not going to help.  Don’t think they’re going to take the mortgage away or anything like that or force you to sell the property.  They will be – there’s a lot of things they can do to help you through and as I say, some lenders have bespoke teams now that are trained to deal with this situation for various illnesses and really help out.  So it’s not like it was 20 years ago.  It’s a lot better placed and lenders have worked really hard on getting this right and they have a duty of care to help their customers just as much as we do.

Roy:            And that’s great to hear and actually the side point to that strangely is that it shows us that generation rent, which is an increasing amount of people in society, protection is just as important for them because they’re not going to get that understanding from private landlords generally are they?

Andrew:       No, generation rent is a whole different ballgame and yes, that’s what really worries me actually is the people who are renting, who have never had any advice on protection or don’t know anything about it.  At least in the mortgage process, you hope that it is spoken about in some stage but for the renters, they really are at risk there and that’s something that we – again as an industry, we have to get in to those people and help them and make them understand that you don’t just need these things if you have a mortgage, you need these things if you’ve got a home full stop, whether you’re renting or it’s yours personally.

Roy:            Correct and another forgotten part of society and at last estimate I saw is there are 800,000 of these – is buy-to-let mortgages.  Again traditionally, what 20 or 30 years ago, I think that what I was taught was, you know, “Don’t bother covering people with buy-to-let mortgages,” but I think the industry’s changed its view a bit on that protection-wise has it?

Andrew:       Yeah, I mean it goes with all the holistic planning that goes around all of these things if you’ve got a buy-to-let portfolio then you talk about tax, you talk about the mortgages and you talk about protection.  There are an awful lot more people who think, “Well actually, do you know what, if I need to sell the properties, I need to sell the properties, it’s not the end of the world,” but it depends what those properties are for you.  If those properties are being used as pension income in effect and you don’t have any other source of income then yes, I’d argue it’s really important to make sure they’re protected so – because if you have to sell those properties then there’s your pension income gone.

Roy:            Yeah, or intergenerational wealth.

Andrew:       Or intergenerational, yeah.

Roy:            A lot of clients will say to me, “Well I’ve earmarked this for, you know, son, daughter etcetera,” and obviously something happens to you, the building society come along and say, “Well, where’s the mortgage amount please?” and the son and daughter haven’t got that money to pay the mortgage off.

Andrew:       Yeah, that’s right.  So everything is connected and we should stop looking at it as, “You only need it for this type of mortgage or for that type of mortgage.”  It has to be a real holistic approach generally around everyone’s – protecting everyone’s lifestyle and protecting their wealth and protecting their family.

Kathryn:       I think sort of like another thing that comes from that though as well is the fact that, you know, we’re talking about home, we’re talking about renting but I think in many ways a lot of the time it’s unusual to find someone who doesn’t need some form of protection.  You know, life insurance isn’t necessarily needed for everyone but it’s usually – at least a little bit is a good idea for most people but there are times when it isn’t actually part of the recommendation and obviously they are very, very far in between but, you know, it does happen but, you know, income protection, you know, really anybody who’s working should be really looking at some form of income protection.  It’s been, again, quite rare not to think of having something like that.  Whether or not people want it or not is a different thing but I think, you know, it’s that kind of mindset, you know, where I think protection is something that should be there for most people and there are the opportunities there and it’s obviously – if people aren’t addressing it then it’s a lost opportunity for the person, it’s a lost opportunity for the adviser as well.

Andrew:       Absolutely and it is all the old things isn’t it?  You speak to someone and they’ve insured their car and they spend ages insuring their pets and they don’t insure themselves.

Kathryn:       Yeah.

Andrew:       And it’s really interesting and I can only think that’s a failure of – it’s a failure of the industry, certainly where income protection is concerned.  I’m passionate about protection.  What’s the one thing I haven’t got?  I haven’t got income protection.  That’s crazy.  Now we’re looking to redress that now but that is the most familiar thing and income protection sales are nowhere near what they should be which tells me two things; one is that we’re not explaining what it is properly enough and two, that the products aren’t fit for purpose in some way and that’s what we have to – going back to my earlier point, that’s what we have to address.  How can we make income protection something that people understand, they believe it’s going to pay out, it’s not overly expensive and people understand why they need it?  And that’s a challenge for all of us.

Roy:            That’s a great point on expense actually.  There’s some research that our industry has done as the perception of the average income protection cost versus reality.  The perception is that over £100 a month, the reality is that it’s £31 a month.  It’s £1 a day.  That’s the average premium.

Andrew:       Yeah.

Roy:            You know, and these are the messages we need to get out, correct?

Andrew:       Yeah, absolutely.  Absolutely.

Roy:            Do you think that it’s helped – rightly or wrongly, the Chancellor got this slightly wrong but he’s likened the furlough scheme to an income protection scheme?  Has that helped us that it’s been mentioned at the despatch box?

Andrew:       That’s a really good question, I hadn’t thought of that.  Hmm.  I think it probably has helped a little bit in terms of people understanding what income protection is and knowing that actually if I can’t work I’m getting some kind of income still so I think actually there’ll probably be a lot of advisers who might use that analogy of actually, “It’s like the furlough scheme.  Remember when you couldn’t work ‘cos you were furloughed and the Government guaranteed this?  Well if you can’t work because you’re not well, then this is effectively a furlough scheme.”  So actually I quite like – I’ve never really thought about it before but actually I quite like it.

Roy:            There’s your Monday morning analogy!  The press on the mortgage side and obviously I know some of the guys over there, you know, excellent press that you’ve got as we have our side, do you think that the mortgage press talks about protection enough though?  There’s another question.

Andrew:       No, but I think they’re getting better.  I really do, there’s some excellent events.  So we always used to have a Mortgage Senate once a year.  For a few years now that’s been the Mortgage and Protection Senate.  Again, with what we’re doing with AMI, we talk about mortgages and deal with the SCA and all the other things that come with home ownership but for the last couple of years we’ve really been talking about protection as well as part of that and that’s something that’s really important.  So I think there is a general sea change within the industry that we are starting to talk about it now and I’ve seen more and more articles around protection and around other services, not just mortgages and property but it’s quite difficult.

I find it, you know, I always write our monthly mailshots out to our clients and they might go out to 10,000 clients and every so often you’ll put a protection or insurance story in and what’s the one story that’s not clicked on?  It’s that and it’s really hard so how – I’ve always thought, how do you make protection and insurances sexy enough for people to want to read about it and to want to understand it and that’s something that – with my marketeer hat on, I haven’t cracked personally and that’s something we need to think about generally but I don’t know the answer to that.

Roy:            Do you think real life – I mean you’ve alluded to it earlier, do you think real life case studies are things that we should be telling more to your industry?

Andrew:       Yeah.  I like real life case studies.  I think there’s a way of doing it so it’s not just a tearjerker-type thing.  It’s more about seeing the benefits of it and there’s been a couple of good campaigns recently actually where they’ve focused on the benefits and what’s happened after and sort of, you know, the sad part about what’s gone before is not the central part, it’s about the happy part about, “Actually I had this and this is what it’s enabled me to do.  This is what it’s enabled our family to do,” and I think that’s where people like to focus.  I think that’s a good way forward of focusing on the real benefits of having that protection in place which I think is good and, you know, people – it’s the same with everything, people are generally empathetic and if you’ve got a good story to tell then tell it but it’s telling it in a way that’s useful and constructive rather than just a sales angle because I think people see through that straight away.

Kathryn:       Absolutely.

Roy:            I know that several mortgage brokers have used the recent 7Families campaign to that extent and my plea to any new mortgage brokers on this call would be to Google 7Families

Andrew:       Yeah, that’s really good.

Roy:            And use it.  There’s no intellectual property there guys, you can use the videos to your heart’s content but it’s a really good thing and actually it’s got some really sort of, you know, good messages for people with mortgages especially.

Andrew:       Absolutely.

Kathryn:       Well thank you obviously Andrew so much for coming on and chatting to us today.  It’s been really, really lovely to chat to you and hopefully listeners from both the protection and mortgage market and afar have picked up some ideas from us all.  I’m going to be back in two weeks chatting with Matt Rann about our next underwriting focus and Roy, you’re going to back in about a month’s time aren’t you I think – chatting through pensions and investments with Lee Robertson from Octo Members.

Roy:            Yes, absolutely.  It’s – thank you very much Monty, it was fascinating to hear the mortgage side of it so what we’re going to do next is look at the wealth management side and actually I think those two sides have parallels as well so that will be great.  So really looking forward to that.  Anyone can listen in to any of these episodes on www.practical-protection.co.uk and don’t forget if you’ve listened to this as part of your work, you can claim a CPD certificate which is very important for us all as well of course.  But Monty, thank you very much as always for your invaluable insights and I guess that the messages from today are, you know, signposting I think should work, we should definitely collaborate between, you know, the two industries more and maybe, you know, I did like your shout out to some of the insurance part of the industry to maybe address the communication side slightly more.

Andrew:       Thank you very much for having me.  I’ve really enjoyed that and –

Kathryn:       Thank you.

Andrew:       I shall listen to the rest of your podcasts with interest.

Kathryn:       Thank you.

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Protecting Your Mortgage

Hi everyone, on this episode Andrew Montlake of Coreco, is joining us to chat about mortgages. We are talking about the need to discuss protection insurance, when a mortgage is being arranged.

Andrew is the Chairman of the Association of Mortgage Intermediaries (AMI) and brings a very open mind over how mortgages and protection should mix. Amongst other things, we are discussing how the current explanation and marketing of protection products isn’t always the easiest for people to understand outside of this area, and how Rishi Sunak’s furlough scheme is akin to income protection and how we can use this as a positive example to explain the product.

The key takeaways:

  1. Statistics over how many clients believe that their mortgage broker has mentioned protection insurance.
  2. Some tips on when to bring the protection discussion into your advice process.
  3. The importance of signposting clients to protection advisers, if you are unable to spare time to do it yourself.

Next time, Matt Rann will be back hosting with me and we will be chatting about the latest underwriting risk, and what you can do to understand it and help your clients more.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website.

Kathryn:       Hi everyone, today we have Andrew Montlake with us, also known as Monty.  He is a mortgage adviser extraordinaire.  Hi Andrew!

Andrew:       Hi, thanks for having me.

Roy:            Hi Monty, how are you?

Andrew:       Not bad, I’m delighted to be here.

Roy:            Today, we are focusing on how mortgage and protection insurance mix, the value of signposting and generally having a good old natter.  This is the Practical Protection podcast.

Kathryn:       So hi everybody, well hi both of you.  You know, how has your weekends been?

Andrew:       It’s been – well it’s been a fun lockdown weekend obviously.  I haven’t been out partying.  We didn’t go out and have a romantic Valentine’s Day meal.  It was just [laughs] a normal day in lockdown paradise.  Actually, do you know what I did Valentine’s Day?  I put up some blinds for my son.

Kathryn:       Aw.

Andrew:       And a shelf.  Not by myself I hasten to add.  I had help from my wife who is much more practical than me.

Kathryn:       Well I think that’s good.  It’s a Valentine’s Day activity together, you know, sort of like you’re doing something, there’s a goal, brilliant.  And how was your weekend been, Roy?

Roy:            Yeah, no, good.  It was good to see England finally win a game at rugby and my football team won as well so a sporting tick tick.

Kathryn:       Who’s your football team?

Roy:            Arsenal.

Kathryn:       Arsenal, okay.

Roy:            So we’d better not get into that because –

Andrew:       No, better not.

Roy:            This young man supports a slightly better team.

Andrew:       Well – ooh, not sure at the moment.  Liverpool but anyway.

Kathryn:       Yeah well we’ll move on from the football side of things, yeah, ‘cos I have no knowledge of football so that’s good.  So I’m really excited about doing this because we – well I certainly don’t do mortgages so I’m going to find it really interesting to have a chat.  I mean I’ve obviously had my own mortgage, I do understand how mortgages work to a certain extent but obviously clearly not from an adviser’s point of view or anything.  I think it would be a good idea for us to sort of give like everybody – ‘cos I know that usually a lot of people that are listening from the protection space, but there’s possibly going to be some people from the mortgage space listening in on this, so it’s probably a good idea to give us – everybody a bit of a rundown about ourselves so very, very quickly, I’m a protection adviser, I advise on personal, group and business insurances which is life insurance, critical illness cover, income protection in the UK and internationally.  So Andrew, can you do sort of like a similar kind of like little snippet of yourself please?

Andrew:       Yeah, little snippet.  So yes, I’m a mortgage broker at heart basically, always have been, so I’ve been doing that 26 years so our job is basically to help people along their home-buying journey and we look after first-time buyers, re-mortgages, buy to let, many time movers, anyone really.

Kathryn:       Brilliant, and Roy.  Just give your rundown please?

Roy:            I’m probably more of a general IFA.  We do lots of protection but also we are wealth managers and we do lots of corporate advice.  I used to do mortgages a long, long time ago but for reasons we’ll come onto, decided to use a third party for them.

Kathryn:       Yeah, I think that’s probably quite a standard thing really, isn’t it?  I’m seeing this more and more in many ways that, you know, we’ll all sort of like start off in a bit of a space and then we kind of specialise or move into other areas and different things.  So I think it’s probably a good way to sort of like start off then ‘cos I know that obviously you have very, very significant involvement with AMI, Andrew, and there was some research recently I think that showed that – ‘cos we’re talking about how mortgages and protection mix and I think, you know, they are very, very intertwined in many ways and in that report it showed that there was a lot of mortgage brokers that sort of like think that they are talking about protection but then when they actually were then speaking to a client, they couldn’t really remember those discussions happening.  I suppose it would be really interesting to hear from a mortgage broker kind of how that discussion of protection kind of comes in or, you know, with how busy everybody is, is it something that’s maybe just not being – people just aren’t able to give the kind of time to it?

Andrew:       It’s really interesting.  It’s something we’ve debated ever since I’ve been a mortgage broker really and I used to do both and I’m passionate about protection and life insurance and all of that but I just found that it became really difficult to be a mortgage expert and an expert in protection and everything else as well.  So I thought actually, it’s much better for my clients if I signpost it correctly and make sure I pass it on to a protection specialist.  It’s really interesting to see this – so the AMI viewpoint, the new protection challenge is really interesting and it did – the research was 5,000 UK adults so it’s a really big piece of research that we undertook and it was really interesting that it came out that 97% of advisers reckoned they spoke about protection in the mortgage process but only 36% of customers remember it being mentioned.

So there’s a massive disconnect there immediately and it’s trying to get over that barrier, making sure that your processes are absolutely spot on, that you are talking about it and different people have different approaches.  I like to approach it that I refer it to a specialist.  Others like to do it – the most successful ones I’ve seen actually – one of the first things they talk about is protection.  They do say, “Look I’m not here just to talk about your mortgage and getting a new home, I’m here to talk about how I’m going to keep you in your new home and protect you.”  And that’s one of the very, very first things that they talk about and they make sure that’s embedded into the process.

I think the reality of the issue is, especially when you’re a busy mortgage broker, mortgages are really not complex but hard in terms of paperwork, especially when you’re busy, when you’ve got people calling you up, you’ve got lots of enquiries coming in.  The most important thing for that client immediately coming into you is they just want that property.  They want that home, they want to start building their dreams and move.  That’s what they’re focused on and for a broker sometimes it’s really hard to take a step back and slow down the person who just wants to buy the property and actually really, really get into a proper explanation of protection and how it works and why you should have it.  So it’s about really getting the process right and I would suspect that a lot of – I do believe that probably 90% – 97% of advisers are talking about it but it’s just a passing mention rather than something that’s embedded deep into their process and that’s the point that we need to get to.

Kathryn:       I think it’s really –

Roy:            But it sounds like –

Kathryn:       Sorry, go on Roy.

Roy:            Sorry, I was going to say Monty, it sounds like the positioning is imperative here as in we’re in the process of advice, you know, there was I guess a charge that was always thrown at particular industries was that if you had a 35-page fact find and bottom of page 35 was, ‘Have you got any insurances?’  By the time you got there, a) you were knackered and b) the position was –

Andrew:       Yeah, absolutely.

Roy:            It didn’t have that importance.  Is it as simple as that sometimes in bringing it, you know, sort of further up, you know, the checklist effectively?

Andrew:       Personally, I think so.  I think it’s in – as I say, it’s in an explanation of what I am going to do.  So when you first sit down with the adviser it’s, “This is why you are sitting in front of me.  I’m not just here for the mortgage.  I’m here for everything else as well.”  And making that clear up front is probably the simplest change which actually would probably bring up that figure of 36%.

Kathryn:       I think it’s sort of like – it kind of mirrors in some ways I think a little bit in sort of like the process, as you say, it’s really, really pivotal in the process where it’s positioned because, you know, we can have it especially in the protection space where somebody comes to you because they want life insurance and, you know, they want the life insurance for the mortgage which obviously generally absolutely fine but then you as an adviser will be seeing that they actually probably really need income protection as well and it’s just then a matter of making sure that you bring that kind of conversation and how you position it kind of straight away and I know one of the ways that I kind of train our team is to sort of say, “Right, if somebody comes to you for life insurance, that’s fantastic, support them, but if you are already identifying that they need something like the income protection in the very beginning of that conversation, you know, probably saying to them, “Right, well you’ve come for life insurance, brilliant, I can do that for you but I have also identified this and I will be giving you options for that.”  Just so that it’s – straight away it’s in there and it’s a case of not kind of like really asking permission to put in front of them and not obviously being forceful in the sense of, “You must have this if you’re having life insurance,” but just to say, “I am the adviser, this is what I need to do to make sure that you are fully protected and here is what everything is and then it’s your choice in a sense as to what you want to do.”  So I think, you know, the idea of you said it being how it’s framed at the beginning is really spot-on.

Andrew:       Yeah, absolutely and the other thing that came out from the AMI research was talking about income insurance, is less than a third of UK adults can correctly identify what income insurance is.

Kathryn:       Well it’s confusing.

Andrew:       So that’s an education piece, yeah, it is confusing and that’s an education piece and the other thing is a trust issue which is quite concerning so over half of consumers don’t believe the protection claims stats and that’s something we as an industry have to get that message out better.

Kathryn:       Absolutely.

Roy:            On that subject Monty, do you think part of the problem actually isn’t necessarily the consumers, sometimes it’s the adviser weirdly?  What I mean by that is, if the adviser’s sitting there, particularly a mortgage adviser or wealth adviser and they don’t believe the claim stats, they’re almost not going, you know, they’re almost not starting that conversation because there is that worry that, “I’m actually going to talk about a product that I don’t believe is going to pay out,” so do we need to take almost a step backwards here and educate the advisory community first of all that claims do get paid out?

Andrew:       Yeah, I totally think that.  I think most advisers now, they do understand it, they do get it but it’s not something they talk about.  I just think there’s an assumption.  I think there are too many assumptions with protection along the process.  Some advisers are busy and just give it a cursory mention, some will go into it with a bit of detail and assume that there’s a level of knowledge and the ones that really do it well will go into detail.  I think we all have to take a share of responsibility and without getting on my soapbox, I think the protection companies themselves need to take a long, hard look at what they are doing, how they are marketing these products and the type of products that they are offering and I think there needs to be some fundamental changes in the way that the products are sold and marketed and are constructed in order to improve the understanding and the sales of these types of products.

Roy:            Have you got an example of where that might be the case in particular?

Andrew:       [laughs] No.

Roy:            It’s alright, I’ve put you on the spot there.

Andrew:       I’d have to think about that.

Roy:            No, but as in – is part of it just that mortgage brokers sometimes are ignored maybe by some of the protection houses?

Andrew:       Yeah, I think so.  I think there’s been a level of arrogance from some of the protection houses in that, you know, “This is what we do, we know what we’re doing, this is it,” and I haven’t really seen – apart from – there are some recent changes in things like Vitality etcetera, but the way that these products are advertised and marketed, they’re very – a lot of them still rely on things like the widow’s story and that type of thing and I just think we need to have to change the way that these things are done and we need to connect with a whole different brand of consumers now who want something different, need to understand something different.  You know, maybe it’s focusing on the mental health side of things, what are the products doing for that kind of thing?  So it’s something that we, you know, we at AMI have actually got a steering group around protection to investigate all of these things which has been really good and there’s some really good ideas coming out of it in terms of how we can make sure that when we next do a survey like this, the figures are drastically different.

Kathryn:       It’s interesting I think as well, like you were saying there about the mental health side of things because obviously I really work in that space and like you say, you know, trying to understand it and all the different things.  I think what’s amazing is as you say like, you know, critical illness cover, income protection, there are so many options now and, you know, with critical illness cover you don’t just get, you know, kind of critical illness cover any more.  There’s core and there’s enhanced then there’s children’s cover – not children’s cover and there’s like the extra bits in it as well and with income protection, you’ve got such a difference as to what’s available based upon, you know, sort of like – I’d say more the mainstream insurers and the mutuals and how sometimes especially with the mutuals you can potentially tweak things and again there’s so many policies within each of those kind of insurers as to what’s happening, what’s going on that it’s absolutely amazing and it’s offering so much option but to be able to do and to know all of those areas and routes on top of all the knowledge and everything as well that’s needed for the mortgage side of things, you know, it’s quite a hefty ask really of advisers to be able to really do it all at the same time.

Andrew:       Yeah, absolutely and what we’ve done at Coreco is we split it out so we’ve got a protection-only broker and probably about seven or eight of our guys and girls will do both but they’re people who have proven that they do it time and time again.  Otherwise if you’re not doing protection regularly, it’s really hard to keep up to date with everything and actually I’d argue if you’re not advising on protection and your clients are taking out policies every month then you’re not really doing the job properly.  So actually we say that, you know, we’ll take a licence away from someone and make sure that they refer their clients to a protection specialist.

Roy:            On the income protection specifically, if I may, we did some training with some mortgage brokers a few years ago and one of the situations that used to come up quite a lot is, we would say to people, “Why are you not doing as much income protection?” and immediately sometimes a response would come back that, “Oh most of our clients are covered by their workplace.”  Now an interesting experiment here is to go and ask the broker to go and check that fact and there are numerous anecdotes where they actually went off at half time and came back and sort of said, “Ooh, I’ve checked it and actually they don’t have what I thought they did.”  The point being, do you think sometimes we – and we all do this – assume that people might have cover that they don’t actually have?

Andrew:       Yeah, absolutely and we get that all the time and it’s something I’m guilty of in the past of saying, you know, it’s really hard especially working in London because when you’re dealing with someone from one of the big investment banks, they have excellent coverage but they don’t necessarily have that part because they’re flexible benefits.  They might choose this, that and the other and you just assume they’ve got everything and it is just so dangerous to assume and that’s a problem.  There’s too many assumptions being made so you do actually have to ask the question and dig that little bit deeper which some people just don’t like having that type of conversation and I certainly got to the point where actually, do you know what, I didn’t particularly enjoy having the conversation of asking the real personal health questions and so actually I just thought it was better to leave that to a specialist.

Roy:            Yeah.

Kathryn:       I think it’s really important though, you were saying as well that, you know, obviously you didn’t necessarily feel comfortable asking the questions but also, you know, we look at these stats and everything but, you know, it could be that a lot of people have turned around and said, “I don’t want to look at this and I don’t want to do this,” and, you know, we can’t just assume that the advisers aren’t doing the job.  You know, obviously when you look at the stats –

Andrew:       Absolutely, yeah.

Kathryn:       It does seem as if maybe more than not are maybe not looking at it but, you know, there are going to be plenty of people – as I say like, you know, we have it at times as well, as I say using that life insurance and IP example I did before where, you know, we can give people an option but, you know, if somebody doesn’t want to have it then you can’t force them to have it and you can talk until you’re blue in the face sometimes about, you know, how important it is for somebody to have something but ultimately it does come down to where – for some people as well where their priorities are because when we are talking about some protection policies, depending upon health and different things like that, the pricing can get pretty high and, you know, ultimately if people can’t afford it, no matter how much they need it, then they’re going to turn and look elsewhere or just ignore it.

Andrew:       Yeah, and that’s where the skill of the adviser – there’s an old adage that gets some people angry where it’s, you know, a mortgage is a need basically.  No one wants a mortgage, they want the home but the mortgage is a need so that’s – you’re not really selling a mortgage but the protection side needs to be sold and a lot of people don’t like that ‘cos protection shouldn’t be sold it should be the same thing.  But yeah, we definitely get that and especially being in London, it’s an excuse I guess that we’ve fallen back on quite a bit where actually the person that, you know, thinks they’ve got their protection from work, they think they’re indestructible generally and they’re just enjoying life and actually why do they need this and they don’t need the extra cost because they just want to make sure that they can afford the mortgage and they’ll discuss that later down the line.  But that’s where the skills of the adviser come in to actually carefully point out that you do need this kind of thing.

Roy:            Fascinating you should mention the word indestructible.  I think lots of commentators are saying one of the lessons we’ve learned from this dreadful crisis is that the indestructibility that we all think or feel that we have has been brought, you know, sharply home.

Andrew:       Absolutely, yeah.

Roy:            And maybe, you know, one hastens to call it an opportunity but there is one out of all this horrible mess to maybe talk to people about, you know, let’s face it, the greatest objection to protection was always, “This won’t happen to me,” and unfortunately I don’t think there’s anybody listening in to this who hasn’t been touched by this in some way.  Do you think this is something we should focus on more going forward?

Andrew:       I think it’s about focusing about, you know, about real life and the realities of the situation.  I was always passionate about it because both my parents sadly died of cancer so it’s – it was something you can talk about personally and understand the value of it and actually if – I saw that actually my Dad years ago didn’t have cover on my Mum and actually all her cancer treatment – just all the savings went on that.  So that was something that really stuck with me actually, you know, for a few quid, to have that protection is incredible.  So it’s – yeah, using personal stories is obviously really good and helps and yeah, advisers – it’s just training and skills and we’re lucky that actually we’re part of Mortgage Advice Bureau and they do fantastic – they’re really passionate about protection, they’ve got some fantastic courses around that but until that, I didn’t see many – we used to, in the old days have loads of good training about spin and disturbance and that type of thing so yes we’ve moved on from that but I don’t see too much of that type of training coming through where mortgage brokers are concerned.  Some firms are better than others but a lot of them, they get into a rut where actually, “I just do mortgages and that’s paying the bills and that’s what I’m going to do.”

Roy:            So part of this solution, Monty, is something that you and I have been talking about for years.  I mean obviously it has been going on signposting but, you know, it’s been a bit under the carpet a little bit, you know, because you and I know some very good examples including your good selves and people who effectively have always signposted but generally the mortgage industry and the protection industry don’t talk as much as they should.  We now have an opportunity where signposting has suddenly become very prevalent.  Do you think there’s a sort of a seize the day moment where the two industries should come together because to your point, there are some mortgage brokers who quite understandably just say, “Look, I’m either too busy to do this or I haven’t got the skillset or I haven’t got the time,” should we be bringing the two industries together more?

Andrew:       Yeah, absolutely.  I’m a big believer in collaboration and working together and that’s something that’s really enthused me probably over the past 12, 18 months.  It has got a lot better and a lot of – there are a lot of really good companies out there doing some really good things, trying to put the two things together really well and yet now it’s definitely an opportunity coming out of – using everything we’ve learned over the past 12 months, it’s definitely an opportunity to work together more, to really bring the two industries together in a really meaningful way, not just for us but something that actually really means something to the consumers and the clients that we’re talking to.

Roy:            I think the other point to be made here, particularly to any mortgage brokers that are listening in, is that this signposting works both ways.  I mean, we’re a very good example.  We, you know, offload our mortgages to a third party and I think it’s not just about mortgage brokers doing protection, it’s about protection brokers doing mortgages and I think there’s plenty of protection brokers out there who would love to meet some mortgage brokers and say, “Here’s some mortgages for you guys to do as well,” so signposting is very important – that should point out goes both ways, works both ways, we’ve seen examples of where that happens.

Andrew:       Yeah.  It’s important to, you know, that we don’t just say that someone’s doing a crap job.  They’re not doing a crap job, they’re just – it’s just they have to embed everything into their process and yes you’re right, if I can refer some protection business to a protection specialist or, you know, we also have an IFA we refer to so if we identify some pensions or some investments and we’ll refer to that ‘cos that’s not an area that we have the expertise on or even if it’s later life lending, so equity release mortgages, that’s not something we do but we can refer that to a specialist and vice versa.  So we get referrals from some banks for example who can’t do a certain type of mortgage but they will refer it into us and the same with some IFAs who we’ll pass on some IFA business and they’ll pass us mortgages back.  That’s really important.  If you get that working really, really well, then why would a customer go elsewhere?  If you’re talking about keeping your customer long-term and turning them into clients and then advocates for you, if you can offer all that by just coming to you, whether you do the business or not, you’ve got a trusted pool of advisers who do different things, then that’s brilliant.  You’ll definitely keep that client for life.

Andrew:       The one-stop-shop.  It makes oodles of sense doesn’t it?  It’s interesting you also mentioned later life borrowing.  Again, people are – I’m sure you’ll have the stats, are buying houses much later and borrowings are going up much longer than ever before. Mortgages are going into peoples’ 60s and 70s.  When I first started, obviously most life insurances stopped when the person was probably 50 to 55 and our industry is very, very worried about the fact that maybe we’ve got that wrong to a certain extent.  What are the messages there from your side of the fence in terms of the need for protection probably being longer than was anticipated?

Andrew:       Yeah it is.  I’m a great example of that actually.  I took out [laughs] – I just looked at my policies the other day and they’re all running out next year, 2022, 2023 and I’m thinking, “Oh my god, I’ve got to review all of them,” and obviously I’m not a spring chicken anymore.  So I’ve got cost implications there so definitely it’s something that we have to look at and that has to frame part of the conversation because I think there’s a lot of people we might be advising on at that age who think they’ve got cover but actually haven’t checked when that cover expires and if you’re, you know, people are working longer, they want their mortgages for longer and yes, we’re seeing a lot of people borrowing into their 60s and even 70s so yes, it’s something that has to be reviewed at that time ‘cos I bet you I’ve got clients where actually they say they’ve got cover but if they checked them, they’d probably expire in three or four years.

Kathryn:       It’s a really hard one ‘cos you kind of feel like – and I know the answer is absolutely no, it couldn’t work that way but it kind of feels almost as if protection should be, you know, if someone’s going to be taking out like a later life lending of some sort that really protection there for the mortgage is kind of an essential, you know, it kind of almost feels like it shouldn’t be an option that it actually must be there but obviously we couldn’t do that because if somebody can’t afford the protection, that shouldn’t mean that they should have not be able to get their home based upon a potential fictional circumstance.  But that kind of leads on to another sort of like random bit of question that I have.  We sometimes get it – and I do know the answer, but I’m asking for obviously the listeners, so we’ve had it quite a few times where people have come to us and they’re really upset because they want to have – they’re wanting to get a mortgage, obviously they’ve found their dream home and they maybe have a health condition and the original adviser or the bank, you know, hasn’t been able to get them the protection insurance and they’ve been told that they can’t have the mortgage unless they have the life insurance in place.  So, can you help me to kind of dispel this myth hopefully once and for all and just say –

Andrew:       I can dispel that.

Kathryn:       Is having life insurance an actual requirement of a mortgage?

Andrew:       No.

Kathryn:       Thank you.

Andrew:       It’s not.  It used to be, a long time ago.

Kathryn:       Used to be.

Roy:            Yeah, when we first started out.

Andrew:       Yeah, yeah it did.  It used to be part of it.

Roy:            And it is in Ireland I hear.  It is in Ireland I believe as well isn’t it?

Andrew:       I don’t know.  I don’t know the answer to that.

Roy:            I think it is.

Andrew:       I think it might be.  But yes, you do not need life insurance in order to get a mortgage so anyone telling you otherwise is telling a little porky pie.

Kathryn:       I thought that you’d, you know, I was going to say, my instinct had always been that that was the case ‘cos, you know, I’d just never come across where that was actually but obviously not being a mortgage adviser, you know, you’re always careful but I think one of the things that, I mean I always say to people is straight away when they come to me, I just say, “Look, just don’t worry.”  I was like, “You don’t have to, you should, you know, you absolutely should in your circumstances but you don’t have to have it so don’t worry, you’re still going to –”  But then it’s really hard because obviously you’re then coming in as a second adviser.  They’ve just had the person who’s arranging their mortgage who they trust, hopefully, really trust or the bank or whatever and, you know, they’re saying to them that they have to have – or their interpretation at least of what’s being said to them is that they must have this and then you kind of – it then kind of makes us all kind of seem, you said the word before, like disconnected in a sense, you know, and again because it’s like, “Well hang on, why is that person telling me this but they’re not a specialist in mortgages so what do they know?”  And you’re kind of going backwards and forwards and stuff and luckily obviously people – no matter what, you’re just happy ‘cos you’re just like, “Well I’m just really happy because, you know, you do really need protection insurance so I’m going to help and let’s just, you know, let’s not dwell on this for too long.”  But it does make you wonder sometimes, you know, when you do hear that, you think, “Well who’s been telling somebody that?”

Andrew:       Yeah, and you don’t know if it’s for – I think probably because I like to believe the best in people, I think a lot of that is probably just in communication.

Kathryn:       Yeah.

Andrew:       But within that, there will be some where, do you know what, people have got sales figures and they make up all kinds of stuff just to flog something and that’s a problem and that’s what we have to stamp out because that in turn leads to, you know, another thing – one of the things that came out of the research was that a lot of people think people are selling insurances just because of the commission rather than a need and that shouldn’t be true.  It’s not about that, it’s about protecting people properly and giving good advice.  It’s not just doing it just for the sake of getting more commission.

Kathryn:       Absolutely.

Roy:            And on that subject Monty, it’s probably worth just helping us educate some of the protection listeners.  When someone is off long-term ill or has, you know, something horrible happen to them, I know some banks and building societies will have some leniency but, you know, in your experience, how far does that go?

Andrew:       Lenders have got an awful lot better at understanding.  You’ve seen someone like Nationwide who did something around people with cancer in terms of the help.  I’m pretty sure it was Nationwide and lenders have got a lot better at understanding individual circumstances.  What I would say to anyone is, if you think you’re going to have a problem, if you are going through an illness then don’t be afraid to talk to the lender about it.

Roy:            That’s actually very important that you should do that.

Andrew:       It’s really important.  Don’t stick your head in the sand.  Don’t think they’re not going to help.  Don’t think they’re going to take the mortgage away or anything like that or force you to sell the property.  They will be – there’s a lot of things they can do to help you through and as I say, some lenders have bespoke teams now that are trained to deal with this situation for various illnesses and really help out.  So it’s not like it was 20 years ago.  It’s a lot better placed and lenders have worked really hard on getting this right and they have a duty of care to help their customers just as much as we do.

Roy:            And that’s great to hear and actually the side point to that strangely is that it shows us that generation rent, which is an increasing amount of people in society, protection is just as important for them because they’re not going to get that understanding from private landlords generally are they?

Andrew:       No, generation rent is a whole different ballgame and yes, that’s what really worries me actually is the people who are renting, who have never had any advice on protection or don’t know anything about it.  At least in the mortgage process, you hope that it is spoken about in some stage but for the renters, they really are at risk there and that’s something that we – again as an industry, we have to get in to those people and help them and make them understand that you don’t just need these things if you have a mortgage, you need these things if you’ve got a home full stop, whether you’re renting or it’s yours personally.

Roy:            Correct and another forgotten part of society and at last estimate I saw is there are 800,000 of these – is buy-to-let mortgages.  Again traditionally, what 20 or 30 years ago, I think that what I was taught was, you know, “Don’t bother covering people with buy-to-let mortgages,” but I think the industry’s changed its view a bit on that protection-wise has it?

Andrew:       Yeah, I mean it goes with all the holistic planning that goes around all of these things if you’ve got a buy-to-let portfolio then you talk about tax, you talk about the mortgages and you talk about protection.  There are an awful lot more people who think, “Well actually, do you know what, if I need to sell the properties, I need to sell the properties, it’s not the end of the world,” but it depends what those properties are for you.  If those properties are being used as pension income in effect and you don’t have any other source of income then yes, I’d argue it’s really important to make sure they’re protected so – because if you have to sell those properties then there’s your pension income gone.

Roy:            Yeah, or intergenerational wealth.

Andrew:       Or intergenerational, yeah.

Roy:            A lot of clients will say to me, “Well I’ve earmarked this for, you know, son, daughter etcetera,” and obviously something happens to you, the building society come along and say, “Well, where’s the mortgage amount please?” and the son and daughter haven’t got that money to pay the mortgage off.

Andrew:       Yeah, that’s right.  So everything is connected and we should stop looking at it as, “You only need it for this type of mortgage or for that type of mortgage.”  It has to be a real holistic approach generally around everyone’s – protecting everyone’s lifestyle and protecting their wealth and protecting their family.

Kathryn:       I think sort of like another thing that comes from that though as well is the fact that, you know, we’re talking about home, we’re talking about renting but I think in many ways a lot of the time it’s unusual to find someone who doesn’t need some form of protection.  You know, life insurance isn’t necessarily needed for everyone but it’s usually – at least a little bit is a good idea for most people but there are times when it isn’t actually part of the recommendation and obviously they are very, very far in between but, you know, it does happen but, you know, income protection, you know, really anybody who’s working should be really looking at some form of income protection.  It’s been, again, quite rare not to think of having something like that.  Whether or not people want it or not is a different thing but I think, you know, it’s that kind of mindset, you know, where I think protection is something that should be there for most people and there are the opportunities there and it’s obviously – if people aren’t addressing it then it’s a lost opportunity for the person, it’s a lost opportunity for the adviser as well.

Andrew:       Absolutely and it is all the old things isn’t it?  You speak to someone and they’ve insured their car and they spend ages insuring their pets and they don’t insure themselves.

Kathryn:       Yeah.

Andrew:       And it’s really interesting and I can only think that’s a failure of – it’s a failure of the industry, certainly where income protection is concerned.  I’m passionate about protection.  What’s the one thing I haven’t got?  I haven’t got income protection.  That’s crazy.  Now we’re looking to redress that now but that is the most familiar thing and income protection sales are nowhere near what they should be which tells me two things; one is that we’re not explaining what it is properly enough and two, that the products aren’t fit for purpose in some way and that’s what we have to – going back to my earlier point, that’s what we have to address.  How can we make income protection something that people understand, they believe it’s going to pay out, it’s not overly expensive and people understand why they need it?  And that’s a challenge for all of us.

Roy:            That’s a great point on expense actually.  There’s some research that our industry has done as the perception of the average income protection cost versus reality.  The perception is that over £100 a month, the reality is that it’s £31 a month.  It’s £1 a day.  That’s the average premium.

Andrew:       Yeah.

Roy:            You know, and these are the messages we need to get out, correct?

Andrew:       Yeah, absolutely.  Absolutely.

Roy:            Do you think that it’s helped – rightly or wrongly, the Chancellor got this slightly wrong but he’s likened the furlough scheme to an income protection scheme?  Has that helped us that it’s been mentioned at the despatch box?

Andrew:       That’s a really good question, I hadn’t thought of that.  Hmm.  I think it probably has helped a little bit in terms of people understanding what income protection is and knowing that actually if I can’t work I’m getting some kind of income still so I think actually there’ll probably be a lot of advisers who might use that analogy of actually, “It’s like the furlough scheme.  Remember when you couldn’t work ‘cos you were furloughed and the Government guaranteed this?  Well if you can’t work because you’re not well, then this is effectively a furlough scheme.”  So actually I quite like – I’ve never really thought about it before but actually I quite like it.

Roy:            There’s your Monday morning analogy!  The press on the mortgage side and obviously I know some of the guys over there, you know, excellent press that you’ve got as we have our side, do you think that the mortgage press talks about protection enough though?  There’s another question.

Andrew:       No, but I think they’re getting better.  I really do, there’s some excellent events.  So we always used to have a Mortgage Senate once a year.  For a few years now that’s been the Mortgage and Protection Senate.  Again, with what we’re doing with AMI, we talk about mortgages and deal with the SCA and all the other things that come with home ownership but for the last couple of years we’ve really been talking about protection as well as part of that and that’s something that’s really important.  So I think there is a general sea change within the industry that we are starting to talk about it now and I’ve seen more and more articles around protection and around other services, not just mortgages and property but it’s quite difficult.

I find it, you know, I always write our monthly mailshots out to our clients and they might go out to 10,000 clients and every so often you’ll put a protection or insurance story in and what’s the one story that’s not clicked on?  It’s that and it’s really hard so how – I’ve always thought, how do you make protection and insurances sexy enough for people to want to read about it and to want to understand it and that’s something that – with my marketeer hat on, I haven’t cracked personally and that’s something we need to think about generally but I don’t know the answer to that.

Roy:            Do you think real life – I mean you’ve alluded to it earlier, do you think real life case studies are things that we should be telling more to your industry?

Andrew:       Yeah.  I like real life case studies.  I think there’s a way of doing it so it’s not just a tearjerker-type thing.  It’s more about seeing the benefits of it and there’s been a couple of good campaigns recently actually where they’ve focused on the benefits and what’s happened after and sort of, you know, the sad part about what’s gone before is not the central part, it’s about the happy part about, “Actually I had this and this is what it’s enabled me to do.  This is what it’s enabled our family to do,” and I think that’s where people like to focus.  I think that’s a good way forward of focusing on the real benefits of having that protection in place which I think is good and, you know, people – it’s the same with everything, people are generally empathetic and if you’ve got a good story to tell then tell it but it’s telling it in a way that’s useful and constructive rather than just a sales angle because I think people see through that straight away.

Kathryn:       Absolutely.

Roy:            I know that several mortgage brokers have used the recent 7Families campaign to that extent and my plea to any new mortgage brokers on this call would be to Google 7Families

Andrew:       Yeah, that’s really good.

Roy:            And use it.  There’s no intellectual property there guys, you can use the videos to your heart’s content but it’s a really good thing and actually it’s got some really sort of, you know, good messages for people with mortgages especially.

Andrew:       Absolutely.

Kathryn:       Well thank you obviously Andrew so much for coming on and chatting to us today.  It’s been really, really lovely to chat to you and hopefully listeners from both the protection and mortgage market and afar have picked up some ideas from us all.  I’m going to be back in two weeks chatting with Matt Rann about our next underwriting focus and Roy, you’re going to back in about a month’s time aren’t you I think – chatting through pensions and investments with Lee Robertson from Octo Members.

Roy:            Yes, absolutely.  It’s – thank you very much Monty, it was fascinating to hear the mortgage side of it so what we’re going to do next is look at the wealth management side and actually I think those two sides have parallels as well so that will be great.  So really looking forward to that.  Anyone can listen in to any of these episodes on www.practical-protection.co.uk and don’t forget if you’ve listened to this as part of your work, you can claim a CPD certificate which is very important for us all as well of course.  But Monty, thank you very much as always for your invaluable insights and I guess that the messages from today are, you know, signposting I think should work, we should definitely collaborate between, you know, the two industries more and maybe, you know, I did like your shout out to some of the insurance part of the industry to maybe address the communication side slightly more.

Andrew:       Thank you very much for having me.  I’ve really enjoyed that and –

Kathryn:       Thank you.

Andrew:       I shall listen to the rest of your podcasts with interest.

Kathryn:       Thank you.

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