How one broker firm boosted its income by focusing on insurance – Mortgage Solutions
My last column explained that advisers do not need to compete on price when advising clients about their insurance options. Instead, the provision of quality service and support is more than enough to make it worth their time while also providing their client an important service.
This contribution is highlighting how one mortgage advice firm has benefitted from embracing this approach.
I have coined the term The Enlightened Broker and if we have ever met you’ll know it’s a concept I champion strongly.
To put it simply, the enlightened are those that look beyond the perceived burdens of price, regulation and competition, and believe that differentiation and customer experience offer the best route to sustainable growth.
I say concept, but in fact the enlightened broker is a proven strategy.
YMD’s review service
To give you an example, Your Mortgage Decisions (YMD) partnered with Cavere to trial the concept.
We trained up a specialist insurance adviser for them, who they then introduced to all of their clients by way of a free protection review service.
The specialist adviser conducts a full review of each client’s current cover to ensure it is appropriate for their needs.
This leads to three possible outcomes:
Either the adviser discovers that their current arrangements are inadequate and can save them money for the same cover, indeed our data shows money savings can be achieved on half of reviews;
They could achieve better quality cover for the same price;
Or alternatively they discover that the client already has the right cover in place.
Bottom line boost
The benefits of this approach prove itself very quickly.
In instances where better cover can be obtained, this provides YMD with a valuable income stream – an uplift in insurance sales which more than pays for the cost of providing the service, and trail commission for future years.
But more than boosting its bottom line, the service has delivered YMD with a differentiated service proposition.
They are engaging with their clients regularly and going above and beyond to deliver on service and value.
Providing the review service has boosted retention and built brand loyalty – a lasting legacy.
Now is not the time for mortgage brokers to shy away from insurance sales, now is the time to invest in doing it right.
Mortgage advisers do not need to compete on price to sell insurance – Mortgage Solutions
As a general insurance provider all too often I hear from mortgage brokers that insurance sales are just not worth the effort. I empathise, but I ask myself how then do some mortgage brokers sell insurance both easily and successfully?
The pressure to compete on price, to adhere to regulation and compliance, to put in place the correct sales procedures and communications strategies are all barriers to entry, costing valuable time and money.
However, I strongly believe that mortgage brokers not making the effort to sell insurance are missing a trick, or two.
Mortgage brokers are operating in a market in which their value proposition needs to be strong if they’re to survive.
With insurers already offering self-service online models, introductory offers falsely leading to a focus on price, I say falsely because it’s not true mortgage brokers cannot compete and I’ll explain why, and the looming prospect of big businesses such as Amazon taking a cut of the market, mortgage brokers need to find a way to differentiate their service proposition.
This really is not as difficult as it sounds, the point of differentiation already exists – trusted council, quality advice and personal service have always been the cornerstone of mortgage broker advantage.
Insurance sales feed perfectly into this process of differentiation, giving mortgage brokers an opportunity to keep in contact with their customers in between the standard mortgage touch points.
Don’t need to compete on price
When I speak to mortgage brokers price is always the biggest reason quoted for not selling insurance. There still persists a common misbelief that you cannot compete on price.
My answer is simply don’t sell on price, you don’t need to.
The relentless drive for new customers driven by price has been the driving force behind the high level of churn the industry now experiences.
Churn to the extent we have now, where a customer can get a price that is below the true cost of the risk in the hope that the customer will simply stay with that insurer through inertia when the price doubles at renewal is bad for everyone – and your customers are very much coming to realise this.
What is more at any one time less than a third of the market is on an introductory offer, meaning there are still two thirds of the market open to mortgage brokers – customers that could be overpaying, or not receiving the right level of cover, and would appreciate trusted advice.
My answer to every mortgage broker still holding onto the misbelief is this, not only can you compete on price but you can achieve differentiation in terms of quality, service and value.
Customers are happy to pay a little more for peace of mind.
When you look at the data what you see is that they don’t enjoy shopping around and switching every year for introductory deals.
What they actually want is to feel valued and confident that they have the right cover first time.
In my experience customers value the knowledge a mortgage broker imparts, as well as the time taken to get the right cover for their needs, meaning that they don’t need to shop around themselves.
Differentiation also means staying nimble to needs and connecting with clients via proactive, timely and relevant engagement.