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News Review: Protection


Planning for the end of the affair by


Alan Newman, psychologist and


management consultant, The Finance IT Network


I recently came across this quotation attributed to American novelist Mark Twain: “It ain’t what you don’t know that gets you in to trouble. It’s what you know for sure that just ain’t so.” And that got me thinking about “what I knew for sure” about mortgages and protec- tion that might not be so. For example, “I know for


sure” that the British have a love affair with home own- ership and tracking the ups and downs of the housing market. But am I right? Just as I came to realise that hav- ing an enjoyable long week- end with Halle Berry was a fantasy rather than a realistic


goal, are those from Genera- tion Y undergoing a similar experience regarding home ownership? How many years of denial does it take to kill off an aspiration? In recent months I’ve seen


the average age of the fi rst- time buyer reported as being as low as 29 in The Guardian and as high as 42 on BBC Radio 1. The most commonly reported average seems to be about 37. But whatever the actual fi gure, the more important question is how many people are abandoning the dream of owning their own home? Research for Post Offi ce Mortgages put the fi gure at 53% of would-be buyers who are not on the property lad- der.


Changing priorities Are we producing a genera- tion of people whose habits


(immediate gratifi cation and a high preference for expe- riences and leisure, for ex- ample) mean that getting a mortgage is not high on their priority list?


As a social species we’re strongly infl uenced by the norms that are shared by our peers. So how likely is it that the majority of those in Gen Y will never have a mortgage – or wish to have one? The conventional wis-


dom in fi nancial services is that key life events drive demand for protection prod- ucts. Buying a home for the fi rst time is such an event, so maybe it’s the demand for home ownership that needs protection most of all? (Or does it? I know that it might sound like a heresy to many readers of Mortgage Introducer, but are there signifi cant benefi ts to our society and our economy if


Analysis: People don’t buy protection by Sarah Davidson


is a diffi cult conversation to have with clients – no one likes to think about what might happen if sickness, divorce or death strike. Another hurdle for


The market has changed over the past four years and mortgage brokers, being an enterprising bunch,


have


tipped their caps in order to survive. But despite a marked improvement in brokers’ penetration rates on life insurance networks and mortgage clubs still feel that more can be done. Part of the issue is that protection


brokers selling protection is that generally speaking clients don’t want it. When you


“sell” a mortgage


people are buying a house. When you sell protection it’s very hard to see what you’re buying. But there are ways of digging deeper into products to identify what clients want to buy. Ian Smart,


head of


product development and technical support at


22 MORTGAGE INTRODUCER MARCH 2012


Bright Grey, explains: “The industry has attempted to change product names to allow clients to make this connection by talking about mortgage protection, payment protection and even school fees protection, he acknowledges. “But clearly it’s not getting across to clients that specifi c solutions to these needs do exist,” he adds. Phil Jeynes,


head of


account development at PruProtect,


says the real


issue is clients getting the guidance they need in order to turn this need into a want.


“This is where a good quality broker comes in,” he says. “Not looking to deliver products in a way they perceive the client needs them but taking the time to establish what particular concerns need to be addressed for the person sitting in front of them.” They may well be right but if 30m people need life insurance, critical illness or income protection and only 100,000 people buy it each year,


perhaps providers should do more to help train brokers to have this conversation.


www.mortgageintroducer.com


people accept that they’ll be renters rather than home owners?)


Boomers Many UK baby-boomers have spent much of their lives paying off the mortgage. Even though they’ve ben- efi ted from a long-term rise in the value of their prop- erty, to what extent has the mortgage been a Sword of Damocles? And how many of the boomers realised that they’d be remortgaging their homes to help their kids? As many more families are having to manage their fi - nances on a complicated, multi-generational basis, perhaps the British love af- fair with home-ownership (and mortgages) will be replaced by a more prag- matic approach. If so, what Plan B do you have for your business?


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