Who hates mortgage advisers trying to sell them insurance?

dunstonh

The only time you would see real benefit in taking non-indemnity is where you have cash flow.

I have never taken indemnity. You get paid less and you run the risk of clawbacks.

I do believe that indemnity commission should only be available to advisers in their first business year. It was originally made available to help cashflow to new advisers but some business models that rely upon it and they are running the risk of being put out of business or having to restructure when indemnity does eventually get removed (although there have been threats to remove indemnity many times before).

Some business models I do believe are unsustainable and it is those that do not build in a cashflow. With initial commissions dropping over the years, if you dont have cash flow of non-indemnity and renewals (GB in case of mortgage business) then you are taking a risk.

AndyWallace

dunstonh wrote:

I have never taken indemnity. You get paid less and you run the risk of clawbacks.

I do believe that indemnity commission should only be available to advisers in their first business year. It was originally made available to help cashflow to new advisers but some business models that rely upon it and they are running the risk of being put out of business or having to restructure when indemnity does eventually get removed (although there have been threats to remove indemnity many times before).

Some business models I do believe are unsustainable and it is those that do not build in a cashflow. With initial commissions dropping over the years, if you dont have cash flow of non-indemnity and renewals (GB in case of mortgage business) then you are taking a risk.

Agreed. I however, take indemnity with some providers and non with others but we each do our own thing and it's about getting the right balance.

Amdy

payless

Just going back to the original point, if you're offering to help someone purchase a house, something that they will work very hard to maintain, is a long term commitment and a major financial drain, then, providing you have applied for the permissions, and even more so if you are listing the service on your IDD, you should be discussing protection of the said asset

Yes, if you list it on IDD, then it should at least be offered

payless

AndrewSmith wrote:

The reason I get 75-80% of my business via recommendation

I must admit over recent years I have not been pro-active in sourcing new clients ... as an excerise just did a review of my last 20 mortgage cases

11 were returning clients
7 were direct referrals from existing clients

AndrewSmith

It's the smartest way to work and allows me to keep my overheads down. I do receive enquiries via advertising / web however those are not dealt with by me personally.

I therefore have the time to deal with each case fully without charging a fee.

Fairdo_2

Let's see. I'll go and ask the couple that I "Sold" Life Cover, Critical Illness and Income Protection to last year that, 9 months later, the lady had a stroke and they claimed, which paid the whole mortgage off and left them with a bit over. He promptly came back to me and asked for a new policy that covered him in Death and a seperate policy for CI! It didn't stop some hardship though as he had to stop work for 3 months and her elderly Mother is helping her to look after their 2 kids, coz she can't do it on her own and he still has to work for a living. I actually feel a bit guilty that I didn't sell them more cover in the fist place, but they think I'm the bees knees. Incidently, because there was past raised blood pressure, the policy was offered with a loading and they still CHOSE to take the policy at about £10 a month more. Thankfully! I gave them a considered argument about the benefits of the different types of cover available and the potential pitfalls of not being covered and, funnily enough, by treating them as aldults that could make their own decisions, they made their own minds up and took the cover. She is only mid thirties by the way, so it's not just older people that need to claim!

Or there is the girl who is mid twenties, that was taken in 2 years ago on Christmas Eve with a Brain Heamorrage. She has made a full recovery and no longer has a mortgage. Need I go on?

I would rather not have the proof of the benefits of the job I do, but inevitably, if you could be bothered to responsibly advise your clients, you would find that a number of people end up finding your work invaluable and thanking you for making them aware of the potential issues!

Conrad

Ah well, I see the FS industry still kids itself its doing a great job, just like it did with Endowments and high charge Personal Pensions.

I choose not to sell insurance, however as stated previously I strongly recommend people get appropriate advice.

I am a mortgage broker. Clients come to me for a mortgage, not insurance.
I recommend they 'take appropriate specialist protection advice'.

We used to sell endowments on the back of a mortgage, now many of us sell protection instead. This has nothing to do with best advice, its all about commission.

Would you like your Doctor or Lawyer to earn commision on the back of recommending certain courses of action / advice?

No thought not.

We pay people hard cash if we think they are worth it. Thats why I say at outset I charge fees. People tell me they respect me for that and the fact I dont have any 'commission imperatives'.

herbiesjp

Conrad wrote:

Ah well, I see the FS industry still kids itself its doing a great job, just like it did with Endowments and high charge Personal Pensions.

I choose not to sell insurance, however as stated previously I strongly recommend people get appropriate advice.

I am a mortgage broker. Clients come to me for a mortgage, not insurance.
I recommend they 'take appropriate specialist protection advice'.

We used to sell endowments on the back of a mortgage, now many of us sell protection instead. This has nothing to do with best advice, its all about commission.

Would you like your Doctor or Lawyer to earn commision on the back of recommending certain courses of action / advice?

No thought not.

We pay people hard cash if we think they are worth it. Thats why I say at outset I charge fees. People tell me they respect me for that and the fact I dont have any 'commission imperatives'.

Conrad

But you contradict yourself with your argument.

You say that all this protection is wrong etc. and only doen for commission.

However you are then happy to refer them on to someone you call a specialist. You are then happy to receive money for them selling something you do not agree with!

Hm - doesn't sound like a good argument to me. If you were that set against protection policies, as they are only sold for commission, even via specialists, then refuse the income!

Conrad

AndyWallace wrote:

but to say that you are an expert on mortgages just because that's all you do is a tad blah-ze and dare I say it, proposterous.


Andy.

Andy, mankind learned that specialisation leads to civilisation. People used to be hunter gatherers, but then some chose to specialise in working the land - farmers.

To deny that concentration and focus of input leads to improved skill is nonsensical.
Athletes who specialise in one discipline will become masters at that skill.

You guys have not tried a day in my shoes, I have however been in yours as I used to advise on protection alongside mortgages.

I fundamentaly challenge the old ways of doing business. Specialisation is what clients deserve.

Conrad

herbiesjp wrote:

Conrad

But you contradict yourself with your argument.

You say that all this protection is wrong etc. and only doen for commission.

However you are then happy to refer them on to someone you call a specialist. You are then happy to receive money for them selling something you do not agree with!

Hm - doesn't sound like a good argument to me. If you were that set against protection policies, as they are only sold for commission, even via specialists, then refuse the income!

Ok, I see where you are comming from.

To make myself clear this is my position:

1) That a very significant proportion of insurance sales are unsafe (especially churned CIC plans)

2) That clients seeking mortgage advice on the whole only want that from us. They are quite capable of arranging protection themselves.

3) That many mortgage advisers highlight thier 'FREE SERVICE' but fail to give THE SAME PROMINANCE (at outset) to the fact they will go out of thier way to also try and make an insurance sale. In other words they suck people in on false pretences. Far more honest surely to say 'I cahrge a fee for my time'?

4) That the insurance industry is incredibly arrogant (just as it was with endowments)in that the reason for so many void claims is very often to do with the ultra complex protection application forms which IMO deliberately set out to trip people up.
Note how the forms use this style of questioning accross several sections "have you EVER suffered any illness..............", then without warning tuck in a question or five with this style - "in the last 5 years......."

I would say these clever devices have been engineered over the last 200 years in order to take money from unsuspecting Joes

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