www.mortgagestrategy.co.uk ANALYSIS
Today’s teenagers could be
heading for senility in the
prime of their lives if
studies on mobile phone
use are to be believed.
According to research,
radiation from mobile phones kills
brain cells. An earlier Swedish
study claims those who use mobile
phones for more than 10 years are
40% more likely to get a brain
tumour on the same side as they
hold the handset.
Whether or not people take the
research seriously, it’s unlikely
they will reduce their phone usage.
Mobiles are the lifeblood of modern
communication.
While the research may get us
thinking, it’s more likely to incite
an attitude of ‘it won’t happen to
me’ – a scenario the protection
industry faces day after day. No-one
While there is
increasing credence
to the view that the
worst may be over for
the property market, in 2007 and
2008 one sector of the market
actually grew in importance as a
source of business for the industry.
Our figures suggest that at the
low point, overall demand for
valuations fell by as much as 70%,
pushing a number of less robust
valuation providers out of
business. And more may go this
way if their annual accounts are to
be believed.
But during the same period,
equity release providers seem to
have held their own and grew to be
a proportionally greater part of
many valuers’ client base.
I don’t see this as changing in
the future. One certain thing in an
uncertain world is that we’re all
Reality check will
promote protection
ROGER EDWARDS
PROPOSITION DIRECTOR
BRIGHT GREY & SCOTTISH PROVIDENT
likes to think about their mortality,
so how can you encourage clients to
take out protection insurance,
which is ultimately an insurance
they hope they’ll never have to use?
The days of door-to-door
salespeople encouraging clients to
buy cover by scaremongering
tactics are long gone. So one way of
stressing the importance of
protection is by asking clients to
imagine what would happen if
their circumstances changed.
Get clients to think of what they
value most about their standard of
living. Then ask them to imagine
how they would feel if they were
suddenly unable to maintain their
lifestyle. Encouraging clients to
look at real life examples will allow
them to see the value of protection
and the financial peace of mind a
critical illness policy can bring.
Tread carefully with
equity release value
RICHARD SEXTON
BUSINESS DEVELOPMENT DIRECTOR
E.SURV
getting older and that alone makes
this a growth market.
There is also a cultural shift,
with the current generation less
likely to want or need parents to
pass on the family home as
inheritance.
But valuers have to take account
of the particular sensitivities and
concerns of applicants.
Most have not had a valuation
of their property for many years
and expectations need careful
management. They are also
typically house-proud and can take
personally comments provided to
the lender solely to assist in
underwriting.
So more work from valuers is
required in this area but it is
definitely worth the investment.
Perhaps the same holds true for
brokers looking for new sources of
income.
One of the questions I
have repeatedly been
asked about equity
release is how we get to
clients as they don’t seem to be
easy to find. It’s a fair point.
If you look at how successful
businesses in this sector promote
their services directly to
consumers, you will see they have
to work hard at marketing their
brand as well as products to get
consumers on board.
Equity release is a product that
is bought not sold, so if you try too
hard to aggregate a client bank you
are in danger of having the
opposite effect.
This is why you need to start
with a soft marketing campaign
that works in a suggestive manner
while adding some education about
the product structure.
TERRY PRITCHARD
CONSULTANT
SYH CHARTERHOUSE
Until news broke that West
Bromwich had agreed a
deal with its bondholders
to convert £182.5m of
subordinated debt into Profit
Participating Deferred Shares, I
had feared the worst for the
society.
Now that it has strengthened its
core tier one capital ratio from 6.8%
to 11.6% it is assured of an
independent future and that hasn’t
been the case for a long time.
It seemed to be living on a wing
and a prayer since the retirement
of chief executive Frank Dilkes and
embarked on a programme of
reckless expansion under Geoff
Allard, formerly of Portsmouth – a
society that had to be rescued by
Cheltenham & Gloucester in 1991.
West Brom’s chief executive
Robert Sharpe, when chief
executive of Portman, pursued an
Think outside the
box to gain clients
JOHN MURRAY
CONSULTING EDITOR
LENDING STRATEGY
Consumers still think they have
to sell their house when they take
out an equity release plan – a
perception that needs changing. A
well put together set of mailshots
coupled with brand profiling does
get results.
Pension shortfalls, healthcare
costs and close relatives facing
financial hardship makes this the
ideal time to speak to clients. So
take another look at your client
bank and start thinking outside
the box and draw up a marketing
plan.
Remember, firms advertising
equity release directly to customers
will probably be talking to one of
your qualifying clients if you
choose not to. So draw up a
business plan and choose your
partner carefully if you want to get
it right.
Sharpe takes edge
off society crisis
aggressive acquisition policy. When
he joined West Brom I was among
the first to write that he had been
recruited for his merger expertise
and been tasked with selling out to
the highest bidder.
But Sharpe put forward his case
in the June issue of Lending
Strategy, saying his strategy was to
turn the society round. But even
before Lending Strategy had gone to
press there were reports that the
Financial Services Authority was
seeking a white knight for it.
Sticking with the story proved a
tough call but I’m glad for Sharpe
and staff at the society, as well as
the mutual sector as a whole.
All that remains is for ratings
agencies to restore it to investment
grade, thus easing the funding
crisis caused by local authorities
withdrawing their deposits as a
result of it being downgraded.
MORTGAGE STRATEGY June 22, 2009 15
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