Risks associated with mortgage
Updated
Risks Discussed is a Driver of Elevation Goal 3: Safeguarding clients’ best interests, mitigating risk
Data based on responses to the following question, asked in the First Impression review form
"Did you discuss the risks associated with getting a mortgage?"
Possible responses
- We didn’t discuss the risks associated with getting a mortgage
- They asked me questions to assess whether the mortgage is affordable with my current income and expenses
- As well as assessing whether the mortgage is affordable with my current income and expenses, they also asked me to consider whether the mortgage would be affordable if my situation changed
Risks Discussed Score
Proportion of respondents answering “As well as assessing whether the mortgage is affordable with my current income and expenses, they also asked me to consider whether the mortgage would be affordable if my situation changed”
Distribution of Responses to Risks Discussed
Why do we ask about Risks Discussed?
Clients understanding of risk was a key risk area arising from our qualitative research with firms and advisers.
How to improve your score:
Relate explanations to your client’s circumstance
No-one thinks that bad things are going to happen to them. The best way to get your client to fully engage is to make them visualise the situation happening to them.
Paint pictures
The clearer the picture in the client’s mind, the more they’ll engage with the situation so focus on relatable details to their lives. As well as including elements from their own lives, use descriptive language to help the visualisation.
- “Imagine for a second that a letter comes through your letterbox in a brown envelope. You open it to see that the second paragraph says your mortgage payment is going to increase by £200pm. How would you feel?”
- “If you were ill for several months, and couldn’t go to work at the solicitors, could you still afford Emilia’s horse rising lessons and your mortgage payments?”
- “If you did decide to have another baby, giving Jack a little brother or sister, how would this affect your finances? Could you still afford to pay your mortgage taking the additional nursery fees into account”
- People can visualise opening a “brown envelope”, a “closed” sign on the door of their office, or taking a child to nursery, so include these details in your explanation to help them paint a picture in their minds.
By getting your client to imagine a situation happening to them, you’ll get a stronger emotional reaction. This will make them really think about their situation before committing and will make them much more engaged in the process.
You may also find your protection cross sales increase by getting your clients to visualise risks. By mentally seeing the event happen to them, it may be that their desire to protect against it increases.
Validate understanding
Understanding the risks involved with taking a mortgage is incredibly important. No-one likes talking about bad things happening, however, by ensuring your clients understand risk, you are helping them make effective, informed decisions.
