For many brokers protection products have become the mainstay of day-to-day business over the past couple of years.
Companies that once relied on mortgage business for as much as 70% of their revenue now find general insurance and protection account for that same amount as mortgage business has receded.
Product diversification is crucial but news that sales of protection products may be falling is a timely reminder that a single income stream is no longer enough to support a business forever.
Mortgage business remains a lynchpin for other sales. Selling different products is a big decision so risks need to be considered.
But GI and protection complement this as they provide renewal income and embed value into businesses. To rely too heavily on one over the other is dangerous. Where firms have only sold mortgages we have seen carnage.
Equally, GI and protection cannot alone sustain brokers in the long term. So as mortgage lending improves brokers must continue to increase their share of this market and manage the risk of being over exposed in one product area.
This is as much about good client management as protecting business streams. The alignment of interest in being a one-stop shop for financial products, even if investment advice is referred on, means you can rely on broader product streams.
Reproducing a transactional model in a different product stream is no long-term fix. A broker’s success is really the sum of its parts.