Asset protection is the process of protecting an individual or familyʼs wealth across generations, not only in legal terms but potentially also from the HMRC. It will help your clients plan their finances in advance to ensure their estate is shared out exactly as they want it to be.
It’s a rare growth market in the financial services arena right now. This is because roughly 70% of people in the UK do not have a will and even more will either have a will that is out-of-date or incorrectly drafted, which can naturally have serious consequences, both financial and personal.
And with a large number of life policies not written correctly in trust, there will always be the possibility that their value could fall into unintended hands and that unnecessary inheritance taxation might also have to be paid - no doubt two more potential causes of client complaint at some point in the future.
In any case, beyond pure mortgage protection cover, a large number of your clients will have no additional life assurance in place at all, exposing all remaining family members upon death. This is an area that needs constant monitoring and updating as, if key events such as buying a home, having children or changing jobs are not taken into consideration, this will affect the policy.
Why should you offer it?
Asset protection offers a significant alternative revenue stream for mortgage brokers and IFAs. In our experience, brokers currently offering asset protection advice to their clients are making average case earnings of around £2,000 by using TAPS in their current business model.
Breaking this down, around £800 of income is generated from each clientʼs will and trust requirements, payable within 14 days, while £50 per month of protection premium typically generates in the region of £1,200 commission.
Not only is TAPS an additional source of income, it also offers added value to your clients, who will be able to use an advisor – you – that they trust and work with closely on other financial matters to handle an additional aspect of their financial planning.
And, as the TAPS guidelines recommend that advisers talk to their client’s named guardians, trustees and executors, it’s a great way of getting new referrals to your business – many of whom will need full financial planning and asset protection services themselves. And as most people will nominate their wealthier or more professional friends and family members as guardians, say, there is an in-built upsell into the TAPS proposition.
In short, asset protection represents a huge potential market for brokers to move into and one that can deliver proven revenue.
Getting started with TAPS
As brokers are not required to write the wills or trusts themselves, offering TAPS will not mean having to take on board ultra-technical information. In fact, a third party specialist legal provider will be responsible for all technicalities involved in will and trust creation and its PI cover will protect all advice given.
Primarily, the role of the broker or IFA is to sell the concept. Areas and issues that TAPS training prepares you for includes: the financial reasons for making a will; the implications of not having a will; issues surrounding the funding and cost of long-term care; inheritance tax planning and estate planning; trusts, life assurance; and wealth solutions.
Also, it is important to point out that no formal qualifications are required, as wills and trusts are not currently regulated by the Financial Services Authority. This means paraplanners and others within your firm could be commissioned to focus exclusively on this area of the business.
Brokers can be talking to their clients about wills and trusts in no more than 30 days.
As mortgage brokers and IFAs, you will spend most of your time helping clients increase their wealth, so it makes sense for you to dedicate time to making sure this wealth is protected for future generations. And at the same time as you do this, you will be generating a strong additional income stream for your business.
Case Study
Gregg Taylor set up What Group as a pure b2b organisation, offering professional advisers, such as IFAs and mortgage brokers, good quality products and services that they can add to their core advice proposition to generate additional income.
The company first got involved in asset protection over a year ago when Gregg was introduced to The Asset Protection Strategy. At the time, Gregg thought that the financial services industry was crying out for a robust wills and trusts proposition, so TAPS seemed like the perfect fit for them.
Why asset protection?
With the financial services industry going through major change and intermediaries looking for additional income streams, TAPS gives them the opportunity of a new proposition, providing a valuable source of referrals while generating high revenues.
Part of the reason Gregg believes in the service is that people trust their financial adviser to make the right decision for them when it comes to wills and trusts – rather than using a solicitor they might never have met, have to take time off to visit and don’t know what the cost will be. And, as nearly 70% of people still don’t have wills, it’s a huge untapped market.
The TAPS service uses a straightforward proven sales process, that works on an introductory basis to a third party specialist legal services company which is responsible for all the client advice and recommendations and the professional indemnity insurance. Crucially, the broker keeps all the client contact and control but does not give the advice.
Keeping it in the family
Gregg was so sold on the TAPS concept his first recommendation was to his wife, Lea Bragagnini. Lea’s business, Bragagnini Associates, is an award winning and highly successful London-based mortgage and IFA business, and after hearing what Gregg had to say about TAPS, Lea recognised that it was a great service for their clients, slotting in nicely with their existing mortgage protection and wealth proposition.
How much can you make?
Lea started promoting asset protection to her clients in July last year, shortly after completing the course. It took only a matter of weeks – she estimates three or four – before she started making an income from it. Lea soon found that she was making around £1,000 of profit per case, a welcome boost to her income with the mortgage market looking unpredictable at best. In fact, Lea has now made over £50,000 purely from asset protection cases since last July.
Not only has Lea seen profits for her business boosted, her clients have benefited, too. As she says, sorting out the protection of your assets is something that everyone needs to do and clients are normally very interested to learn about the protection available. In many cases, the asset protection work has made it much easier for Lea to uncover areas of her clients’ finances that had not been addressed previously, allowing her to add further value to her business with clients.
Spreading the word
Now a firm advocate of the asset protection offering, Lea decided she was confident enough to promote the concept to potential clients in a more cost effective way than one-on-one meetings. She had always used seminars, so decided it was time to showcase TAPS. She distributed 5,000 leaflets in her local area, which resulted in 30 brand new prospects attending her first seminar. This proved highly lucrative. As well as securing new clients, Lea also picked up a client with work that needed completion in various areas of financial planning, including TAPS, which generated earnings of over £20,000.
Lea says she would recommend TAPS to any mortgage broker or IFA, as long as they are willing to invest a little time getting to know the product and process after learning the basics and sales skills on the course. After that, it’s a no brainer.
