Financial planning is really about… helping clients minimise loan interest

The lower the interest rate, the better off your client. Simple.

(Actually, it is compounding, but we discuss that elsewhere).

A recommendation that your client contact his or her bank manager to discuss a lowered rate of interest is not credit advice. So, whenever you observe a client paying an interest rate higher than you know is available through that lender, it can pay to suggest to that client that they seek a lowered rate of interest.

Many advisers routinely visit the website of their client’s lender to gauge whether their client is getting the best deal possible. This can be a good thing to build in to a standard client process.

Even in cases where there is not a published lower rate elsewhere, it can be a good idea to suggest that clients make an enquiry whenever you think that the interest being paid could be lowered. 

The worst thing that can happen is that the bank says no! 

Adviser tip – here is how you might suggest it

Can you see these paragraphs in your next SOA:

Version 1

We note that you are paying an interest rate on your home loan than is higher than the interest rate advertised on your lender’s website. We recommend that you send the following email to your bank manager.

Dear ___

I have recently noticed that the interest rate being applied to my loan is higher than the rate advertised on your website. Can you please organise for my loan arrangements to be altered such that this lowered rate of interest applies. Alternatively, can you please explain to me why my rate is higher than the advertised rate?

Version 2

We note that you are paying an interest rate on your home loan than is higher than the interest rate being paid by other clients with comparable loan arrangements. We recommend that you send the following email to your bank manager.

Dear ___

I have recently noticed that the interest rate being applied to my loan is higher than that being paid by other acquaintances with comparable loan arrangements. Can you please organise for my loan arrangements to be altered such that the minimum rate of interest applies. Alternatively, can you please explain to me why my rate is higher than the rate other people are paying?

The Dover Group