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Tep-by-Tep guide

The endowment market may help you in more ways than you think. Recent regulatory concerns have caused many IFAs to stop selling endowments but these products still have a role to play for most advisers in the guise of the traded endowment market.

An increasing number of endowment policyholders are becoming aware that they can sell their policy for more than the surrender value. With recent regulatory changes requiring the life companies to tell customers about the option to sell their policy when they enquire about surrendering, this is a trend that is set to increase.

Some IFAs have traditionally steered clear of the traded endowment policy market by giving clients who want to surrender a list of market-makers which may buy their policy and let them find the best price on their own.

As more and more customers use the Tep market, IFAs have a key role to play in ensuring they are given full advice so that they can make an informed decision about what to do with their endowment policy.

Using the Tep market not only fulfils your regulatory obligations to inform your customers about the option to sell but also gives you an opportunity to add value to the service you provide your clients, increase their loyalty to you and generate new business enquiries. By using the latest online price search services it can also be an easy, low-cost service to provide.

Endowment reviews

There are a number of circumstances where the appropriateness of an endowment policy should be reviewed. In most cases, endowment policies were originally taken out to cover a fixed mortgage amount and the review will focus on the ability to pay off the mortgage.

This review process optimises existing arrangements, provides peace of mind for your clients and may identify other financial needs that can be fulfilled. With changing interest rates and unstable markets, policies should be reviewed at least annually.

Reviewing an endowment policy should include getting a quote for its Tep market value as well as getting the surrender value and assessing the likelihood of it paying off the mortgage at the end of its term. These figures will indicate how the policy has grown since its last review and any changes in marketability of the policy as a Tep.

This service can be offered cheaply, efficiently and compliantly by making use of an online price search service to do the legwork for you. In some cases, IFAs provide the policy information online and get back a compliant league table of offers from a wide range of regulated market-makers. Using a service like this is time-efficient and saves money for IFAs and their clients.

In particular, IFAs do not have to share their commission with a third party. This ensures that any cost incurred in providing an endowment review service should be more than repaid by income from policy trading and the new business identified by the review.

We would expect that most endowment reviews will show that your clients are better off keeping their endowments rather than selling them. The result though will be reassured clients who will remember to ask you next time they are considering financial changes.


A review of clients&#39 mortgage arrangements often identifies cost savings for them. It is also a business generator with the potential of remortgage business as well as reviewing life cover and other insurance.

If you find that a repayment mortgage is now more suitable for your client and they feel they could make better use of the capital tied up in their endowment, then you can use the endowment review process to arrange the sale of the policy on the Tep market.

There may also be opportunities to provide endowment review services to unregulated mortgage brokers who are not able to deal with endowments directly.


The splitting of a couple&#39s assets on divorce is usually handled by a solicitor. However, the need for sound financial advice cannot be much greater than at a time of such uncertainty as divorce.

As well as helping your clients split their financial assets, it will provide you with the opportunity to stay in touch with your customers and increase the probability of keeping both parties as future clients.

While it is possible to reassign a joint-life endowment policy to a sole name, many couples need to release the equity in their endowment to complete their settlement. In these cases, obvious value can be added by trading the policy for more than the surrender value.

Many IFAs have generated a valuable source of new business in this area by negotiating partnership deals with local solicitors. This means they will offer financial advice to any of the solicitors&#39 divorcing clients who do not have their own financial adviser.


This is possibly the area where customers are most in need of sound financial advice. Very often, good advice and quick action can reduce clients&#39 outgoings to a level where the problem virtually disappears. For bigger cash needs, trading an endowment policy may be a better bet than getting additional loans that push customers into further debt.

Customer contact

More and more IFAs are seeing the benefit of maintaining regular contact with their customer base by post or email. In today&#39s marketing-driven world, consumers are constantly being bombarded by media messages.

Many of the bigger financial services brands run high-profile advertising camp- aigns with the intention of obtaining high volumes of customers – often on an execution-only basis. With so many tempting offers around, is it any wonder that they quickly forget the value provided by IFAs?

Endowment policy reviews provide a regular opportunity to keep in touch with your customers and remind them of the value of tailor-made advice in the face of heavy marketing, tough economic conditions and a bewildering array of products.

The ideas set out here are just some of the ways that IFAs could use the Tep market to generate new business while adding value for clients.

The services of Tep market-makers can be used to enhance the services offered – making them more personalised and efficient – without adding to the workload.


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