The importance of advice
Bob Hunt (pictured), chief executive of Paradigm Mortgage Services
As we approach a new year, my feeling is that there is a lot to be positive about, certainly from a mortgage intermediary perspective.
Putting aside the political situation, and looking purely at our market, it’s plain that with three-quarters of all mortgages currently being intermediated, we are in a strong position.
Yet, part of me also believes that the other quarter of transactions which do not go through the intermediary channel are not necessarily out of reach for advisers, even if there may be a belief that our market share has plateaued.
However, notwithstanding my optimism the fact of the matter is that a significant number of potential and existing borrowers still walk into their bank branch, or phone them up, or merely take the mortgage proffered to them, and don’t visit a mortgage adviser at all.
There are further threats to disintermediation, notably the rise – with technology at its centre, of price comparison websites (PCW).
With some direct to consumer lenders doing deals with these PCW’s my belief is that the price-led approach they are taking could be dangerous, not just to consumers but clearly their advisers too.
There are however a number of ways we can combat this.
First is an education message to the consumer market about why it might be a good idea to visit an adviser, and in that regard, we might have an unlikely champion.
I recently listened to Radio 5 Live and the ubiquitous Martin Lewis was on providing ‘advice’ to listeners about their mortgage situation.
Now, Lewis himself tends to draw the ire of advisers because well, quite frankly, he’s not an adviser and some might see him as treading on the toes of advisers.
However, what was interesting was the steps Lewis took the callers through and, with every single one, he tended to book-end his thoughts with a request that they go and see a mortgage adviser.
Of course, he was well-informed about the market and talked about the recent rate cuts for lower LTV borrowers, but he also acknowledges that this is a rather complex market, that the deal often offered to existing borrowers by their lenders may not be the most suitable for them, and that the best course of action – regardless of how much research you’d done online or how you viewed the best buys available – was to speak to an adviser who would be able to get the job done and ensure that all available solutions were reviewed.
For a journalist who has not been viewed often as the ‘adviser’s friend’, I think there is little more we could ask him to say about using intermediary services.
And let’s not underestimate his reach in the media, or the fact that many, many people trust him and are willing to follow his ‘advice’.
But, that’s really not enough to make the breakthrough with the 25% who don’t use advisers, and let’s face it, the regulatory picture and playing field is being shifted in order to make it easier for lenders to conduct execution-only business.
As mentioned above, that 25% might get bigger in the medium-term, given the focus on technology allowing borrowers to sort their mortgage out online, even if it’s not the most suitable product for them.
A point that has been raised lots of time recently.
In that sense, brokers need to do much more to engage with their clients’ post-mortgage completion – not just six months prior to the maturity of a 5-year fix, for example.
The recent survey undertaken by Canada Life spelt out exactly how poor advisers are at staying in touch, and crucially just how many intermediary clients have no intention of returning to their original adviser.
That should act as a call to action for all advisers.
The fact of the matter is that we, as an industry, need to be going all out in terms of the ‘benefits of mortgage advice’ message, but we also need to be demonstrating that we are improving our skills, our knowledge, our use of smart tech (e.g. Dashly) to out-game others, and our understanding of the market, etc.
That we are educating ourselves in a continuous manner, that we are becoming qualified in other related fields, that we have all the skills necessary to ensure we can give quality advice to every single client.
It’s for this very reason that I have recently joined the cross-sector board of the newly relaunched Society of Mortgage Professionals, because this is exactly the kind of focus the new SMP will have.
I think there’s a deep-seated acknowledgement from large numbers of mortgage advice stakeholders that we cannot simply stand still when it comes to our expertise.
Is it enough just to hold a CeMAP qualification that you secured 15 years ago, especially if you want to be involved in all manner of growing products and sectors? Undoubtedly not.
There has to be a commitment to improving our standing in the eyes of the public, and that can certainly come from a better qualified, educated, and knowledgeable adviser community.
And then we have to sell those improved standards to consumers, in order that they might take the advice of one Martin Lewis and feel completely comfortable in taking their business to an adviser.
This requires work but the advantages for both firms and their clients are there to be seen – I’m greatly encouraged that the SMP will be leading the way in this regard, and would therefore urge any adviser who isn’t a member to see what is available and the benefits it might bring to your business in the months and years ahead.