Upskilling needed to service future customer journey
Gemma Harle (pictured) is managing director of the mortgage and financial planning network for Quilter Financial Planning
The FCA’s variety of recent mortgage papers has made one thing crystal clear; they want execution-only mortgages to be a far more common occurrence in the industry.
While there are a number of reasons why this might represent a short-sighted stance, the pros and cons of the FCA’s proposals are well-trodden in the press.
Instead, it might be better to broach how mortgage brokers must flex their proposition to accommodate the rapid changes taking place across the mortgage landscape.
It’s worth noting that the regulator’s attitude towards execution-only is not going to be the only factor driving change in the mortgage industry.
Lenders have and will continue to bolster their use of technology which will ultimately allow them to better pick the low hanging fruit in the mortgage industry such as product transfers or remortgaging work.
According to UK Finance over the course of 2018 a total of 624,900 product transfers, worth £85.7bn, were conducted on an advised basis while 564,300 transfers, worth £73 bn, were execution-only.
This shows that currently consumers do prefer to get advice in this space.
However, with the FCA set to relax its rules around execution-only it’s likely this figure will start to shift dramatically and additional technology will further enable this.
Mortgage advisers therefore need to think carefully about not only the future pipeline of work available but also whether the advice is simply transactional in nature opposed to repeatable.
This can be challenging in the mortgage space where people typically believe that they don’t need frequent and ongoing mortgage advice.
What’s needed is repeatable advice which helps build a book of clients who regularly need reviews across their whole financial life.
Most people’s first contact with financial advice is when they see a mortgage adviser often in their late twenties or early thirties.
However, this is just the start of their financial needs and it whether they realise it at that point or not, they will need financial advice for the rest of their lives.
So this presents an opportunity if the merits of holistic financial advice can be communicated at this point an adviser could have a client for life.
Building up this type of book of clients not only helps bring in regular and reliable fees it will ultimately make an advisers business far more appealing when they come to sell.
When we asked nearly 20 different advisers in the network about their plans for their businesses in the future 35% were sure that they were going to sell at some point which I suspect is common across the industry with a further 18% saying that they plan to appoint a successor to manage their business.
However, surprisingly 24% said they hadn’t thought about it and another 23% didn’t know.
My message to all those people that didn’t know or hadn’t thought about it is: now is the time to start exploring whether adding full financial planning to your proposition is a sensible next step.
There is likely going to be a time where selling your business will seem appealing. So make sure you embed as much value in that business by building a fully serviceable client bank.
While mortgage advice has a fantastic future it’s important for advisers to roll with the times and make sure they keep upskilling so they can service the customer journey of the future.