Firstly, the good news. Ours is an extremely fast-paced mortgage environment at the moment, and with the constant changes we see every day, comes a greater demand for advice.
How else can consumers navigate through these ever-flowing waters and meet their wants and needs without independent mortgage advice? There’s a very good reason why we are seeing 75/80% of all mortgage business going through the intermediary channel.
However, at the very same time, the burden upon advisory firms has perhaps never been greater.
‘Cost of living’ increases impact on firms and individual advisers as much as they do on their clients; extra resource costs money as does ensuring staff are looked after; the regulatory burden will not slow down – for instance, we have moved from the regular completion of Covid surveys to Resilience surveys with the extra work and cost this brings and we will all be expected to implement the Consumer Duty rules when they are announced next month; what about PI insurance and the increased costs here; and all, at a time, when getting business completed takes longer and there is a need to deal with the many lender service issues that blight our sector.
This all presents challenges for every single firm, but it perhaps impacts even more on the smaller operators, particularly those that have no umbrella to shelter under and are being expected to deliver much more with rising costs to meet.
It’s unfortunate and is unfortunately something of a sad situation, but the overall burden on those smaller DA firms is huge and this is likely to be the straw that breaks the camel’s back for many.
Now, this doesn’t mean we are complete advocates of the ‘big is beautiful’ mantra but it does appear to show the benefits of having ‘backing’, of being part of an organisation that has influence but can also be flexible enough to give adviser firms, their owners and their advisers what they cannot achieve on their own or through being part of the very biggest industry ‘machines’.
Here are a couple of examples. As we know, relationships matter in this market, especially at present when – as mentioned – getting business done can be incredibly tricky and where you can see products changed/removed at the drop of a hat, or when service issues lengthen the process to such an extent that a product is lost.
This happened to us recently with a major high-street lender – one of the biggest in the country.
A case which began in September dragged on and on, with a change in requirements from both developer and lender kicking this particular Help to Buy case back and forth, before eventually the product initially secured ran out in February.
However, our size and influence allowed us to kick this up the food chain, to talk to our contacts and strong relationships, to help them understand what had happened and how it was not our or the client’s fault, and we came to a resolution.
The original product was honoured and the lender agreed to backdate the mortgage payment levels to January on the original rate.
That only happened because of our size and the strong relationships we have. While a one/two man/woman-band might have got the same outcome, it is doubtful.
Indeed, advisers will know only too well what has happened over the last couple of years, with access to BDMs and regional managers curtailed if you don’t write enough business, and with smaller firms having to run the gauntlet of a free-for-all access to telephone staff let alone those who can actually make such decisions.
Now, as mentioned, there is a sweet spot in terms of the network organisations you might look to work with.
If they’re too big, they tend to have an industrialised approach and process with little flexibility; too small, and they don’t have the clout and influence, or the commercial terms, to make it worth firms’ while.
That flexibility is also vital – working with a network should not be a dictatorship. Again, just recently, we had an adviser talk to us about joining the business who wanted to work part of the year abroad.
He said he’d talked to a number of operators in our market who wouldn’t allow this; we looked into it, did our due diligence and were able to make this work.
Sitting in that network sweet spot means you can get the best commercial terms, higher procuration fees, full access to all lenders and products, a stronger relationship, quality compliance oversight, a sharing of the regulatory burden and the support needed to meet your responsibilities. We could go on.
Now, of course, this does not come free, but as you might imagine, we tend to believe the benefits far outweigh the costs.
Again, just recently, we recruited a new adviser who worked out that the extra procuration fee he could secure from placing business with just two lenders on our panel would be more than enough to cover the annual cost of joining us.
So, while it is true the cost/regulatory/PI/compliance/business burden is on the rise, there are opportunities for firms and individual advisers to mitigate all of this, and to have the work/life balance they want, and run thriving operations at the same time.
After all, the work and business opportunities are there, the client demand is there, and good networks like ours and many of our contemporaries can help make this a reality.
Rory Joseph is director and Sebastian Murphy is head of mortgage finance at JLM Mortgage Services, the mortgage and protection network
