A new year is here, and in all manner of ways and means, 2024 feels like it could be a pivotal one for advisory firms, and potentially a game-changer for many individuals with shifts in many aspects of politics, the economy, world affairs, etc.
So, from an advisory perspective, what could those shifts be, and how might they land?
And how can you best traverse this new environment, ensuring you have the right level of support, and access to all the necessary products, solutions and opportunities available this year?
Rates, rates and rates
It has been a noisy start to 2024 with most of that noise being generated by lenders cutting rates. Few are letting the grass grow under their feet in that regard, and we know that with a highly-competitive market, this means others will need to act, and act quickly.
We said at the tail-end of last year that lenders have been in ‘2024 mode’ since mid-October, and now that we are finally here that focus has kicked on, with swap rates falling acting as a major catalyst.
In just a few days, we’ve seen a major domino effect and that is not likely to stop anytime soon.
However, for advisers this presents something of a dilemma in terms of continuously reviewing product shifts and changes, and presenting them to clients for whom the recommended deal you discussed last week, or even yesterday, is no longer the ‘best in class’.
Firms need to think very seriously about the way they present this ‘service’ and the cost to them in terms of constantly checking the market.
Technology gets you so far but it still requires time, resource, money to deliver. Make sure you are getting paid for this work.
Plus, are you able to access all the product solutions appropriate to your clients? Does, for example, your network provide you with the opportunity to look at non-mainstream options such as later life lending, second-charges, bridging and the like? Or does it keep you in your ‘lane’?
If the latter, think about shifting to a network, such as JLM, which has those income streams open to you, and has access to all those providers and the opportunities you want and need as an adviser.
Early Budget/early Election?
The next Budget date was confirmed as the 6th March prior to the end of 2023, which has got the rumour mill whirring, not just about what it might include, but also what it might herald in terms of a General Election. We’re almost 100% getting one this year unless the Government hangs on until the bitter end.
Noises coming out of Government suggest there will be a number of carrots offered, in particular to first-time buyers – a replacement for Help to Buy? A new long-term mortgage guarantee? And there is always the potential for a change to stamp duty. Some are even suggesting the Government might ditch it completely, although we’ll believe that when we see it.
It’s almost nailed on that we’re going to see some market-moving measures announced – if not in the Budget, then certainly in the Conservative Party’s manifesto.
The polls however suggest otherwise, and as we write, the likelihood is we’ll have a new Labour Government this year, which again is going to mean some big-ticket changes, potentially impacting the buy-to-let sector, and certainly – if they keep their promises – impacting on current house-building targets/supply.
Politically it could be a bumpy year, and we’ve not even mentioned Donald Trump in the US either.
Consumer Duty
We’re not yet at the six-month point after the introduction of the Consumer Duty rules, but its impact is only going to grow and grow.
2024 is likely to see the first thematic visits to regulated firms in the mortgage space, and we could see the first precedents set in terms of non-compliance, and the first fines for those deemed not to be up to scratch.
Consumer Duty puts a wider responsibility on firms and advisers in terms of their ability to talk/act/recommend across more client needs. This is no longer a mortgage-only job, and firms may have to invest more in meeting their Consumer Duty responsibilities, plus of course the ongoing cost of regulation itself.
We are very supportive of Consumer Duty as both a network, an advisory firm and advisers ourselves because it encourages, and expects, fully-rounded conversations with clients in order to help deliver the best possible/most positive outcomes for consumers.
Networks such as ours can do a lot of the heavy lifting when it comes to Consumer Duty compliance, meaning they save themselves time and resource which can be better spent doing what they are good at – advising clients.
We can constantly evolve in order to meet the regulatory changes, and firms under our umbrella benefit from that.
In our experience, large numbers of firms could benefit from joining a network, particularly in an environment where regulatory responsibilities continue to grow and grow.
By placing their trust in a quality network they can effectively ‘stick to their knitting’, meaning their advisers can focus more on clients therefore generating greater levels of income.
It can be a real win-win and we would urge all firms to explore their network options in order to benefit from this approach.
2024 as a whole
The big trade bodies – UK Finance and IMLA – have played down any big shifts in activity/lending in 2024. Predictions are for an even worse year than 2023, but we’re not sure it will turn out like that.
Of course, firms can excel in any market situation, providing they are making the most of all the opportunities afforded to them.
However, you will need access to these, and therefore if you are not currently able to work in certain sectors or access certain lenders and providers, you need to move to a network which can offer you all this, plus of course take care of your regulatory and compliance needs.
One of the biggest changes you might see this year is not within the wider market, but within your own firm and your own approach to business and what you need to thrive.
Make sure your business is in the right place and is getting the right support from the right network – by doing so, you can achieve stellar results and growth within any environment.
Rory Joseph and Sebastian Murphy are group directors at JLM Mortgage Services, the mortgage and protection network
