It has been heartening to see that confidence among mortgage brokers is on the rise.
The latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA) found that 94% of advisers felt either very confident or fairly confident about the intermediary sector in the second quarter of the year. That’s up from 88% in the previous quarter, while there were similar confidence levels among brokers about their own business prospects.
The report suggested that this improved confidence was down to rising business levels, and it’s certainly a trend that we have seen among our advisers at Rosemount. There is a clear optimism and belief that these firms can do more, support more clients, not just with their mortgage needs, but other financial services too.
However, for brokers debating how to best reach their potential as a business, a big decision will come down to their authorisation status. Do they want to go it alone as a directly authorised (DA) adviser, or sign up as an appointed representative (AR) of a network?
Controlling your own destiny
One of the common worries we hear from DA brokers is around a perceived lack of control from working within a network. Historically there has been something of a stigma about being an AR, that somehow this is less entrepreneurial.
The truth is completely different. ARs are just as in control of their own destiny, and the sort of business they run, as those who opt for DA status. We have seen it with our own members, who are working out for themselves the areas they want to specialise in, the sorts of clientele they want to attract. There is a wide number of different types of advice business within our network, just as there are within other networks in the industry.
Ultimately, determining to join a network is about getting the support needed to help you reach your potential and develop the advice business you want to build, rather than limiting your options or giving up autonomy.
Unlocking more options
Working with a network can actually allow an advice business to broaden its services in ways which might not be so easy if opting for the DA route.
The nature of running a small DA brokerage means that you have to take on responsibility for everything, leaving little time or energy to explore opportunities from adding the likes of investments, pensions or general wealth management to your services.
But good networks make it much easier for advice firms of all sizes to expand what they do. At Rosemount, for example, we have seen great interest from advisers in moving into general wealth management, and provide a range of features, like bespoke training and masterclass sessions, which make those sorts of developments easier.
Rather than limiting your options, working with the right network can actually provide a broker with more potential routes for their business.
Taking care of compliance
Perhaps the biggest attraction to AR status at the moment is the handling of compliance. Brokers will know only too well that the expectations of the regulator have increased, not just in terms of the level of service being provided but the evidence required to prove that those standards were met.
There can be some naivety among small firms when it comes to the regulator. I’ve heard it before from brokers who believe that they are essentially operating under the radar, and so will never get a visit from the FCA. They might think that having a freelance compliance specialist coming in for a day or so a month will be enough to satisfy the regulator, should that visit ever come.
This can prove a costly mistake, however, should that unexpected visit turn up some unwelcome findings.
By working with a network, brokers are effectively protected from this worry. It’s up to the network to ensure that the proper compliance framework is in place, allowing advisers to focus their efforts on the advice itself.
Realistically, the compliance burden is unlikely to lessen for the foreseeable future. There are only going to be greater expectations around providing the appropriate advice service, and meeting those expectations is going to be a push for those going it alone.
Working with a network that understands the importance of compliance, and has systems in place to guide its members, will become ever more appealing as an idea.
What’s right for you?
There is no automatic right answer here; it all comes down to the individual firm or adviser. What’s more, even if you decide to work with a network, the fact is that they all do something different.The experience of ARs can be varied based on who they have signed up with.
That’s why it’s so important that they do their homework over what they are likely to experience with a particular network, and the level of support on offer. Before signing up with a network, you need to be confident that the structure is in place which will allow your business to reach its potential and meet your ambitions.
I always think it’s a good idea for brokers to use the FCA website to identify a handful of brokers who are members of the network under consideration, and pick their brains so that you have a true impression of what the network is like in practice, rather than just what they say in their promotional material.
What’s most important is that you work out the right option for your own firm, and do so based on actual facts rather than misconceptions and outdated concerns. You can still be the master of your own destiny as an AR.
Ahmed Bawa is CEO of Rosemount Financial Solutions (IFA)
