Your IndustryApr 18 2013

How advisers are paid for arranging short-term finance

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An adviser may be paid an introductory fee or commission by the lender or their distributor, with amounts varying from lender to lender.

“All lenders will have different commission structures, which will vary further according to the specific nature of the loan being applied for,” notes Jonathan Samuels, CEO of Dragonfly Property Finance.

“But suffice to say that if an adviser introduces a large loan to a lender, he or she can expect to receive a very good commission.”

On average, advisers might expect to get paid between 0.75 per cent and 1.5 per cent, depending on the deal.

“It is important to note that any fee paid will be disclosed to the borrower,” says David Kinane, partner at Paxton Private Finance.

Rob Jupp, chief executive officer of Brightstar Financial, adds that intermediaries can also charge a fee of their own which can be added to the loan in many cases.

Most brokers and advisers tend to deal with specialist distributors, says Danny Waters, CEO of Enterprise Finance, one such distributor.

“Bridging is a very specialist area and therefore for most brokers and advisers it makes sense to deal with bridging lenders through a specialist distributor.

“Specialist distributors will have preferential rates, a detailed understanding of which lender will have an appetite for which loan, and will be able to process the loan much more quickly,” he claims.

“The best bit of all is that advisers can get a specialist distributor to do all the hard work without their own remuneration being affected at all. This is because specialist distributors use their volume to negotiate enhanced commercial terms with the lenders.”