John Coffield, head of Paradigm Mortgage Services, said while there has not been a huge amount of consolidation or acquisition activity in the mortgage advice sector recently, that might be because it was hard for firms to prove their inherent value.
“Where’s the recurring income, rather than just procuration fees? You can’t base a business on that, so brokers need to look at selling protection and life cover, which have renewals, to give their businesses more underlying value.”
His colleague Mike Allison, head of protection at Paradigm Protect, said while you cannot force busy brokers into selling insurance, he has been working hard to put together a comprehensive protection proposition to make it easier for them.
“A lot of advisers we speak to say they should be writing more but they’re running so fast already on the hamster wheel selling mortgages that it is difficult to jump off and look at what else is around.
“We reckon if you write a couple of policies a week, that will add up to a recurring income stream of between £20,000 and £30,000 within a few years.”
Richard Adams, managing director of mortgage and protection network Stonebridge, said the provision of protection advice by its appointed representative firms is just as important as their mortgage offering.
He said: “It is a fundamental part of the advice proposition and, to my mind, absolutely beggars belief that advisers might be concluding within their factfind that the client needs certain protection cover and not then going on to provide it.
“The benefits in offering protection advice appear obvious, not just in terms of providing the fully-rounded advice that clients expect and need, but also in terms of the regular, secure income stream it can deliver not just now but also in the future,” he continued, adding this can provide a significant foundation that can cover off costs and allow firms to build upon.
Mark Harris, chief executive of SPF Private Clients, stated: “By diversifying your business and creating different income streams - whether that means protection, insurance or wealth management - can insulate your business when the mortgage side of things slows down.”
Last week, John Charcol launched a legal conveyancing service in association with ULS Technology, to be rolled out through its network of more than 115 mortgage advisers in June.
Ben Thompson, chief executive of ULS Technology, said the mortgage market has largely polarised into ‘price or advice’, where customers either simply want to secure the best possible price with as little human interaction as possible, or need advice and assistance in helping them to make important lifetime decisions.
“There was a view that mortgage advisers would find it hard to adapt to technological advances, but adapt is exactly what many have done, successfully making the necessary transition from being a broker to an adviser,” he stated.
“Quite simply, advisers have had to adapt and re-invent themselves to successfully get to where they are today, accounting for nearly seven in 10 new mortgages arranged this year.
“They will need to continue to move with the times and adapt to inevitable further change in order to survive and thrive, however.”
Meanwhile, technology providers like Iress are trying to make life easier with additional sourcing and research support recently added to its Xplan system. The firm’s executive general product manager Andrew Simon explained this helps make the adviser and client’s experience more seamless.
“The quote itself is built by utilising information already gathered during the fact find, which is simply added to the total cost summary, drastically reducing the additional time and effort required for both the broker and their client if they took the more traditional route of going through an additional sale.
“We’re working on this protection module now by integrating the exchange into Xplan and expect to release this in the summer,” he added.
In April, Legal & General Mortgage Club director Jeremy Duncombe argued brokers need to do more in order to stay in business.
“Just as Amazon no longer only sells books, brokers have a lot more to offer customers than just mortgages – from advice on releasing equity, to protection, conveyancing, lifestyle planning, other borrowings, and so much more,” he said.
“If brokers are to sustain and grow market share, they need to invest in technology and provide a differentiated service that will enable them to meet changing customer needs and expectations.”
Back in March, Newcastle Intermediaries’ head of mortgage distribution Steve Carruthers suggested brokers were caught between wanting to offer clients more, and being worried the market may be set for another fall.
“It’s something of a dilemma for brokers, many of whom re-trenched post-crisis and are now wondering whether they should recruit to meet demand,” he said. “Some firms have expanded recently, but others may suspect that the current boom is cyclical in nature and we’re at the high point before a fall.”
peter.walker@ft.com
