Kevin Paterson, sales and marketing director at Assurant Intermediary, looks at how intermediaries can adapt their business model to charge clients for their expertise and knowledge
There has been heated debate over the past few months surrounding dual pricing and the increasingly common practice of lenders taking intermediary business in house as they try to build margin in what has been a shrinking marketplace. Intermediaries have naturally been up in arms as they try to protect their corner and successfully manage their way through the downturn.
King Canute ably demonstrated to his courtiers that even the highest power in the land could not stem the tide. Rather than trying to fight the inevitable, is it time for intermediaries to embrace these developments and find a way to make them work to their advantage?
The simplest solutions are, more often than not, the ones right in front of us. I believe that this is very much the case when it comes to the changes that have taken place in the mortgage advice sector over the last couple of years. If you start from the premise that fee-free mortgage advice is dead and begin to think about how you can adapt your business to make money, then you are half way to achieving your goal.
I have long been an advocate of mortgage advisers charging their clients for the knowledge that they pass on. Think about it. It has taken you years to acquire this knowledge and you have probably learned some valuable lessons along the way, all of which has brought you to the position in which you now find yourselves. You have amassed knowledge and experiences that no sourcing system will ever be able to teach you – and if there was ever a need amongst your clients to take advantage of all that knowledge and expertise, surely it is now.
I would suggest you look at breaking down your sales process into three identifiable sections, and talking through each section and the services available to them under each one so it is clear what they are accessing and what they should pay for.
Let’s start with the source. Helping your client source a mortgage deal from across the whole market, not just the intermediary routes, has as much value today as it has ever done. I believe that many intermediaries have shied away from this in the past for fear of losing the case to a lender-direct deal. However I would encourage you to embrace this route going forward rather than fearing the outcome. Demonstrate to your client that for an appropriate fee – say £149 – you are able to collate all their relevant details, research the whole market including lender direct deals, match their requirements and recommend the most appropriate solutions presenting your findings in a professionally produced report.
If you point out how long it would take for them to try to research and review even half a dozen mortgage deals through the likes of moneysupermarket.com, then all of a sudden you have proposed solution and fee doesn’t look quite so bad.
I think the value of this proposition is made even clearer at stage two – the placement of the business.
Having produced your report, you present your client with several choices. They can simply take your advice and do with it as they wish – having effectively paid for it, they own the report. More likely, however, they will look to you for some additional help and this is where intermediaries have more recently come unstuck. An intermediary friendly route will invariably generate a proc fee which should cover some or all of your fee, but what if the recommended route is not a deal available through an intermediary, rather a lender direct deal? How do you help your client and, more importantly, how do charge for your assistance? You offer them a coaching facility to guide them through the process, and I will expand on this in my next piece.
There is also a third stage of the sales process to consider, for which you could charge a further fee &hellip but more on that in the follow-up to this article!
