Kevin Paterson, sales and marketing director at Assurant Intermediary, looks at different ways to make money with a direct model
Like it or not, dual pricing is here to stay and lenders are likely to continue to take intermediary business in-house. So even if you’ve done all the leg work of searching the marketplace for the best offer for your client, how can you make money if they choose a lender direct deal? What service can you provide for which you can charge, and for which your client will be happy to pay?
I believe it is possible to offer and charge for a coaching facility to guide them through the process.
While there are undoubtedly more deals out there now when compared to this time last year, most lenders continue to apply unparalleled levels of scrutiny to every application. Most are looking for reasons not to lend and your clients, particularly the less financially astute, are not necessarily best placed to present their case. This is where your coaching service comes in.
Using your knowledge of what lenders are looking for and, equally important, what is likely to make them nervous, you can ensure that your clients say and do all the right things to put them in the best possible situation to make a successful application. You can take them through what the lender is looking for and identify what pitfalls, if any, they may encounter. You can help them complete the paperwork, making sure they present all the right pieces of information and do not unwittingly volunteer additional and probably unnecessary information that could jeopardise their case. It is also important with such a service to help your client understand that they will probably get only one shot at obtaining a loan. Rejected applications are registered on the Hunter system, as are previous credit searches, and so could reduce the attractiveness of your client to another lender if they are unsuccessful.
This is a pretty comprehensive service offering and a fee of £199 is not unreasonable. OK, it doesn’t match previous procuration fee levels but when combined with stage one of the staggered sales approach that I outlined in the previous piece discussing a fee-based model, it does represent a decent recompense for the time spent.
Having completed stages one and two of the sales process, you then move on to stage three. Your client will need at least one insurance solution in the form of buildings and contents, but there are also a number of others to discuss with them. Life insurance, income protection and cover for critical illness should all be highlighted. You can offer a sourcing service just as you have already done for the mortgage itself, paid for by the commission you receive from the insurer. This minimises the actual cost to your client, and saves them valuable time as well as potentially securing a better deal than they could find themselves. They may not want your assistance and choose to source their own policy but insurance is not that simple and very often requires advice – something the price comparison sites really can’t provide.
Of course, your client could reject one or all three services you can provide, but you won’t know if you don’t try. I recently tested the theory on a friend who is active in the mortgage advice sector. It transpired that he was already offering part of the service, but he got really excited about extending his proposition to include the additional areas I proposed. He resolved to try them out the following day and 24 hours later I got an excited call to say that the new service worked like a dream. More importantly, he said that it made good sense to his client who was more than happy to pay for his expertise.
Much has quite rightly been said about the need to diversify to survive. Work your general insurance business and explore parallel opportunities like debt management and IVA referrals. Consider up-skilling your permissions to encompass other areas of expertise like pension and investment advice. But don’t ignore the fundamental core skill and expertise in your business built up over many years. Value that knowledge accordingly by helping your clients in this extraordinary market.