For anyone in the mortgage market, especially networks, there is always one table that grabs our attention – no, not the latest Premier League standings, but rather the latest Network League Table.
Paul Day’s quarterly round-up of networks and their Appointed Representative (AR) numbers is always a must-read.
While, of course, we track our AR numbers internally, it’s still interesting to see how the wider network community is faring.
The latest table, which is based on the Financial Conduct Authority’s register and looked at Quarter 4 2023, confirmed what we already knew of our own network, but also suspected of the wider market – AR numbers are on the rise.
We saw our own AR numbers climb by 34.1% during 2023, which was fantastic and a demonstration of the hard work and commitment everyone working at the Beneficial Network have shown.
Our own figures were also representative of the wider AR numbers, which showed AR figures increased by 110 in Q4 across the main networks.
Of course, what the table doesn’t tell us is why so many brokers made the move to AR status – but I can hazard a guess.
Sometimes, what is happening in the mortgage market can impact which way we see the AR/DA pendulum swing.
Seeking security
When the market is challenging and gross lending is falling — as it did last year — there can at times be a tendency for brokers to migrate towards a network, and this is perhaps what we saw in Q4.
For some, a network can offer a sense of security – especially in trying times. During such periods, brokers will also naturally be looking to boost their business, with some feeling a network can help them achieve better results, as well as help propel them into new product areas.
The support offered by networks, through workshops and training, can give ARs the confidence they need when considering new product areas, whether bridging, commercial finance or looking to increase their insurance sales.
Now more than ever, it’s also essential brokers are able to support their clients who might fall into the specialist market, either due to missed payments or their deteriorating financial situation.
The best networks provide training courses for their members to upskill and deliver a more comprehensive service and set of products to their clients and it may be that some brokers need the support and encouragement of a network behind them to gain confidence.
Another factor that can lead brokers to join a network is regulation. While mortgage brokers are adept at handling regulation – last year saw the long-awaited Consumer Duty rules come into play. This added a new element to the current regulations and required firms to adapt a slightly different mindset to regulation.
This may have also contributed to the increase in AR figures in Q4, as more brokers turned to networks for guidance and resources to ensure compliance in their advice.
Accessing the latest technology
Fintech is becoming a necessity in the day-to-day operations of a broker, and while some are confident in choosing and applying their own systems, others are not.
Having a network effectively unburden brokers with this task, knowing that they have the right system in place, can be a huge relief for some brokers.
The vast array of cutting-edge technology on offer is amazing and growing every day, and having the right sourcing system or case management in place can not only make operations smoother for brokers but also more profitable by freeing up time to do what brokers love best – advise.
This not only benefits brokers, but their clients too.
When gross lending is down, as well as looking for new business areas, it’s only natural for broker firms to also look at how they can streamline costs, and this is what I expect a lot of brokers started to do as volumes fell last year.
For some brokers, the AR model might offer a more financially viable option for their business.
One stumbling block for brokers can often be a feeling that the more successful their business, the more of a percentage they have to efficiently give away to the network, with a large number of networks charging a percentage of income as their fee, and while that can work for some AR firms, it can become a little hazy when trying to budget.
For networks, it’s often a matter of ‘happy broker, happy network,’ and when our brokers are thriving, we like to share in that achievement – this doesn’t mean we take a slice of your commission, but rather operate a flat fee model, so every bit of commission earned is yours.
This means that everyone involved in the relationship knows from the outset exactly what the partnership will cost, making it much easier to plan for the future.
A more personalised experience
Something we hear from our members a lot is that being a member of a network makes them feel part of a community. Often when Directly Authorised (DAs) make the move to become an AR, the transition can feel significant – like moving from a small town to the big city!
But it doesn’t have to feel that way. While at one time some networks may have been perceived to be all about numbers, there are now an increasing number of smaller networks in the market – including ourselves – which might make the transition for brokers slightly less daunting and offer a more personal feel.
Mat Rees is chief executive officer of Beneficial Network