Given the fact that 2016 was so unpredictable, it seems rather foolish to be attempting to work out what might be coming over the horizon in 2017. However, despite all that might be on the verge of happening – President Trump, Brexit and the like – there appears to be a certain degree of stability when it comes to mortgage advice and the role of intermediaries.
The latest figures appear to show a market share of 70%+ for advisers and there seems little reason to doubt this will fall back anytime soon, especially in a mortgage marketplace whichappears to grow in complexity each week and where consumer demand for advice remains strong.
However, competition for customer’s hearts and minds is increasing. We’ve heard a lot about lenders (particularly the high-street operators) looking to use new technology in order to increase direct business – the assumption being that this is somehow the opening of a ‘new front’ when it comes to clawing back business from the intermediary sector. Of course lenders will need to continue feeding the direct part of their businesses, but from my perspective, they remain committed to the broker market and are mostly looking to streamline processing and engage in different ways with an increasingly ‘tech savvy’ public.
That said, there are those that are already, and will be increasingly in the future, keen competitors for existing intermediary firms and they want to take your market share. It’s firms like Habito that are utilising technology to offer an advice service and it’s those brands who are perhaps already major operators in other markets but are looking for sectors which might be open to a disruptor proposition. Can we safely say that the delivery of advice would be somehow off-limits for those businesses who are renowned for the quality of their service and already have brand recognition and customer loyalty – might we therefore see the likes of John Lewis, M&S or Amazon entering the sector?
Let’s not kid ourselves that the provision of mortgage advice is somehow immune to the technological revolution; that we can continue blindly in the face of all the evidence to suggest otherwise. There are significant businesses who are conducting forays and taking market share every single day in all manner of sectors via the use of technology, and therefore we as advisers have to prepare ourselves for what could be coming over the horizon. Indeed, it’s best for all concerned if we believe this will happen, rather than just thinking it might.
That said, there is much that can be done right now that puts mortgage intermediaries at a major advantage when it comes to those potential disruptors. I’m talking about upping existing and new customer engagement levels, looking at the existing relationships you have and seeing if they can’t be bettered, ensuring that you are as diversified as possible in order to meet all a client’s needs not just the mortgage. If you have opened up new income streams then you are on the right track, and along with a general service remember that developing a bespoke, specialist offering in areas such as equity release, later life lending, second-charge mortgages, protection and GI, for example, is always going to be a positive.
The key question however is whether to fight this threat on your own, or are you much better looking for support and resources, piggy-backing onto larger operators and propositions that can provide plenty of support to help you build your brand and proposition. For those smaller, independent firms there is the opportunity to develop a relationship with a DA mortgage club/distributor that provides product access, improved terms, technology and compliance support, marketing resources, etc, that you could simply not access on your own. While for existing AR firms, now might be the time to reflect on what you get from your existing network and to see whether there is more on offer from others in the marketplace.
Overall, there are propositions like our own, that can help advisory firms of all shapes and sizes as they seek to stave off the competitive threat. We all know this business requires constant attention, constant client communication and engagement, constant provider and service knowledge and expertise, and it may well be that having the backing of a major operator who can provide in any number of areas, is the right way to not just put up the defences but to also go on the attack.
In that regard, we wish you every success and a highly competitive next 12 months.
Paul Nye is director, business partnerships, at Stonebridge Group