How did we get through 2009, asks Dean Jones, head of paaleads.com
As we start 2010, it is a good opportunity to look back at what has been one of the most challenging years yet for IFAs and consumers.
Last January, most brokers and IFAs that I spoke to were saying to themselves ‘How on earth am I going to get through this year?’ It really was a case of doing anything to survive, as the economy slumped into recession.
A good example of how advisers adapted to the climate was their rapid diversification of income streams. Life insurance, previously a modest channel on paaleads.com, became increasingly popular. This was a direct reaction to the changing needs of consumers who sought to protect themselves from the changing economy. We saw the numbers of moneysupermarket.com customers seeking financial advice for life insurance increase from 20% of all enquiries at the end of 2008 to around 35% at the end of 2009, a significant shift.
In November 2008, paaleads.com saw around 65% of its mortgage enquiries were from customers looking to remortgage, compared to around 35% for purchases. However, by the final interest rate cut in March, which left the base rate at 0.5%, over half of mortgage enquiries were from consumers looking for purchase advice, and around 45% looking for advice on remortgaging. This change emphasised the difficulty that consumers faced in securing debt as lenders tightened their criteria. Historically, it was widely believed that purchase leads did not deliver value, but over the last year, IFAs have come to realise that these customers typically present future opportunities, not least for cross selling purposes.
Looking to the year ahead, the mood, I am pleased to say, is cautiously optimistic. A recent survey carried out amongst the IFA panel for paaleads.com revealed that 62% are positive about their prospects for 2010, feeling their business is in a strong position to grow. It is important to remember what a step change this is when you consider my remarks with regards to market sentiment 12 months ago.
The areas I believe will present the greatest potential include the protection sector. With advisers having diversified in the downturn to PMI and life cover, I believe this will become a core part of their new business proposition, as opposed to having just served its purpose as a short term revenue fix.
There is also much talk of lenders being forced to lend more, which can only be positive for mortgages. Interest rates are touted to remain at low levels for sometime, so in order to try to revive the market, the increased liquidity that the banks are experiencing can expected to be passed onto potential home buyers.
Finally, perhaps the most encouraging signs can be found in the conversations I had over the last weeks of 2009, with large IFA firms planning for Q1 2010 and preparing for growth. This in itself may not seem anything unusual, but when you consider the state of the market over the past year, this is very positive news for the industry. I am not suggesting that we are now operating in a normal market once again (or at least what was once considered normal), but elements of normality are returning.
2010 will undoubtedly be as tough a year as last in some ways, but I look forward to sharing it with you. Happy New Year.
