BestAdvice (BA): Why do you think Sesame realised the need to include a private bank on panel for its network members?
Peter Izard (PI): There are two elements to this. The first is that the number of high net worth (HNW) individuals is growing and becoming more diverse. It was a noticeable feature of The Sunday Times Rich List published earlier this year that there are so many different ways in which those listed had accumulated their wealth. High earnings didn’t necessarily come from traditional sources but from the world of dating apps, video gaming, clothing or even reality television. This dynamic means more brokers that sit outside of the established large London firms could encounter a HNW client.
The second element is that, when it comes to HNW clients, no other type of lender in my opinion is as well placed to deliver a solution for their mortgage needs than a private bank.
Private banks are geared towards the complex needs of HNW individuals, with experts who are able to analyse every application on its own merits and create tailored solutionsthat meet the specific requirements of the individual borrower.
BA: Do you expect more networks to follow suit and add private banks to their panel?
PI:Absolutely, and we are currently having a number of conversations about how Investec Private Bank can work more closely with other networks.
BA: What benefits can a private bank offer over a high street lender?
PI: For HNW individuals, it is very rarely a case of one size fits all and even though they may have considerable wealth, they also have extensive mortgage needs.
Many might require high loan to value (LTV) mortgages, some on an interest-only basis, or split over differing fixed rates within one mortgage deal. Or it could be that we need to consider numerous and varied assets, long-term incentive plan (LTIP) vesting schedules, retained profits or complicated borrowing structures.
Some retailbanks would traditionally take a more rigid approach to underwriting, whereas the underwriting offered by a private bank is bespoke and tailored entirely to the circumstances of the individual. This means that a private bank could make considerations that the high street cannot.
BA: Are there any myths or misunderstandings about private banks?
PI: One big misconception about private banks is that brokers might assume that a client needs to bank with, or place some of their assets under management by that bank in order to secure a mortgage. While some private banks do still ask for assets under management, Investec Private Bank does not require this from clients in order to be considered for a mortgage. Our only pre-requisite is that the client has a minimum annual income of £300,000.
Another myth amongst some mortgage brokers is that private banks are off-limits to the everyday broker. While we cannot speak for all private banks, this is certainly not the case for Investec Private Bank. Our doors are very much open to mortgage brokers who are looking to secure a mortgage for HNW clients who meet our criteria.
BA: What can brokers do to attract more HNW clients?
PI: Demonstrate to potential clients that you have a strong understanding of the market, good access to lenders and can add value. If you do work with a HNW client, take the time to provide the lender with a clear and informative case enquiry. This will mean a quicker response and a shorter wait time for the end client, which could stimulate referrals.
One way of improving your expertise in the sector and understanding the packaging requirements of different lenders, is to make use of the resources that lenders make available to you. A good relationship with a knowledgeable business development manager from a private bank could help you attract more HNW clients.