Take a straw poll on the collective buying habits of the UK consumer and I’m sure you’ll find that the vast majority of people have now bought at least one financial product via a comparison site. Unless you’re still living in the technological dark ages, then I suspect most people have secured perhaps car or home or pet insurance via one of the many sites available; you can probably add in a credit card to that, potentially a loan, and there may even be some who have sourced and secured their mortgage via this method, although I’m deeply unconvinced of the merits of this over using a mortgage adviser (for obvious reasons).
Consumers clearly feel more confident purchasing certain financial products via the comparison sites rather than others – I suspect that has a lot to do with the pricing of such products. Getting it wrong with pet insurance – i.e. buying a product which doesn’t cover you further down the line when your pet does get a certain illness – isn’t perhaps as financially hazardous, as getting it wrong when it comes to choosing your mortgage or pension, for instance. The numbers involved are slightly different, to say the least.
In these circumstances, we tend to find that consumers want tailored, individual advice from a recognised expert which is why we find demand for advisers growing and flourishing. What does however trouble me is the demarcation between the provision of say mortgage and pension advice – on the one hand, the UK consumer seems to accept that advice for the latter will require a fee, and yet on the other the mortgage advisory community still seems to struggle in terms of securing ‘fee acceptance’ when it comes to the provision of mortgage advice.
I know many firms do charge a fee, and when you are able to save clients thousands of pounds by securing them the most appropriate deal, then why not? Plus of course, we shouldn’t forget the protections that consumers are afforded when using an adviser. However, the prevailing attitude of consumers, that they should get their mortgage advice free, still means that many advisory firms do not opt to fee-charge and instead only ‘get paid’ via the lender’s procuration fee.
Given this is the case, then it seems fair to me that advisers seek to maximise their income opportunities in other areas of the market, namely protection and general insurance where they secure trail commission that can underpin a business for many years to come. In this regard, it also makes sense (in my opinion) for advisers to consider the provision of conveyancing advice because it allows them to charge a referral fee as recompense for the advice provided.
It’s also vital for an adviser to be offering such advice because there could be a notion amongst clients that conveyancing should be a ‘price comparison-esque’ product or service. By that I mean, clients might be willing to go down the pet/car/home insurance route with their conveyancing needs thinking that price should be the only determining factor and therefore they might believe they can source get both the best conveyancing and the cheapest price. These are often very different.
As mortgage advisers you’ll know only too well how dangerous a step this could be – allowing your clients to source their conveyancing in such a way opens up all stakeholders within the transaction to a potential service which is far less than that anticipated or required. Price is clearly important, but it should not be the be all and end all when it comes to your client’s conveyancing needs – again if you take control of that conveyancing advice not only do you give yourself that revenue stream, but you can move your client in the right direction. One where they are not at the bottom of the pile for a firm that may not have the right processes, experience, staff, the list goes on, to deal with their needs.
So, while we understand the allure of the price comparison site, there is much to be said for advisers educating their client base about the cons to the pros they might see. In certain product areas, a price-based approach can be right, however when it comes to others, particularly mortgage/GI/protection/conveyancing, there should be no doubt about the importance of other product/service/quality features over price. The simple question, ‘Do you want it done right and within the timescale required, or do you want the cheapest?’ could be an opening gambit and should hopefully open the client’s eyes to the potential damage they are doing by only choosing on cost.
Harpal Singh is managing director of Broker Conveyancing