If your reaction to the above is ‘why should I?’ then I won’t take up any more of your time. However, if, as a professional adviser, you are still keen to ensure that your clients are actually seeing evidence of all the options that the FCA would expect them to know about, then hopefully this article might be useful.
We all know that when discussing capital raising with clients, we have to make them aware of remortgaging, further advances and second charge mortgages. For many advisers, telling clients that second charge exists is as far as it goes and then, in many cases, the client is told that in the opinion of the adviser, the only game in town is a remortgage.
No worries there, the obligation to follow the FCA guidelines has been ticked off, the second charge option has been allowed out of its box and then put back inside and the client is led firmly back to the ‘safety’ of a remortgage as the only option.
Of course, it could well be that a remortgage is the best option, but is the customer getting to see why? My guess is that the answer is no. My question is why not?
We are all grownups here, so I have another question for you. Let’s assume that you are not a professional adviser but a member of the public, reasonably educated in financial matters, and seeking the best way to raise capital. Would you be prepared to be told about the potential options, but then see no actual evidence as to why a remortgage is the only way forward? Apart from your adviser telling you so, that is.
No, I didn’t think so. Don’t you think that clients deserve to see the kind of evidence based approach that you would find acceptable as a potential customer, rather than just be told that it is effectively ‘my way or the highway’? If not, it really begins to look suspiciously that either the adviser is personally biased against second charge mortgages and does not even want to consider them (so an emotional rather than professional response), or even worse, is too busy or too blinkered to grant a client the right to see why other options have been discarded.
Customers trust their advisers to give them ‘best advice’. Surely that should include facts and figures that logically lead to the actual recommendation? I know that is what I would want from my adviser.
So how do you achieve this zen like approach to capital raising advice? I have no doubt that every one of you is busy but hopefully not too busy to be thorough. However, I am sure that for many of you, second charge lending is not as familiar as remortgaging, which is also a strong, if understandable factor as to why so many advisers still ignore them.
Sourcing systems can provide basic second charge quotes, but are usually unable to take into account a client’s specific requirements beyond the basic criteria and can give you a misleading comparison.
The simplest way to ensure that your client is getting an overall picture is to come to a whole of market second charge specialist, like Fluent for Advisers, who can help you on all aspects of second charge and more specifically, provide you with a quote tailored to that particular client’s circumstances from the lender most likely to accept their application.
Then, when you go and see your client, at least you will have the evidence to back up your decision of which option to adopt. You never know, the evidence might very well lead you to look at second charge mortgages more closely.
In short, I am not here to ‘sell’ second charge. All I want to see is that customers are fully briefed and provided that is done, then the recommendation made, whether it is for a remortgage or not, will have real validity.
Jeff Davidson is head of intermediaries at Fluent for Advisers