Last year was incredibly challenging for mortgage brokers, particularly due to the fallout from the September mini-Budget and what seemed like a revolving door in parliament.
There was an abundance of optimism that 2023 would be a much smoother experience for the industry but, while mortgage rates are falling, the year has already presented new tests, namely an imminent recession in the UK as forecast by the International Monetary Fund.
Brokers will be busy calming the nerves of borrowers and advising them on how best to manage their finances during the current cost-of-living crisis.
Brokers that are part of a mortgage club have access to a whole-of-market lender panel
But what support is available for mortgage brokers themselves to assist them in staying operational as business costs rise and enquiries slow or become more complex?
It’s at times like these that mortgage networks and clubs should prove their worth by offering advice and tools to members.
“We’ve seen a drop in the number of residential purchase property transactions, in York and across the mortgage market, since September,” says Mark Fenton, director at Fenton Simpson Financial Services and TMA Club member.
“November and December are often quieter months in the lead-up to Christmas, and that was certainly the case last year.”
Delayed plans
Fenton adds: “More particular to 2022, this slowdown was also in part due to rising interest rates following the mini-Budget, causing consumer confidence to ebb away. Due to the uncertainty, many applicants delayed their plans in the hope that rates would lower and affordability would improve.
The Openwork Partnership has supported its advisers through easy-to-use data that can be entwined with its new in-house CRM
“When it comes to buy-to-let, we’ve seen a similar decline in applications. This is mainly because of higher product rates and higher stress-test rates — used to measure how much landlords can borrow — being more stringent than pre-September.
“However, this highlights the vital role that brokers play in helping customers find a mortgage deal that suits their individual needs. Indeed, brokers that are part of a mortgage club, like TMA, have access to a whole-of-market lender panel, which means they can find solutions for clients with increasingly complex needs.”
Sesame Bankhall Group chief operating officer Richard Howells says other issues are putting financial strain on brokers and aren’t as openly discussed as the cost of living.
“Something that receives far less attention, but is just as serious, is the cost-of-trading crisis that is also affecting advice firms due to the impact of issues such as rising regulatory and professional indemnity insurance costs,” says Howells.
We want to make sure our advice firms have viable businesses not only today but also in the future
“That’s why we’ve been engaging with our network members to assist each of them and help improve their firm’s financial resilience. This is particularly important for sole traders, where both crises have a direct impact on the individual’s and firm’s income and profitability.
“As part of our service for Sesame Network members, we assist firms with reviewing their cost base, helping them to focus on things that can have the greatest impact on revenues. This can help them to make informed decisions about where to invest in their firm to increase productivity and generate new business.
“We have developed a package of network services and assistance that provide tangible support to help firms navigate through some choppy financial waters. It’s at times like these that advisers need our support more than ever.”
Advisers who have operated mainly in the mainstream markets have the ability to learn about commercial mortgages or bridge loans
The HL Partnership network says the support it offers broker members includes information on managing finances, maintaining wellbeing and developing strategies, plus the provision of marketing content that brokers can use to promote their business. It also holds reserve funds to provide financial support to any advisers facing difficulties, which it calls a ‘safety net’.
HL Partnership chief executive Christopher Tanner says a focus is also placed on brokers building long-term relationships with customers as a sustainable way to grow business.
Gap in income
Connect for Intermediaries chief executive Liz Syms acknowledges that broker application levels suffered in the final months of 2022.
“Due to the natural delay between application and completion, this may cause a gap in income for advisers in the coming months and they may wish to consider ways to bridge this gap with additional income streams,” says Syms.
“Connect has been operating for 25 years this year and has seen many ups and downs in the market. We believe it is the breadth and diversity of offerings we have for our network members that enables them to help as many customers as possible and weather challenging times.”
Support Connect’s offering to members includes an ‘on demand’ training system where advisers can gain knowledge in areas they are less familiar with, or increase their skills to ‘expert’ level to recognise more opportunities and help more customers.
We assist firms with reviewing their cost base, helping them to focus on things that can have the greatest impact on revenues
“For example, advisers who have operated mainly in the mainstream markets have the ability to learn about commercial mortgages or bridge loans,” says Syms.
Support Connect also offers a course on maximising opportunities with existing customers, and is about to launch system-generated client lists from its customer relationship management (CRM) system to help advisers identify customers in need of a review.
Paradigm Mortgage Services chief executive Bob Hunt says advice firms are “incredibly robust” in managing their own finances but are not immune to rising costs.
“As a business that exists to support advice firms, we want to make sure they have viable businesses not only today but also in the future. Plus we want to make sure they are taking advantage of all opportunities and are being paid the optimal amount for the business they place,” says Hunt.
We’ve been engaging with our network members to assist each of them and help improve their firm’s financial resilience
“That becomes even more important in a market that is predicted to see lending levels fall in 2023 — particularly purchasing — and where providing ongoing advice and positive outcomes to those clients is at the heart of the Consumer Duty proposals.”
Audits and reviews
Hunt says it’s crucial that a firm truly understands where its costs and revenues are balanced.
“We have field-based business consultants who are assigned to individual firms and undertake regular audits and reviews with owners,” he says.
“They can provide advice on, for example: ensuring they have a robust retention/remortgage process; helping them move into protection advice, or escalating the firm’s involvement in this and other cross-sales areas; offering them further tech support to increase efficiencies; helping them develop staff nurturing programmes; and providing knowledge development to see the further opportunities that may exist outside where they are currently active.”
It’s at times like these that advisers need our support more than ever
Hunt adds that Paradigm also offers outsourced compliance and file review services to help members with the costs and challenges of regulation and compliance.
Openwork head of partnership services Setul Mehta says the best way for advisers to continue to run successful businesses or navigate difficult times is through communication with clients.
“The Openwork Partnership has supported its advisers through easy-to-use data that can be entwined with its new in-house CRM.
“We provide blogs, newsletters and social media posts to complement existing client engagement with engaging prospects — therefore building a pipeline of future clients.”
This article featured in the February 2023 edition of MS.
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