Brokers discuss how to take on the issues associated with self-employment
CMME, the mortgage advisory firm, has launched a new scheme designed for self-employed mortgage advisers. The scheme is also aimed at expanding its broker network to 50 self-employed advisers within the next 12 months.
So with self-employed mortgage brokers seemingly in demand, Mortgage Introducer spoke to those operating in the space on the key challenges and how to overcome them, as well as the pros and cons of the sector.
Pros and cons of being a self-employed mortgage broker
Stephen Perkins, managing director at Yellow Brick Mortgages, said one of the key benefits is the higher income potential, with self-employed brokers usually earning more per case. This then enables self-employed brokers to focus on quality rather than quantity to earn at appropriate levels, he said.
Another key benefit, Perkins said, is the work life balance flexibility that usually comes with being self-employed.
Meanwhile, the challenges he highlighted include the timeline between writing the business and the money coming in when starting, as well as the lack of guaranteed income every month with peaks and dips.
“Additionally, a concern most will have is lead supply or generation when operating as a self-employed broker,” Perkins added.
Self-employed mortgage brokers – the challenges
Anil Mistry (pictured left), director and mortgage broker at RNR Mortgage Solutions, said the primary challenge faced by self-employed advisers pertains to the inconsistent nature of income.
“Consequently, for individuals embarking on a new journey in self-employment, it is advisable to establish a financial cushion equivalent to six months’ worth of expenses prior to commencing a self-employed venture,” he said.
A pivotal strategy, he said, involves active engagement on social media platforms, thereby fostering the development of a personal brand.
“This brand establishment contributes to the cultivation of the ‘know, like, and trust’ factor, thereby enhancing the likelihood of attracting and retaining clients,” Mistry said.
Over the course of time, Mistry added that self-employment can prove to be highly financially rewarding and offers the distinct advantage of complete flexibility in work scheduling, along with the absence of micro-management. Moreover, he said that this approach liberates individuals from the dependence on leads supplied by the self-employed arrangement’s affiliated firm.
James Bull (pictured right), mortgage broker at JB Mortgages, agreed that the biggest challenge is cashflow, especially in the first 12 months of trading.
“Even if you have a flying start off the blocks, with procuration fees being paid after completion, this may mean no income from this source for six months plus,” he added. As a pipeline is built up by doing regular business, he said this becomes much less of an issue and income will flow consistently.
Bull said the best way to overcome this is by charging a broker fee on offer, which provides income much quicker.
“Ultimately though, once this initial period has been overcome, the benefits of being self-employed and the flexibility and work-life balance it gives, far outweigh the guaranteed salary that an employed role can offer,” Bull said.
Rhys Schofield, brand director at Peak Mortgages and Protection, also said the biggest challenge is having a steady stream of business and cashflow, given that a self-employed broker will likely face three to six months building a pipeline and waiting for income to be paid.
“Once you have established yourself though, the flexibility and rewards are there for good self-employed brokers to have a great career and strike a healthy work-life balance,” he said.
James Miles, director and mortgage adviser at The Mortgage Quarter, added his own thoughts that self-employment is perfect for an adviser looking for that ideal work-life balance. However, Miles said he would first recommend joining an established firm to help with onboarding and being able to trade quicker, which means the broker can focus on attracting new clients and start advising as quickly as possible.
“The biggest risk is not having clients, and things can become tough if you do not have a suitable business plan - this is where an employed role could be safer,” he added.
What do you believe are the core challenges self-employed brokers face? Let us know in the comment section below.
