Over the past six months, we have noted a significant increase in the number of mortgage brokers being recruited by IFAs. Anecdotal evidence suggests this trend is the result of those IFAs who used to shy away from mortgages beginning to consider a more holistic approach to the provision of financial services advice. Financing the purchase of property, as a home or as an investment, is an intrinsic part of financial planning and as a result, IFAs are looking to bring mortgages within their umbrella of service offerings.
IFAs have a number of options when considering how best to add mortgage advising to their existing range of service offerings. Companies may add these services by employing a specialist with mortgage experience or by training existing IFAs to offer mortgage advice in addition to basic financial planning. Another option is to outsource mortgage services as a means of avoiding the costs associated with training or recruitment of new specialist staff.
Outsourcing
Many companies have used the outsourcing route as a means of adding additional revenue streams through referral bonuses without any outlay of capital. This strategy can impact service quality as seen by Envision’s client PQR Financial Planning Limited. PQR recently added a professional mortgage broker to its team as a means of better servicing the needs of clients and to avoid reliance on external suppliers. Quentin Holland, managing director at PQR, said: “We found the service we received from external brokers was not up to the standard of service we give our clients for the rest of their financial advice, so we were left with the option of setting up our own mortgages services team.”
There seems to be some contention between the customer service impact of the addition of a mortgage practice and the financial risk for what some consider limited financial reward. Many of the big companies refuse to spend time on mortgages because of their time-consuming nature. This creates an opportunity for smaller boutiques to offer added value through consistency of service and a holistic approach to financial planning.
Frustration
The frustration that customers feel can be noted by one of Envision’s consultants, Mark Adams, who has recently been working with a large IFA firm to obtain both mortgage and financial planning services. While the IFA tried to account manage the separate pieces, referrals to separate brokers can be confusing, yield additional paperwork, and generate poor results. Adams says: “I finally moved to a smaller IFA who was able to deal with all of my needs. These types of referred relationships are redundant and I like to work with a single adviser with whom I can develop a trusting relationship.”
Recruitment is intense for candidates with mortgage broking experience. Candidates who can truly offer independent advice and survey the market for the best deals for clients are in high demand in the market today. This is especially true for candidates who, as Holland says, can ‘run a mortgage desk without much management input.’ This calibre of candidate allows IFAs to diversify with little additional cost aside from those associated with recruitment and wages.
In the end, the provision of financial advice of any kind is a business. Clients who have invested in mortgage brokerage have seen significant financial returns from their efforts. This is in addition to the service impact and the ability to breed client loyalty through a more holistic approach. It is our expectation that more companies will be asking this what took them so long to become involved in the coming months, creating an even more significant requirement for candidates with mortgage broking skills.
