If a friend asks you in the pub, ‘what do you do for a living?’, what do you say in reply?
If the answer is, ‘I’m a mortgage broker’, you are probably selling yourself short, because mortgages are not, or should not be, the only service you provide. Most ‘mortgage brokers’ also regularly arrange buildings and contents insurance, payment protection insurance (PPI), life cover, help clients find and appoint a conveyancer, organise will writing, sort out commercial finance, the list goes on and on. In fact, this list will get longer, as new services come on stream, such as the provision of Home Information Packs (HIPs) next year. Positioning yourself as a mortgage broker is, therefore, not an accurate reflection of what you do.
I mention this because I was having a debate in the pub the other day with a friend who is an estate agent. She described her role as ‘looking after a client’s complete house moving needs’; a positioning that I strongly disputed. I argued that all she does is advertise and sell property and everything else in the house buying process is actually sorted out by a financial adviser.
Offering a comprehensive service
This whole issue of how you ‘position’ your business is more important than mere pub talk. If you promote yourself as a ‘mortgage broker’ don’t be surprised if clients simply ask you to arrange a mortgage for them. If, on the other hand, you want to provide a more comprehensive service, think very carefully about how you describe and promote your business.
Providing a wider ranging service makes a lot of sense. It not only generates more income and therefore profit, but it also provides your clients with a better quality service and is more likely to encourage them to come back to you again in the future.
Thinking differently about the way you run your business can bring real benefits. Take the sale of insurance products, for example. Many brokers I speak to admit insurance is still an ‘add on’ sale; something they do if time permits and they acknowledge that penetration levels are nowhere near as high as they should be. So what can be done about it?
I put this question to Geoff Taylor, one of our appointed representatives (ARs), who works for The Mortgage People. He came up with the following very sensible three step guide.
Step one: Don’t try and sell insurance as an add-on at the end of a long and detailed mortgage meeting. Arrange a separate meeting, when the subject can be given the attention it deserves.
Step two: Don’t leave the meeting to discuss insurance until the mortgage has been completed; introduce insurance far earlier in your discussions. If you leave insurance until after completion, don’t be surprised if the client is less than excited about discussing insurance when they have just endured the trials of sorting out a mortgage and a new home. The time to introduce insurance is up front, when completing the mortgage application, and that is when a follow-up meeting should be arranged.
Step three: Set yourself the challenge of not using financial lingo when talking about insurance. Banish words such as ‘critical illness’ and ‘life cover’ from your vocabulary and use language your clients will understand. A good tip is to explain to the client that they need to consider four important issues:
- what would happen if they were made redundant?
- what would happen if they were off work ill?
- what would happen if they were seriously ill and couldn’t work for a long time or maybe even never again?
- what would happen if they died?
I’m sure you’ll agree this advice makes sense and should help drive up insurance sales. It’s not rocket science, just common sense , but it is surprising how many brokers choose not to put this type of common sense to good use.
Recruiting a specialist
Talking to some of our other members, I have also come across a few other pieces of sage advice about increasing insurance penetration levels. One good idea, and I appreciate this will only apply to larger firms, is to recruit an insurance specialist. If a firm has three or four mortgage brokers, it may make sense to employ an insurance expert, who is focused purely on insurance sales. It may sound like a luxury, but if penetration levels can be increased, the specialist will pay for themselves very quickly and, most importantly, make a contribution to increased profits.
Another idea is to recruit more administration staff, to help with the additional paperwork generated by insurance sales. Again, your initial reaction may be resistance to increasing costs, but sometimes you have to invest in order to take the business to its next level of profitability. A problem with small businesses of two, three or four brokers is that they tend to become jacks of all trades: salesmen one minute, administrators the next, trouble-shooters the next and office dogsbodies when they have a spare five minutes. Sound familiar?
Consider for a minute how much of your time is actually spent selling as opposed to doing clerical work that a competent administrator could do on your behalf. There’s a fair chance the extra income you could generate if had more time, would more than cover the costs of an office administrator – especially if that person is shared among two or three advisers.
Some of these ideas may work in your business – some may not. What’s important, however, is not accepting the status quo and constantly questioning how you run your business and how you can make it more profitable. Getting back to my conversations in the pub, a good starting point is to ask yourself what business you are really in.
I suggest it isn’t just mortgage broking. If I’m right, make sure you capitalise on the additional profit opportunities which are available to you in those markets, such as general insurance, which you may not be fully focused on at the moment.
