Many mortgage brokers already use estate agency leads to generate business but Lowe says more could be made on the wealth management side.
IFA firms with wealth management offerings could link with estate agents directly while pure mortgage brokers could refer leads from estate agents to their wealth management partners and take a cut of commissions.
Lowe has worked with large IFA firms including St James’s Place but he says brokers with existing estate agent relationships could benefit from thinking about wealth management referral opportunities more. Lowe says agency clients with commercial needs, large property portfolios or even agricultural interests may benefit from trust advice, tax planning or pensions transfers.
These are products and services that have been ignored by estate agents in the past because of the market’s concentration on mortgage business.
Lowe, who has 30 years experience in estate agency with firms including Reeds Rains, Connells and TSB Property Services, has been developing Estate Agency Business Solutions since network Home of Choice, where he was estate agency director, went into administration in May last year.
Lowe is working with independent estate agencies at the top end of the market referring clients to IFA firms and intermediaries offering pensions, investment, trust and tax planning advice. Estate agents and wealth managers split the commission on any products sold as a result of the referral.
“The referral system from estate agents has traditionally focused on the mortgage and possibly protection but there are other opportunities to build relationships with clients,” said Lowe.
“Particularly at the high net worth end of the market estate agents can have access to clients who need wealth management services and who would seek a financial adviser outside of that relationship.”
Melfyn Williams, managing director at Wales-based estate agent Williams and Goodwin, has just launched Lowe’s offering.
He said: “Estate agency has always looked after mortgages and because it’s a moving market we decided to look at financial services from a different angle. We see a lot of clients with second homes or empty properties for example who might benefit from some help with the wider management of their finances.”
Lowe’s model is currently small scale but he believes mortgage clubs could negotiate larger scale contracts for their members to benefit from referrals and wants networks, clubs and larger organisations to adopt the idea. He is due to speak to Towergate Group later this month.
“Networks should be looking to benefit from this but they’re not currently showing that much interest,” said Lowe. “We’ve had a sausage machine effect for too long where business has been about mortgage churn. I think we have to think about the full client lifespan – from the house, mortgage, protection right through to inheritance tax issues and protecting that individual and their family’s finances in the future.”
John Malone, executive chairman of network PMS, said he agreed that wealth management was the next step in the mortgage, protection cycle.
But he added: “There might be some opportunities for lead generation for the “crunchy gravel market” estate agency business but it is reasonable to expect that prestige property purchasers do tend to have an existing relationship with a DA-type intermediary already.
“I would expect our DAs to already have links and relationships with prestige agencies in that fashion,” he added. “It’s not something we’d be looking at negotiating on their behalf.”
