The evolution of the adviser

02 Apr 2012

It was Warren Buffet who said: “In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.” For some readers this may be a useful metaphor, certainly when considering the role of today’s mortgage broker.

The role of the mortgage broker has come a long way since regulation was introduced in 2004 and like any regulated profession it continues to evolve and be shaped by numerous factors. In that relatively short space of time we’ve seen intermediaries (at peak) accounting for more than 60% of all home loans before falling to today’s more modest levels at circa-50%.

We’ve seen a slight move towards fee-based advice models as opposed to an offering wholly dependent on procuration fees and we have seen intermediaries blossom from becoming home loan experts to something more far-reaching – some even moving back to the familiar territory of pensions and investments, more akin to a financial services one-stop shop.

This diversification was necessary for many advisers who were impacted by falling income as a consequence of the declining number of mortgage transactions, and related sales opportunities.

It has also been prompted by a number of other factors including advisers recognising the competitive threats around them if they are not seen to offer a more comprehensive and appropriate service and the real threat of the high-street banks who are able and willing to dual price.

But more than ever, we are now seeing external factors motivate this expansion. In the financial advisers’ space we can clearly see the huge impact the Retail Distribution Review is having. In the mortgage space we have the Mortgage Market Review which, while nowhere near as advanced in terms of its introduction as the RDR, promises to deliver some fundamental changes.

If there is a common theme between both reviews then it is perhaps the notion of ‘quality advice’ and ‘quality advisers’. The regulator is adamant that advisers have to continually improve themselves be that through minimum qualification standards, on-going qualifications and CPD.

We should therefore expect to see advisers continuing to branch out into different sectors and product areas, and ‘prove’ themselves in those areas by attaining the appropriate qualification levels. These are all strings to the adviser’s bow and show a want, and a need, to offer a much more rounded advice experience for clients that take in far more than just mortgage advice.

Mortgage-related insurance has long been a complementary product for brokers to offer their clients alongside a home loan, but advisers have long since branched into other forms of protection. After all, if you are comfortable in offering cover for your client’s house or mortgage payments, it doesn’t take a huge leap of imagination to ask about their other insurance needs.

Where do they get their motor insurance, or if they run a business, do they have commercial insurance need? For advisers who feel this would take time and focus away from their core business, there is always the option of establishing a referral arrangement with a local provider or adviser, meaning your clients’ bond with your business is that little bit stronger, and you get a small financial benefit but are still free to concentrate primarily on core activities.

Other areas beyond insurance that mortgage brokers have started becoming more involved in the distribution of include conveyancing and legal services. The latter in particular has massive potential for advisers and this scope is starting to be realised.

Given that advisers have conducted a thorough fact-find of their client’s circumstances, they are perfectly positioned to know what their legal requirements are likely to be. Bearing in mind they have essentially facilitated the customer with the biggest loan of their lives, it would be remiss on their part if they didn’t help their client fulfil their legal obligations or at least point them in the right direction.

No-one likes to think of the worst case scenario, but when such sums are involved it is important to prepare for every eventuality. This is part of the reason we recently created Paradigm Legal in association with Redstone Wills - to help our advisers cater for such situations if they crop up in conversation with their clients.

When someone passes away it is a tough enough time emotionally and the last thing anyone needs is for the scenario to be further complicated by complex financial issues. Despite this, seven out of 10 people in the UK currently don’t have a will and this is something that needs to be addressed to stop the law – rather than individuals and their families – deciding who inherits estates.

Advisers have therefore travelled a long way in the past eight years and there is no limit on how much further they can progress if they embrace a changing marketplace. They should also remember that, by changing nothing, nothing changes.

 

Bob Hunt

Blog Archive

Opinion: The mortgage revolution is unfolding 
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Brokers’ fortitude will see them through this ‘depressing and dispiriting’ situation 
10 Dec 2018

Paradigm CEO Hunt invests in mortgage switching platform Dashly 
19 Nov 2018

We should be confident despite the uncertainties 
14 Nov 2018

FCA should leave mortgage market alone until Brexit uncertainty lifts 
09 Nov 2018

Not following EU rules could benefit the market 
16 Oct 2018

Long-term fixes fail to catch on 
01 Oct 2018

Mortgage market must ensure it deals in Project Clarity 
21 Sep 2018

Advisers can help landlords get their skates on for HMO changes 
11 Sep 2018

A deeper look at the state of the UK lending market 
17 Aug 2018

Understanding product transfers 
30 Jul 2018

‘Go compare’ is not so ‘simples’ 
26 Jul 2018

It’s worth looking into later life lending 
05 Jun 2018

SVRs are a cash cow for many mortgage lenders 
04 Jun 2018

Leaving a network should be more straightforward 
08 May 2018

Not all later life customers are in the same boat 
03 May 2018

Advisers must beware leasehold ‘minefield’ 
16 Apr 2018

It’s just not cricket 
12 Apr 2018

Proc fee timescales are way off 
29 Mar 2018

Broker-lender relations have undergone a fundamental shift 
28 Mar 2018

Opening at weekends shouldn’t be a priority 
13 Mar 2018

Take control to signpost clients in your direction 
22 Feb 2018

Product transfer: ‘Lenders might view greater adviser involvement as a problem’ 
12 Feb 2018

Buy-to-let advice is needed more than ever 
08 Feb 2018

Open Banking is a revolution without the fanfare 
16 Jan 2018

Land Registry needs to engage with brokers over Instant Mortgage 
08 Jan 2018

Simply focusing on age will not fix borrowing into retirement 
22 Dec 2015

Reduce the regulatory burden for firms by reallocating money from FCA fines 
03 Nov 2015

Customer choice has narrowed – the FCA could help fix this 
02 Nov 2015

The regulator’s differing interpretations of rules 
21 Oct 2015

Change is constant 
08 Oct 2015

Paradigm signs exclusive specialist lending deal with Brightstar 
06 Oct 2015

Landlords cash in on PRS 
22 Sep 2015

MCD – no grace but plenty of favours 
16 Sep 2015

Equity release success signals change in consumer perspective 
05 Aug 2015

Remortgagers play at ‘chicken or egg’ 
29 Jul 2015

BTL has closed the housing gap 
20 Jul 2015

Analysis: Writing a will can avoid a death blow 
15 Jul 2015

Industry deserves housing minister appointed to Cabinet 
22 Jun 2015

Waiving Stamp Duty won't encourage downsizing 
08 Jun 2015

Damned if they do, damned if they don’t 
01 Jun 2015

In the Spotlight with Bob Hunt 
26 May 2015

Election result provides stability 
20 May 2015

‘Grey borrower’ power is set to grow 
13 May 2015

Decisive election result could spur new build revolution 
27 Apr 2015

MMR 12 months on 
13 Apr 2015

Mind the protection gap 
09 Apr 2015

Analysis: Change status with the right support 
08 Apr 2015

Housing will be election battleground 
16 Mar 2015

Securing the specialist string to your bow 
04 Mar 2015

Interest rate direction is anyone’s guess 
04 Mar 2015

Regulatory B2L change is inevitable 
12 Feb 2015

Analysis: Do your homework with relationships 
04 Feb 2015

Lenders rising to the self-employed challenge 
04 Feb 2015

The sectors to watch in 2015 
06 Jan 2015

A helping hand 
05 Jan 2015

Can a landlord be truly ‘accidental’? 
17 Dec 2014

Coming in from the cold 
05 Dec 2014

Analysis: Why distribution demands inclusion 
12 Nov 2014

HSBC’s move signals cost of branch advice still rising 
20 Oct 2014

Analysis: Broker community boosted by HSBC 
15 Oct 2014

Just when I thought I was out 
08 Sep 2014

Analysis: Owning a home is not out of reach 
03 Sep 2014

Take level 4 advice exams before the FCA steps in 
02 Sep 2014

Analysis: Get set for more BoE intervention 
20 Aug 2014

Welcome to the Twilight Zone 
11 Aug 2014

Housing policy deserves seat at top table – Bob Hunt 
24 Jul 2014

MMR is enough to slow the bubble 
09 Jul 2014

Help to Buy remains in the spotlight 
08 Jul 2014

Mixed messages risk consumer confusion - Bob Hunt 
03 Jul 2014

It’s good to talk 
20 Jun 2014

H2B a rare housing policy success 
18 Jun 2014

Increasing mortgage volume will come through brokers - Bob Hunt 
27 May 2014

The better option to going direct 
14 May 2014

FCA concerned by packaging renaissance 
12 May 2014

Watch out for European regulation by year-end 
06 May 2014

Ask the Experts: Will MMR cause mass application declines? 
22 Apr 2014

Ask the Experts: Can a broker operate MMR-compliantly before 26 April? 
17 Apr 2014

Cross-sales not just for times of crisis 
16 Apr 2014

Brokers in the dock 
26 Mar 2014

Lenders in catch 22 situation over MMR - Bob Hunt 
25 Mar 2014

Paradigm launches protection arm 
21 Mar 2014

‘MMR Day’ may be a damp squib 
12 Mar 2014

Make sure your papers are in order 
12 Mar 2014

MMR lending slowdown could force protection bonanza 
18 Feb 2014

Countdown to MMR 
12 Feb 2014

A big year ahead for lenders 
04 Feb 2014

If the quality is same – why can’t AR & DA proc fees be equalised? 
30 Jan 2014

BoE is unlikely to be trigger-happy 
15 Jan 2014

We’re not in 2008 anymore 
09 Jan 2014

FCA cannot ignore views of smaller firms 
13 Dec 2013

The Prediction Game 
06 Dec 2013

Stay ahead of the regulator with CPD 
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Don’t let booming business hamper MMR preparation 
21 Nov 2013

Living up to expectations 
15 Nov 2013

MMR compliance underpins success 
30 Oct 2013

Advisers should step up to level 4 qualifications 
24 Oct 2013

Bank of England must follow words with actions 
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Lean times leave a leaner, keener core 
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If you don't ask lenders, you don't get 
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Steady as she goes is the right approach 
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Are we about to see a broker boom? 
16 Jul 2013

Now is not the time for procrastination 
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Improving standards is no grounds for complaint 
03 Jul 2013

Is product innovation being tied in knots? 
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We can’t rely on external stimulus 
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Put your services in the shop window 
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Mutual Magic 
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Does the FCA understand human frailty? 
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Has the mortgage market regained its mojo? 
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Help to Buy plus prudence equals prosperity 
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Will George Osborne be having a flutter ahead of the Budget? 
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Size matters on capital adequacy 
04 Mar 2013

Mortgage Indemnity Guarantees: helping first-time buyers fly 
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HS2? I’d rather see more houses built instead 
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95% LTV mortgages are not back... yet 
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Regulators have listened to feedback 
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The Great House Price Debate 
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Keeping your clients' wills up to date 
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