Independent Mortgage Advisors or Not??

HelpWhereIcan

Robert_Sterling wrote: »

So you get less from fees than from commission.

You may be surprised. As long as an adviser does it the right way ie rebating all commission or using commission sacrifice to improve the terms of the client's plan, the adviser need be no worse off and the client is often better off.

Take a mortgage of £100,000 - If I charge my clients £145 to review the whole market and reccomend a suitable deal - they may well end up with a direct only deal that makes them (using figures from the last one I looked at) approx £900 better off over 2 years.

I don't get the usual £350 commission I would have received for an application submitted through me, but a lot less of my time has been taken up (as we don't have to administer the application) and I have been paid for the time I have spent so I am better off.

With investments the situation could be even more apparant. We have compared a customer taking a £50000 bond and us taking 3% commission to the customer taking a £48500 bond, paying us a £1500 fee (3% of available funds) and us rebating commission into the plan to improve the terms of the bond (lower initial charges). The customer is better off taking the second option as the effect of charges etc on the performance of the bond is much lower and the adviser is no worse off.

We have done a similar comparison with collectives and the principle remains the same.

With both, the charges applied to the investment are lower than those available direct so the customer is better paying our fee than DIYing.

The principle is the same with Life cover and other protection plans.

With any financial product (especially mortgages) there comes a point where the fee an adviser would charge is lower than the commission they would receive so the customer would be better of electing to pay a fee.

The real difference to the adviser is that they are paid for all the time they spend on a customer's affairs as the fee is charged whether or not the customer takes a particular financial product and the adviser is therefore never working for free - unless they choose to.

Dan_1976

The FSA got this wrong when they took over mortgage compliance. Somebody thought up a whole new dictionary for mortgages! It needs to be simple. Keep whole of market with a declaration saying that some lenders are not available and drop the independent bit.

Make fee's a different issue. You can pay x or you can pay y and get some commission rebated etc etc.

The direct issue will not be resolved until lenders want to increase volume again. THey dont want broker business as they cant manage and control the volume as much as the branch.

As ever the banks win, brokers and clients lose!

dunstonh

So you get less from fees than from commission.

Yes. However, you get better quality clients and better referrals.

Robert_Sterling_3

I have removed my original message here while I have a rethink

Dan_1976

I wish I could do that after speaking some days Robert!!

Robert_Sterling_3

HelpWhereIcan wrote: »

You may be surprised. As long as an adviser does it the right way ie rebating all commission or using commission sacrifice to improve the terms of the client's plan, the adviser need be no worse off and the client is often better off.

Thank you very much for your reply to my post.
I will look at it more carefully later.

pinksparkle_2

I have a question,

Me and OH have a mortgage with NR that we are happy with, we took it out 3 years ago and are on a fixed till 2011, when we took out the mortgage we both had good credit reports, since OH has kept his clean but i have entered a dmp, we are looking to move into a larger house in 4-5 years once we have paid every penny of debt back but by then i will have as a poor credit file due to defaults etc but both of us will be debt free (Except mortgage) what we want to know is what are the chances of us taking out a higher mortgage once we have paid off all our debt???

Pinksparkle
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