Why a high failiure rate for mortgage advisers?

newrecruit

I am a little curious. There are a lot of negatives about the role of mortgage advisers here in the forum compared to IFAs.
I would have thought, since an IFA or a financial adviser is trying to convince a client to invest their life savings into a fund that has a potential of losing their money, and based on current economic situation, it must be much harder to close the deal. Whereas, people come to mortgage adviser to get a best deal in mortgage so the sale must be a foregone conclusion.
People are getting more money savvy nowadays with all the info on websites like this one, so convincing people to make right investments must be hard.
IFAs are trying to sell promises, unlike mortgage advisers who are offering what people want and also something that is tangible - ie. money in the bank for the purchase of thier home.
Surely, there must be higher success rate or customer conversion rate for mortgage advisers than IFAs. So why so many of them fail?
I appreciate the fact that there are so many of them looking for a job, getting employed as a mortgage adviser is hard, but once in job, it must be plain sailing for those who is used to sales - ie. those who appreciate everything is based on the Law of Averages which says more customer you see more you close....
(or may be there are no customers out there.....)
Any thoughts?

yelf

You are clearly mis guided on what an IFA is. An IFA advises, not selling. Any and IFA who trys to convince a client to invest their life savings into a fund that has a potential of losing their money should be struck off.

"Whereas, people come to mortgage adviser to get a best deal in mortgage so the sale must be a foregone conclusion." but if people go to IFAs for the best potential returns, is that a foregone conclusion, therefore !!!!ing on your argument?

newrecruit

OK, yelf....IFAs are strictly speaking independent and required by FSA regulations to ensure that the customer needs are met first of all.....I am aware of this, and the best adviser are truly advisers....but I am talking about fianacial advisers working as tied or multi-tied adviser. If you are working for a bank, you are constantly pushed to achieve a target, hence end up selling rather than advising.
Even IFAs, I feel, are at the end of the day must make sales to earn the commission.
As for the funds, there are no gurantees that they will make the kind of returns a customer may hope for. In long term, and if they go for more low risk options such as guilts, they may yield the returns as projected (if modestly projected) or better but I feel no investments are risk free (correct?), and can and most likely to make a loss in a short term but will yield returns in mid to long term
I am interested to find if all IFAs have iron will and able to resist offering products with poteantially higher commission rate than others?
What I am talking of here, in essesnce, is that IFAs may be dealing with highly informed and reluctant clients who require a great deal of confidence and trust building compared with the clients of mortgage advisers. In other words, it requires greater skill and talent to become an IFA rather than a mortgage adviser, so surely there must be higher failiure rate for IFAs than mortgage advisers? (this is reflected by the difference in their earnings)
What makes a mortgage adviser more successful than other mortgage advisers? Is it his/her ability to network for potential lead providers such as accountants and solicitors?

newrecruit

yelf wrote: »

if people go to IFAs for the best potential returns, is that a foregone conclusion, therefore !!!!ing on your argument?

If it is possible for IFAs to always correctly predict which investment will give the best return everyone will be a millionaire! Surely, if such was the case, no one have lost the money like they have recently.....Am I wrong in thinking this?

dunstonh

I would have thought, since an IFA or a financial adviser is trying to convince a client to invest their life savings into a fund that has a potential of losing their money, and based on current economic situation, it must be much harder to close the deal.

Personally, never been busier. An IFA is much more than an investment adviser. Its an important part but financial planning is wider than just that. Advice is still required at all times and its the advice that is being bought.

Also, some of the best opportunities come when the market drops. You pick up the badly invested portfolios where people went DIY and realised they got it wrong (often fashion investing or not realising they were too high on the risk profile) or you get bank sold investments which are low quality and badly invested.

People are getting more money savvy nowadays with all the info on websites like this one, so convincing people to make right investments must be hard.

Not at all. The problem with websites is that the opinions are usually based on one person's scenario. Another person may need different tax wrappers, have different risk profiles or require a different investment strategy. No-one is the same and that difference leads to different outcomes.

IFAs are trying to sell promises, unlike mortgage advisers who are offering what people want and also something that is tangible - ie. money in the bank for the purchase of thier home.

IFAs sell advice. That is the product being bought by the consumer. No crystal ball is used in the process. IFAs are not discretionary investment managers and cannot trade and cannot predict the future.

Surely, there must be higher success rate or customer conversion rate for mortgage advisers than IFAs. So why so many of them fail?

IFA is a role that people tend to move into after spending time being a mortgage adviser or tied agent. In other words they gain experience first. Very few go straight to IFA as its damned hard to do so. I have known tied agents who went IFA go back to tied agent as they found being an IFA too hard.

newrecruit

I suppose IFA is like a money or finance coach just like a sports coach for a professional athlete. If you are good, and can achieve results you are in constant demand. It is about working closely with your clients in achieving their goals. Just as the best sports coach looks at not just the performance but overall health and fitness of the athlete (including nutrition etc.) the best IFA will look at every aspects of their clients in relation to their financial well being as they eveolve with different stages in life.
I get the feeling that dunstonh is like such a coach / IFA.
So mortgage advisers should be enjoying easier and more lucrative career than IFAs who are up against IFAs such as dunstonh....surely.
So why is it that there are such a high turn over of mortgage advisers?
What make one mortgage adviser more successful than the other?

yelf

newrecruit wrote: »

If it is possible for IFAs to always correctly predict which investment will give the best return everyone will be a millionaire! Surely, if such was the case, no one have lost the money like they have recently.....Am I wrong in thinking this?

"f it is possible for IFAs to always correctly predict which investment will give the best return" Where did you get such a comment from?? "Am I wrong in thinking this?" yes grossly: Higher risk funds (which have suffered the most) also tend to produce higher returns - so who wins when - and how do you know its a good choice?

Question: the mortgage adviser who told a friend to fix on a 10yr deal at 6.9% in October 07 - where do you stnad on that?

newrecruit

Yelf...I am not disagreeing with you...but you are missing the point.
What I am talking about here is that how is it possible for so many mortgage advisers to fail to hit the targets whereas IFA businesses are thriving?

You see, I feel it is harder to succeed as an IFA or even as a tied or multi tied financial adviser than a mortgage adviser.
If you are selling the advice as dunstonh says, then the advice must worth the money the client pays (whether as a fee or as a commission). I feel that this is not easy for financial advisers.

Take it from the client's point of view...Say I have 50K saved in a building society account. I am then offered a financial review. I will listen to the advice in relation to protection, pension and the best ways to get the maximum return from my 50K.
I am likely to have family and life protection already (such as life assurance, critical illness etc.) and even if an IFA offers me cheaper and more cost effective option, I may be reluctant because of the fear of incurring penalties. Then comes the advice on investing 50K. If I don't want to risk it, the IFA may offer best investment or saving options such as ISA....OK let's not get into too much detail. But even if IFA's advice seems suitable for my needs, based on recent economic situations, I am fearful of committing my 50K in investments.
A good IFA will look at every aspects of my life and offer me the best advice, but I will still not be 100% unless the IFA is good at earning my trust. Such ability cannot be studied from doing CeFA or getteing CAS after 1 year, surely.

On the other hand, if I want to buy a property for 300k and can only afford (or wish to pay) 1000 pounds per month, the mortgage adviser will search the market and come up with the best deal, and may suggest which is the best, variable rate, fix rate, interest only, tracker etc.and the adviser will also offer the best deals in payment protection, buildings and content insurance etc. - Simple (as the meerkat says)!

Getting an IFA is like paying Gok Wan to give me a full make over - its great if I don't know what to do...but if I am one of those client who thinks I know but don't know I could be IFA's nightmare. Whereas getting a mortgage adviser is like walking to a Primark sotre and buying a T-shirt that is on best offer.

So how is it possible for a mortgage advisers to fail? Is it because there are not enough homebuyers at the moment? If so the success of the mortgage advisers must depend on location rather than ability...am I right?
If this is the case, I should relocate to Cheltenham

Wutang_2

newrecruit wrote: »

If this is the case, I should relocate to Cheltenham

Eh? What?......feel free to come along, its cool (we have the races and a racist football manager).

You might need to read up on why a mortgage adviser becomes a successful mortgage adviser too.

opinions4u

newrecruit wrote: »

Yelf...I am not disagreeing with you...but you are missing the point.

I think you are genuinely confusing the point.

What I am talking about here is that how is it possible for so many mortgage advisers to fail to hit the targets whereas IFA businesses are thriving?

The bottom has fallen out of the mortgage market. People aren't moving house. Remortgage deals have become less competitive so the need to see a mortgage adviser is much lower.

Individual portfolios still exist. Most will have fallen in value, meaning that clients turn to their IFA for advice again (or ditch their IFA and find a new one).

You see, I feel it is harder to succeed as an IFA or even as a tied or multi tied financial adviser than a mortgage adviser.

IFA is a more skilled profession with a much broader range of client objectives.

Location, attitude, market and competition are issues that would affect both professions. Indeed, these are factors that affect just about every business.

Your post is way too complex and doesn't need to be.

Wutang wrote: »

Eh? What?......feel free to come along, its cool (we have the races and a racist football manager).

Have they not sacked him yet?

Let_Us_See

Where to start?
A forum such as this has both its good and bad points. Many of the queries posted could easily to answered by a simple phone call to the appropriate lender, solicitor or mortgage consultant. Surely, this is a better initial alternative to posting on a forum were there is a strong possibility of receiving inaccurate advice or biased advice due to personal experience? However, I would be the first to recognise that there are qualified advisers answering posts to the best of their knowledge.
This now leads to this post concerning IFAs and mortgage consultants. Basically, they recommend or advise and never sell (although bank advisers may well argue differently), and these recommendations are derived from completing a full and frank fact find and discussing the clients needs, risk profile and future aims. Both IFA and mortgage consultants are heavily regulated by the FSA and there has to be a clear ‘trail’ to the advise provided, followed by a Suitability Letter to the client confirming our recommendation and the reasons for making the recommendation.
Bad advice, rogue consultants? The financial advice industry, like any other industry has good and bad advisers and I would advance, perhaps controversially, that forums attract people who either have not received good advice or cannot be bothered to find it. Conversely, people receiving good advice have no reason or need to contact forums? We also live in a blame society and forums attract the disgruntled. Receive bad advice (and it does happen), then onto the forum and tell all and sundry what awful charlatans advisers are. Hence, the negative comments? Receive good advice, nothing happens, it is not news, so nothing to post on the forum!
So what has happened to mortgage advisers – the credit crunch. All industries are affected by supply and demand, and as the housing market has been hit by the recession there has not been the demand for so many advisers. Many good advisers, through no fault of their own, have been made redundant and it is a shame to see such a resource being wasted.
Finally, investments. Almost all investments, even buying your home, are a risk. The value of your investment can rise and fall and best advice should always be sought to match your individual needs and risk profile. Is a forum the best place for this? I will let you decide.
Personally, I support this forum as it can offer assistance and limited advice, but more importantly it provides a meeting of minds where the poster does not have to feel they always have their backs to the wall and no one cares about their predicament.