Why a high failiure rate for mortgage advisers?

dunstonh

The most common reason for failure with any type of adviser is lack of clients. In the case of mortgage advisers, many saw the recruiting firm adverts giving promises of unrealistic income (if job done compliantly) and there was a deluge of joiners. Problem was they soon realised that if they didnt see people then they didnt earn money. Once the friends and family ran out they had none left to contact.

Let_Us_See

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

OP4U. This is the old chesnut. Many would argue that IFAs because of their "much broader range of client objectives" are Jack of All Trades and Master of None. How one earth can one person claim to be uptodate and an expert in all financial planning disciplines? Successful IFA practices tend to specialise and due to income streams mortgage advice is often not a prioity. If I need mortgage advice my first priority would always been an independent whole of market mortgage adviser and not an IFA. Why? Because they `live and breath` only mortgages and have daily involvement with rates, available schemes, underwriting criteria, the idiosyncrasy of lender's etc. etc.

dunstonh

This is the old chesnut. Many would argue that IFAs because of their "much broader range of client objectives" are Jack of All Trades and Master of None.

That is probably correct of some general practitioners. However, most IFAs I know specialise or restrict themselves to certain areas. That has been a trend in recent years.

newrecruit

It seems from the replies that mortgage advise is in trouble because of the current market situation. So it will be a matter of time that it should pick up and also related very much to where you operate....Cheltenham being one location where house sales are on the rise, am I right?
But as for IFA...the business is well for those who are both experienced and talented but is going to be tough for newbies because of RDR and requirement for level 4 training making in house training too expensive for banks and other firms, making them reluctant to take on trainees.
Am I correct in assuming that the best option for anyone is to become a mortgage adviser in location that is boyant with a busy agency or building society and then do CeFA and level 4 training of your own back while you earn a living as a mortgage adviser, and then look for a vacancy as a financial adviser?
Or will there be a time in the future when a good mortgage adviser can earn 100k+?

koexelek

dunstonh wrote: »

The most common reason for failure with any type of adviser is lack of clients.

Correct. that goes for any type of business.

However, at the moment, I am failing because I cannot provide the mortgages that people want.
Either they don't exist, or they are only available direct from the lenders.

These days, I feel like a fish and chip shop unable to get supplies of fish and potatoes

Thrugelmir

A few points to clarify.

When referiing to mortgage advisors are we discussing inhouse staff or independents?

Independent mortgage advisors are not regulated by the FSA. Unlike an IFA who is also required to be qualified to give advice.

There was an enormous boom in mortgage lending between 1999 -2007. Many new lenders entered the mortgage market. To sell their products they used independent mortgage advisors.

People who used mortgage advisors were often credit impaired/self employed/ uncertified income/ high income multiple borrowers etc.

In 2007 bubble burst. These lenders have now left the market. Lehmans/GMAC/Morgan Stanley etc.

Banks took business back in house as well as activity levels fell.

Net result. No money for mortgage brokers to lend. So no job (for many).

Let_Us_See

Independent mortgage advisors are not regulated by the FSA. Unlike an IFA who is also required to be qualified to give advice.

Whoa!!! Thrugelmir where have you been for the past five years - anyone, independent or tied, providing mortgage advice has Tto be qualified and has been regulated by the FSA since 2004?

There was an enormous boom in mortgage lending between 1999 -2007. Many new lenders entered the mortgage market. To sell their products they used independent mortgage advisors.

Your statements are undoubtedly meant to be informative, however, they are not just misleading but completely without foundation. How can you make these statements? Your comments can only lead to utter confusion. IFAs, mortgage advisers (both independent, tied or working from a panel of lenders) all have to be qualified and all are regulated by FSA.

Conrad

newrecruit wrote: »

It seems from the replies that mortgage advise is in trouble because of the current market situation.

I was a regional manager for a mortgage brokers prior to starting up on my own.

Even during boom time MOST advisers fail. You seem to be under the impression it's primarily down to the quiet market.

I spent a few years managing brokers and these are my observations;

+ Thinking about The Apprentice, although many applicants seem very well qualified, only a few have 'what it takes' to think on thier feet - this is a key requirment.

+ Broking is not about simply searching for the best deal - that's easy

+ You need to be a lateral thinker. Client's come with all sorts of complex scenarios that are at odds with COMPLIANCE. The sucessful broker is able to sail the very thin line between being compliant and getting cases through. This is where many brokers fail as they take the compliance too literally and end up deeming most cases to be unplaceable.

+ Business skill - there are many soft skills involved, which have a huge effect. Let's say Halifax declines a mortgage application - the poor adviser will ring the client and give them the bad news. The skillful broker will have another lender agree (as far as possible) the case and call the client with the news - "great news it looks like we have an acceptance, bad news the rate is slightly different as it's an alternative lender".

+ Resillience - a key requirement as part and parcel of the game is being let down constantly by clients - espcially those that are 100% sure they will see it through! You end up doing a lot of work for zilch and many end up finding this intollerable

+ Are you canny? - brokers that reveal everything up front to a client often get let down. It's common here to read posts where applicants describe how they went direct to lender after spending hours with the oh so helpful adviser. Certainly don't give away your tricks of the trade until money and signatures have been passed accross the desk.

+ Are you businesslike? - a sucessful Bank assurance chap I know will insist on life assurance where the case is touch and go - "right I think my underwriters can agree your case, but first I want to know if youre going to be arranging your insurance with me?"

+ Efficient - there are thousands of tiny seemingly minor details that can lead to a case being declined, or the broker being sued. In my experience not that many people have the attention to detail to ensure these tiny details are attended to up front.

+ Driven - if you are'nt driven you wont be a sucess, period. Many brokers are a bit laid back, for example they wont input that urgent application for a couple of days as they are choc a block with meetings, whereas the dedicated soul would input it at 10pm.

IFA v's broker. I started out as an investment adviser limited to a few providers. For me the work was'nt stimulating, but I certainly did'nt find it as complex as some would indicate. I know plenty of IFA'S some of whome got back into mortgages but soon got back out as they had'nt realised how complex the business is. They would waste months on a case only for it to be declined.

On the whole I suspect the better brains are IFA's but one should'nt generalise too far.

SUMMARY

I recall the failure rate for mortgage brokers was something like 80% over the medium term. Joe public have this notion we push a few buttons and job done.
I recall a couple of teachers trying broking that failed miserably. They simply could'nt take the strain and insecurity.

newrecruit

Thanks Conrad...you have provided me with the answers I was looking for!
Whenever I talk to IFAs or training providers, they paint a picture of IFA's work being all complex and high calibre whereas that of mortgage provider being no different to logging onto go compare website which any client's can do - hence the decline of the mortgage advisers....but I felt it was NOT the case and I was curious as to how much lateral thinking that comes from sales experience is applied to mortgage advise - (which you spelled out perfectly)
I understand now why many mortgage advisers fail and I feel more prepared for the role...

newrecruit

Thrugelmir wrote: »

A few points to clarify.

When referiing to mortgage advisors are we discussing inhouse staff or independents?

Independent mortgage advisors are not regulated by the FSA. Unlike an IFA who is also required to be qualified to give advice.

There was an enormous boom in mortgage lending between 1999 -2007. Many new lenders entered the mortgage market. To sell their products they used independent mortgage advisors.

People who used mortgage advisors were often credit impaired/self employed/ uncertified income/ high income multiple borrowers etc.

In 2007 bubble burst. These lenders have now left the market. Lehmans/GMAC/Morgan Stanley etc.

Banks took business back in house as well as activity levels fell.

Net result. No money for mortgage brokers to lend. So no job (for many).

Hang on...I though that all mortgage advisers had to be regulated and be qualified to CeMAP 3 level. Even the networks of independent mortgage advisers are not taking on those without qualification and experience.
Anyway...the mortgage advisers I was referring to includes both independents and tied to bank, building society or estate agencies.

I am not sure you are right in saying that people go to mortgage adviser only when their credit are impaired, because if you apply for a mortgage with a bank, they will most certainly send their tied mortgage adviser to you.

All that sub primes....the root to of the current economic woes!
Were there any similar drive to encourage sub prime lending in the UK by the Government similar to the USA as well?