Why a high failiure rate for mortgage advisers?

Thrugelmir

Let_Us_See wrote: »

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.

Mortgage brokers are registered with the FSA , whole firms and their directors.

Individual mortgage brokers are not currently registered. So could move from firm to firm. There's where the system failed in some instances.

Thrugelmir

newrecruit wrote: »

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?

Brokers often fill niche markets. For all sorts of individuals who don't fit the criteria of being in steady 9-5 jobs etc.

In answer to your last point. There was insufficent regulation in the lending market. Can you name the lenders that pushed the boundaries by selling mortgages then sold the debt on (pre the crash) ?

newrecruit

Thrugelmir wrote: »

Mortgage brokers are registered with the FSA , whole firms and their directors.

Individual mortgage brokers are not currently registered. So could move from firm to firm. There's where the system failed in some instances.

I am aware that mortgage brokers / advisers tend to either become employed by bank / building society / estate agency's finance department or join mortgage adviser network who are regulated by FSA which is not too different to financial advisers.
IFAs can set up his/her own firm and have it regulated by FSA, but I thought the situation was the same for mortgage advisers and there was a requirement by FSA for you to be qualified before you can call yourself a mortgage adviser.....mmm....

Can I set up a mortgage advise company tomorrow or even advertise in the papers as a independent mortgage adviser without completing CaMAP or letting FSA know?You see, I can pay money to OFT and apply for Consumer Credit License and then be registered with Promise Solutions as a mortgage introducer and make a decent income on commissions....and if what you say is true I can call my self independent mortgage broker and FSA will not clamp me down?

Your comment about mortgage adviser being able to move from firm to firm...I thought this was also the case with financial advisers too...so why their system not fail but it did for the mortgage advisers in your opinion....or you are saying that whole financial product brokerage system has failed?

newrecruit

I have done some enquiries and research.
If you are involved in first-charge secured lending, namely a mortgage, you MUST be qualified (in CeMAP) in accordance to the guidelines set down by Financial Services Skills Council and your operation must be either directly or indirectly regulated by FSA.
If you are involved in second-charge secured lending, such as equity release or secured loans, you MUST hold Consumer Credit License and be regulated by CCA, but there is NO need for qualification.

There is a European directives requiring the merger of these regulations by June 2010. So there is a possibilities that secured loan brokers may required to be qualified and aslo be regulated by FSA in the future - which is a good news, there will wipe out cowboy lenders.

Another bit of infor - If you are registered mortgage broker you are allowed to visit people at home but if you are secured loan broker you are not.

Thrugelmir

You asked originally why mortgage brokers have "failed". Who can be a mortgage broker is not at question. Why are you now bringing IFA's into the conversation.

So I'm unsure which direction you are trying to take this debate. Please clarify.

newrecruit

Thrugelmir wrote: »

You asked originally why mortgage brokers have "failed". Who can be a mortgage broker is not at question. Why are you now bringing IFA's into the conversation.

So I'm unsure which direction you are trying to take this debate. Please clarify.

To understand how someone fails is to understand how to succeed, if you understand what I mean.

My back ground is in both insurance and unsecured loan brokerage and I have been interested in becoming financial adviser for a sometime.
I have always been aware that becoming a good financial adviser is not easy, and I have been following the advise I was given to go for mortgage adviser and do CeMAP, get experience, be good at it , then do CeFA and DipFA and get signed off for CAS (with a bank possibly) to become IFA.

My issue was...when I looked around for more advise from this forum as well as from people I know, I got the response saying that I am mad at thinking of becoming a mortgage adviser because I am doomed to fail, or to that effect.
I could not understand why....some fail and some succeed...this is the case with every target driven career, but what will make a mortgage adviser succeed and others fail?
Is this purely to do with current economic situation with less and less people looking to buy houses while more and more mortgage advisers looking for home buyers as their client?
If so, why a customer select one mortgage adviser over others?
Is it because he/she happens to be in right place at the right time?
Where is this right place? Bank? Building Society? estate agency? local newspaper?
Or is it the same for all mortgage broker /adviser?
Just as Conrad said earlier...is there special skill needed by mortgage adviser to succeed?....I feel there is

My inclusion of IFAs is because, I received comments from guys in this forum who said that IFAs are busy but being a mortgage adviser is like selling a raincoat in desert....meaning the market has dried up, I pressume.
This again, I could not understand...is the success of IFAs is due to being more highly skilled and experienced than mortgage brokers (this impression is given by some guys)? Or because of the current market situation.
I would have thought with all that regulations coming in and with stock market crash making customers reluctant to invest, IFAs and financial advisers were in similar situation of seeing market drying up...

The steering towards IFAs is also because of more IFAs replying to the thread, I think.

Anyway, Thrugelmir, I still do not understand what is it that you are talking about....
Are you saying that because the mortgage adviser market in unregulated they are failing? Because I do not feel this....mortgage market does seem heavily regulated....
You should see the unsecured and secured loan market...I have seen loads of dodgy stuff going on in the past incluiding debt management and IVAs being forced onto vulnerable people who actually did not need them.
There is going to be more regulations for loan market...I understand that there is an European Directive to merge FSA regulation and OFT regulation of loan arrangement (making mortgage, secured loan and unsecured loan under single regulating body)

Thrugelmir

I'm not in the Financial Services Industry, but have been in finance all my working life. So my views are of a general nature not specific.

The mortgage market boomed between 1999 and 2007. The number of lenders grew. When the bubble burst. A considerable number of lenders withdrew from the market, Lehmans, GMC, Morgan Stanley. B&B and A&L went bust. NR contracted there lending overnight to a fraction of what it was at the peak. In the last few weeks Lloyds announced the closure of HBOS's IF and Barclays are buying Standard Life Bank. Some banks no longer sell there products through independent brokers.

Fewer mortgages and remortgages are now completed on a monthly basis. There is less money to be lent. So the whole market is contracting and changing. To sum up its not a growth sector. Requiring fewer people to be employed in it.

To start a business now. In a sector which is overcrowded and where the established players are more or less dominant would be a huge challenge.

Why not ask your friends how they arranged their mortgages? There are so many variables in the equation.

As for who is and isn't successful. Until you give something a go yourself you'll never know. Try and find a good teacher if you can.

newrecruit

Thanks for your reply Thugelmir.
I agree with what you say, but what you are saying is something I already know.

My point of this thread is this.
dunstonh said in this thread that
" 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 am getting the feeling now that this is true because I am seeing less and less banks and networks taking on Trainee Financial Advisers and they tend to want newbies who have proven themselves as a Mortgage Adviser.
So naturally, for the guys starting to take CeMAP / CeFA module 1 now to steer towards CeMAP and seek mortgage adviser position.

But then you are confronted with this doom and gloom here saying that mortgage adviser position is destined to failure.
It will be natural for anyone to question "what can I do to succeed?"
There is so many things I can do, be more selective to which employer I talk to (ie widen the job search), shall I be selective in location, shall I complete CeMAP off my back first, complete the qualification and join a network as a self employed or get employed by someone like Countrywide to get the experience?
Also what do I need to do to have that edge?

When I looked at all this, I started to get a feeling that you can get just as much success as being a mortgage adviser as a financial adviser, because (1) becoming high calibre IFA is both hard and takes years and (2) many financial advisers don't make it either.

My comparision with financial adviser was because of (2). If I worked hard at succeeding as a mortgage adviser and then try to convert to becoming a financial adviser, it is making things plain sailing or is it suicide? If it is the latter, should one stay as a mortgage adviser, unless becoming financial adviser is the passion and dream.

I love the financial industry and I also want to have a decent life with decent income. If I can achieve this by being a mortgage adviser, I am happy.

But why I get a constant feeling that IFAs look down on Mortgage Advisers? Or am I just being paranoid? I do look to IFA with admiration and desire to become one, but if the path towards IFA majkes no business sence, then I may leave it only as a dream

dunstonh

But why I get a constant feeling that IFAs look down on Mortgage Advisers? Or am I just being paranoid?

Too simplistic. Many IFAs have stopped giving mortgage adviser and employ or use a mortgage adviser. Perhaps in the same way that the partners of the solicitors firm wont do the conveyancing but leave it to junior clerks. There is so much going on nowadays and so much to know that specialising in areas is becoming more common. Mortgages are an easy option for IFAs to drop.

That said, many IFAs are dropping their full authorisation and becoming or will become (due to RDR) mortgage advisers. The lower costs and compliance requirements suit those [ex] IFAs who did little investment class business.

Historically, it was always considered a junior role but its increasingly becoming another speciality role within firms. Because of the lower qualifications and that it is generally the role that new recruits start on (unless going tied from the start) it can be perceived as a junior role. However, that isnt really fair any more.

Where you may get a negative view from IFAs is because the mortgage adviser role became flooded with Johnny Come Lately who thought it was an easy way to make money and had no professionalism and no scruples and have damaged the image of the profession. For a long time now, IFAs have been getting less and less complaints and professionalism had been improving. Now that image has been harmed by cowboy mortgage advisers despite the fact that mortgage adviser role and IFA role is different. Many IFAs are angry at that and generalisations may occur.

if the path towards IFA majkes no business sence, then I may leave it only as a dream

That is sensible. I dropped mortgages because I didnt do many and didnt like doing them. I employ a mortgage adviser who is an ex IFA because he found the IFA side too hard but his comfort zone was mortgages and he is good at it. He refers investment class business over to me. I have another IFA who is dropping his full authorisations in December to be mortgage only as 90% of what he does is mortgages and its too expensive for him to keep up the full authorisation for the level of business down. Again, he will pass investment class through me. I have a few other IFAs planning to do the same before 2012.

You can make money on the mortgage only side but it helps to have an IFA to be attached to for referrals as you can have a steady income from that side of the business. My mortgage adviser earned over £50k last year from referrals. He is on track to do a similar amount this year. So, keep thinking with a business head on.

newrecruit

Thanks for the great advice dunstonh.
What you say is great. It is a tendency for people like me to think of going it alone, when you can get a steady flow of income as well as leads from referrals.
Teaming up with a local IFA is an excellent idea.
Agreeing on suitable kick back and lead generation is may be the way to go.
Being able to offer investment advise through fellow IFA for my clients and being able to offer mortgage an remortgage advice to my fellow IFA's clients makes the buisiness stronger.

It is worrying, however, for the new mortgage advisers that there will be a flood of ex IFAs looking to become a mortgage advisers as well