What do you expect from a mortgage broker?

toonfish

kenshaz wrote: »

I do not wish to deal with a salesman/women,just a professional who cares more about me than his/her bank balance.

that is very surprising, considering the flag you keep flying.

No broker can be truly whole of market, there are so many mortgage clubs, packagers etc that it is impossible.

What does annoy me are the "exclusives" advertised by some of the estate agencys which may be "exclusive" but are easily beaten elsewhere.

We offer a fee option - no-one ever goes for it.

MortgageMamma

MarkyMarkD wrote: »

The point is that paying a fixed amount for the advice, NET of any commission, is far fairer for the customer as it removes 100% the incentive for a dodgier adviser to advise a product purely because it pays higher commission. And it doesn't have to cost the customer more - as long as the fixed level of fee is similar to the average amount the adviser currently earns in commission.

Of course, an interesting consequence would be advisers advising a lot more non-commission-paying mortgage products - which would then make other lenders think "Hm, we could do a non-commission-paying version of this product and it would be more profitable/we could set the rate lower". I'm not sure where that would go eventually?

In the long term it would probably mean a more fee based market, which then removes the option of charging a fee and rebating commission. it would also mean the majority of consumers would have to add fee's to their loans on which they would be charged interest which isnt really in their best interests. That would probably push quite a few mortgage brokers out of the industry, and send people hurtling to direct to the banks where they could end up with an uncompetitive deal. It would also mean the banks profits would increase as they would not have to pay brokers, and a lot of people would sit lazily on standard variable rate. I imagine such a shift in the market would also encourage more of these best buy tables you get online, and they could become more sophisticated a bit like broker sourcing software.

homer_j_3

Right having spent a while reflecting on this subject, I have come to the conclusion that the only fair way of being truely fair to a customer from an advisers point of view is to charge a fee AND rebate commission if received and include every lender regardless of the commission status in the intermediary world.

I think that any fee charged has to be fair, comparable and not excessive to the average proc fee that would be received had you been non fee based (possibly upto 0.5% of loan on prime and 1.5% on non prime). You would have to have some form of condition in there to say that you will charge based on the actual catagory that you qualify for and not what they think they are - ie avoid adverse cases being charged non adverse fees and vice versa. Whether this can be done or not, I am not sure?

In addition to this, I think that as an adviser you are only being fair to the client if you only allow them to engage in business with you if they do not add this fee on to their debt or allow YOU the adviser to repay off the debt upon commission being received.

You could ensure this in 2 ways, firstly the client may have the money to pay you once they have agreed to do the business or secondly get permission to add to loan but you as the adviser take the commission received and pay it off the mortgage upon being paid to ensure this is automatically reduced.

My issues with fee based advisers are that often if they are pure mortgage brokers they will charge and collect commission and often add everything to the mortgage including the lump sum MPPI.

In my opinion, this means the client is often disadvantaged straight away in comparison to had they been to a fee free adviser as their debt would have been lower from day one with no interest being accrued on the additional amount which negates the majority of commission bias issues that are claimed.

payless

My issues with fee based advisers are that often if they are pure mortgage brokers they will charge and collect commission and often add everything to the mortgage including the lump sum MPPI.

In my opinion, this means the client is often disadvantaged straight away in comparison to had they been to a fee free adviser as their debt would have been lower from day one with no interest being accrued on the additional amount which negates the majority of commission bias issues that are claimed.

there's a difference between fee based advisers ( they do just that - work oon fees and rebate commission) and those that charge a fee as well as commission

homer_j_3

Yes I do appreciate that but there are more advisers out there that work on charging a fee and collecting a commission aswell. Joe public are more likely to come across these types of advisers than just fee earning with rebate of commission in my opinion.

My post was to say that I think this would be the only way charging a fee could be seen as fair to the consumer and offering menus to suit EVERY scenario may complicate matters for MM and also mean that she is doing additional work for TCF and also trying to explain the varying fees to the client. I always find keeping things a simple as possible means less can go wrong.

MortgageMamma

Thanks for your thoughts Homer_J I wondered why you hadnt responded earlier as I know this is a subject that concerns you but obviously you were thinking

I *think* I agree that the fairest way is to charge a fee and rebate commission, but the practicalities may incur more costs. e.g. it would cost to rebate the fee and also for those of us who work through networks we would have to build the network cost intot he upfront fee

The thing is different people will always want different service levels and remuneration structures and it could get even messier if you offered every option

JoeK_3

homer_j wrote: »

Joe public are more likely to come across these types of advisers than just fee earning with rebate of commission in my opinion.

Hey, watch it, mate! lol

JoeK

homer_j_3

sorry joe - not taking your name in vain

MortgageMamma

It would be interesting to have an insight into the statistics of the success rates of each business model

for example, how many fee's free brokerages have survived on a fee's free basis, how many started as fee's free then converted to fee charging, the sizes of the successful fee's free businesses and how they and their staff are remunerated. Average time spent on case and average case earnings/profitability....

It would also be equally as interesting to see the stats and workings on businesses who do charge - I dont think its something I coudl find from the offfice of national stats though

MarkyMarkD

I'm interested to know what level of fees you charge, toonfish - is it similar to average commission? And do you fully rebate commission to customers who choose to pay you the fee?