Mortgage networks

running_man_3

Can anyone explain how mortgage networks work and what advantages / disadvantages they may have over a franchise or going it alone. What sort of charges do they make and what do you get for such charges.

Rick62

A franchise, such as MortgageForce, will give a high level of support, including systems and marketing. This can be of great benefit, giving an instant brand and crdibility to your business particularly if you want support how to set up, market and run your business. In return they will presumably charge fees and take a percentage of your commission.

A network will also suply systems and take responsibility for you compliance allowing you to focus on your business. They will give little marketing support and you will be responsible for your own image and marketing. In return they will normally charge about £200/month fee and take between 8% and 15% of your fees. Legally your clients will not be yours, but will belong to the network for FSA purposes.

Going it alone means going Directly Authorised (DA) and you will have complete responsibility, including deciding what systems you use and being responsible for your own compliance (and FSA reporting) and paying your own fees for FSA and Indemnity insurance. You will get better levels of commission and through signing up with different mortgage clubs get wider access to exclusive deals.

I initially set up with a network then went DA so that I could use systems (including CRM, compliance and sourcing) of my own choosing, get better proc fees and more exclusive products and so my clients would trtuely be my clients. If you go DA you can still get many services from networks and other support clubs (such as Simply Biz and Premier Mortgage Services) enabling you to a large extent have the best of both worlds while retaining full control of your business.

running_man_3

Thanks Rick62. You are confirming what I have started to realise. I understand getting leads is the key. I have a number of ideas in this area, but I also very clearly understand I know nothing and have no experience and therfore nothing with which to judge how sucessful (or not) these ideas will / will not be. This also confirms your second point which I also fully understand and accept is my biggest area of confirm. Namely - Training, knowledge, a network of support and experience.

running_man_3

Thanks Rick62. I believe I replied to UKremortgagebroker and managed to get my wires crossed. However my reply on this message applied to both. I have concluded from the good advise from both of you that I should do more research and focus on getting more details about networks. Thanks to you both for your help.

MortgageMamma

running man - if you feel you need to talk through the pro's and cons of networks vs directly authorised give me a call sometimes, I have been both, and I've got to say at this moment in time I think I'd rather be DA, but its too much time and hassle for me to be bothered leaving my network. There are good points about networks of course, but they are not for everyone. The amount of training and compliance guidance you get is good with some networks, some networks provide leads I'm told, - if I left my network (Pink Home Loans) and went to another network it would definitely be Sesame.

dunstonh

I have been both, and I've got to say at this moment in time I think I'd rather be DA, but its too much time and hassle for me to be bothered leaving my network.

For the last few years, IFAs have been moving away from networks to become directly authorised. Now you have the new solvency requirements coming out (requiring £50k minimum capital adequacy rather than the current 10k) you are now seeing that trend reverse and IFAs rejoining networks.

Plus, the FSA has small firms in it's sights at present and having a good network with a good compliance record can be far more beneficial.

MortgageMamma

dunstonh wrote: »

For the last few years, IFAs have been moving away from networks to become directly authorised. Now you have the new solvency requirements coming out (requiring £50k minimum capital adequacy rather than the current 10k) you are now seeing that trend reverse and IFAs rejoining networks.

Plus, the FSA has small firms in it's sights at present and having a good network with a good compliance record can be far more beneficial.

I won't go into detail as it could turn into a slanderous rant I am that hacked off with my network, I'd meet the current CA requirements no problems but would struggle on the 50k as I'm not a homeowner (but, I have my eye on some commerical premises)

I have nothing against networks in general, It wasnt so long ago I was pro network, but there is a thin line between keeping your AR;s compliant and controlling every single tiny little function of their business. My network said they are commited to keeping paperwork to a minimum for AR's. I have to do lengthy suitability letters for non reg products, I am tied to their rather poor packaging arm, and to their again rather poor (not poor, just slow I suppose) life assurance processing company. I don't like the restrictions. I have a few friends who are with sesame and it seems they are a lot less regimental.

dunstonh

I have a few friends who are with sesame and it seems they are a lot less regimental.

That is a big change in your point of view.

You need to remember that the grass is always greener and you will find every network has it's issues. I have a few issues with Sesame but if you play fair with them, they will play fair with you. None of the issues I have are deadlock issues though and the two I have are being looked at as they appear to recognise the benefits of what I am saying. The other issue most Sesame members had (business monitoring unit in India) has been resolved. That was every adviser's pet hate.

I have to do lengthy suitability letters for non reg products

Protection factfind can either be the mortgage factfind with a shortfall analysis page or a full (investment) factfind with a shortfall page or a general insurance factfind which can be as short as two sides of A4. The suitability report fits on one side of A4 (assuming you have a standard cover letter and then one page of text). I have that template in my back office software and takes about 3 minutes to complete. There is no requirement to have your reports in any set format providing all the compliance things are said. So, you control the design, layout and wording.

I have seen other networks and what other IFAs go though with them and each has it's quirks. However, I have never regretted my decision to choose Sesame.

MortgageMamma

I will answer this on PM, don't want to detract from the original thread or put off the industry newcommer with my ranting. Lets just say the cross over from being DA to AR has proved challenging for me.

payless

Can't see CA limits being increased that much for non-investment advisers... At moment mtg/life sole traders don't need to provide a personal asset/liability calculation so long as can show the £5000 in the business ( exc goodwill)

MM ... I did warn that wotking with networks is not as simple as they make out , although in fairness being in charge of a DA firm means having to do RMAR reports!

Don't think Sesame are particularly cheap . PT are , although I have heard that some investment advisers find it hard work with them.... but would say they are more geared to Mtg anyway

MortgageMamma

payless wrote: »

Can't see CA limits being increased that much for non-investment advisers... At moment mtg/life sole traders don't need to provide a personal asset/liability calculation so long as can show the £5000 in the business ( exc goodwill)

MM ... I did warn that wotking with networks is not as simple as they make out , although in fairness being in charge of a DA firm means having to do RMAR reports!

Don't think Sesame are particularly cheap . PT are , although I have heard that some investment advisers find it hard work with them.... but would say they are more geared to Mtg anyway

Heard lots of good stuff about PT but saying that I heard lots of good stuff about my network now, with the RMAR reporting would you not just get your compliance contractor to do that for you if DA?