Take extra care when using brokers at moment

MortgageMamma

I think the real key here is to offer the customers a choice and value your own time as a professional. Mortgage brokers are ten a penny and the public know it. You get people who value your time and advice and do the business with you, and people who value your advice, don't give a monkeys about your time and income and go direct. Fair play if thats best for them. This has always happened but its happening more frequently now because of the BIG difference in the direct deals as opposed to what brokers can access. We all know the truth is that in order to survive we will have to resort to charging an advice fee - it doesn't have to be a huge amount, say whatever you would charge a client for an hour or two of your time. To be fair to the customers who transact business it should be refunded and to those that don't they have not wasted your time, you are giving them a true whole of market comparison and to me, any customer who doesn't agree to remuneration in that form - they are likely to be timewasters anyway. I think this is a fair way to operate. I've started charging every client £99 upfront and refunding on completion.

Payless - I did give up my authorisation via Pink, but I didnt authorise with the estate agents but with a seperate company that was just accepting introductions from them (via Sesame), so I am still authorised to transact business and still ok thankfully. Luckily for me the principal of the firm I am authorised with is a really decent man and understood exactly why I did what I did, despite the fact that he is now lumbered with the EA "work"

NeilQuinn

Good luck if you're going it alone. Are you working on your own clients from home now?

Fella from Pink called in to see me yesterday, incidentally. Always trying to get me to join them.

MortgageMamma

Oh and added to this - just to make people realise there are still clients who value advice, here is a little tale for you

6 months ago my principal began advising a client. He was the proprietor of a local music store thats sells instruments, music sheets etc. Its a well established large business, not some tiny little outlet. The man was looking for a mortgage of about half a million on a large purchase. That purchase fell through, as did the next one. Third time lucky he finds a property thats right and puts in an offer. Goes back to my principal for advice, spends an hour with him. Principal says, I'm really sorry Mr X, but I cannot actually look you in the eye and say I will find you the cheapest possible mortgage. The lenders are doing a bit of an underhand thing and using the credit crunch to try and reduce the broker community to keep their own staff in jobs, and in order to do this they have made their direct products far more competitive than what I can offer you. You have an option, go direct and lose your consumer protection, pay me a small fee or give me some insurance business and I will research and recommend these none commission paying deals for you, or I just look at the products I get access to and hope for the best.

The client took some time to take on board what my principal had said to him and called him the next day. My principal was so pleased with the outcome.

Client "thanks for your time yesterday and for your frankness about the current situation within the mortgage market. I've considered what you've said and have decided I'd rather do my business through you, as I can see you have spent a lot of time on my advice and you DESERVE to be paid for it. I absolutely hate it when people come into my store and get advice on instruments etc, use up my time and resources and then go and buy it cheaper on the internet its really unfair"

See - to those that are losing out right now, honesty is the best policy and if you lay your cards down for the clients to make an informed choice and really level with them on issues, then there are people who value your time and advice.

MM

MortgageMamma

NeilQuinn wrote: »

Good luck if you're going it alone. Are you working on your own clients from home now?

Fella from Pink called in to see me yesterday, incidentally. Always trying to get me to join them.

I always did self generate and work with my own clients from home until October last year when I relocated 325 miles to join the estate agency - I wanted an easier life didnt like being a director responsible for everything. Had I known we were on the verge of a credit crunch and such troublesome times in the market I'd have stayed put and continued with my own company. You live and learn!

Ian_Griffiths_Halifax

MortgageMamma. You hit the nail on the head. The advice is the key and honesty when dealing with clients.

If a learner customer bought their musical instrument on the internet without knowing how to use it fully, I bet they wouldn't think twice about going to his shop and asking him if he could show them how it works!

How many times have people arranged a mortgage them selves on the internet or direct through a branch, only to come on here wanting advice on their offer letter, or some other issue. All questions which would have been explained in the first place or easily answered if they had used a broker in the first place.

Also, would you get a lender saying there is a better deal at the Bank down the road? NO! Is this Treating Customers Fairly if they know that another lender is offering a better deal (used in loose terms) than them?

MortgageMamma

The problem in this country is that consumers are very ignorant of finance, how it works and the contracts that they are getting into. Its a problem that is passed down through generations. If you have a family who take advice they are savvy with their money, their kids pick up on it and take advice from the parents and pass it on to their offspring. The family who are dreadful with money and struggle to manage it and sign without looking into contracts etc, usually the ones who think they know it all or who just think advisers are middle men just wanting a slice of commission, end up in an absolute mess, have no knowledge to pass onto their kids and the kids grow up equally as ignorant.

Thankfully its been recognised that children need financial education at schools, but this in in the very early stages and isnt high on the FSA's agenda. We need to TEACH adults and children alike how to manage their finances (before they can access credit cards, bank loans, HP and mortgages) and hopefully then we will see a lot less repos bankruptcies IVAs and bad credit.

I'm hoping this in an area I can move into as it develops, but it seems a long way off yet.

payless

Ian , personally I could not give a rats tail how any individual broker decides to work, especially given we all openly accept that we do not post here to attract business ( well thats not actually the case , but thats another story) , and yes if a broker feels they are happy to say "I'm Whole of Market" when in the current climate they know that the rates they offer are not the cheapest ( even when quoting same provider) thats up to them, they are their own business owners - they may well be within the rules as well. Same goes for those that decide to charge a fee .

This is a consumer lead site, and I think it should be highlighted that people should know what they are getting ... the firms that will be affected most by this ( if Martin decides to update his article) are those larger firms ( as recommended in articles) that purport to be offering WoM or BestBuys (like cashback sites) but don't.

Ian_Griffiths_Halifax

payless wrote: »

Ian , personally I could not give a rats tail how any individual broker decides to work, especially given we all openly accept that we do not post here to attract business ( well thats not actually the case , but thats another story) , and yes if a broker feels they are happy to say "I'm Whole of Market" when in the current climate they know that the rates they offer are not the cheapest ( even when quoting same provider) thats up to them, they are their own business owners - they may well be within the rules as well. Same goes for those that decide to charge a fee .

This is a consumer lead site, and I think it should be highlighted that people should know what they are getting ... the firms that will be affected most by this ( if Martin decides to update his article) are those larger firms ( as recommended in articles) that purport to be offering WoM or BestBuys (like cashback sites) but don't.

Just out of interests, do the Cashback sites or those brokers offering to rebate the procuration fees advise the clients that there may be Tax payable on the money they receive?

Ian_Griffiths_Halifax

payless, I do hope that your comment regarding "we all openly accept that we do not post here to attract business ( well thats not actually the case , but thats another story)" was relating to me?

I simply made a mistake when registering as it asked for a user name. Ian Griffiths had already been taken, and I didn't want to be known as Big Boy, Whothedaddy, Isavemoney, or any other silly name.

InMyDreams

Ian_Griffiths_Halifax wrote: »

Consumers in general, want help in finding the cheapest rate until they sit down with a broker who can show them that there is more to a mortgage than the rate, such as fees, compulsory insurances, income multiples or affordability calculators, flexibility, portability, offset facilities, payment holidays, overpayments etc etc etc.

The cheapest rate isn't necessarily the best deal!

So what would you suggest to a consumer who feels that they are confident with all this and can do their own research? I always believed that (current climate excepting) a broker could access better deals than an individual direct. That is why I would use a broker, not for the advice.

MortgageMamma wrote: »

it doesn't have to be a huge amount, say whatever you would charge a client for an hour or two of your time. To be fair to the customers who transact business it should be refunded and to those that don't they have not wasted your time, you are giving them a true whole of market comparison and to me, any customer who doesn't agree to remuneration in that form - they are likely to be timewasters anyway. I think this is a fair way to operate. I've started charging every client £99 upfront and refunding on completion.

MM, I think this is ideal. After having done my own research, if a mortgage broker felt that they could find me a even better deal, I would happily pay £99 for them to try, and would not expect it to be refunded *if they managed*. I would be more than happy for them to keep the £99 *plus* any commission they make. If they didn't think they could do it (or thought it unlikely), then they are free to refuse my business before taking the fee. I think in the problem is for brokers at the moment, is that in the current climate, for many clients, they can't. All that they have left to offer is the advice. I think that the problem for potential clients is that unless they are aware of all the issues Ian makes above, they could end up making costly mistakes, but at least they haven't wasted the brokers time. If they don't want to pay for the advice, that's their lookout.

The question should be, how do you, as a professional, persuade people they need your advice and it's worth paying for? Playing the sympathy card, whilst I have every sympathy, is not good enough reason for me to part with my cash. I appreciate it must be very frustrating, knowing that you can make a positive difference and that your professional advice is valuable and worth the money. I agree that the way the current system is set up does nothing to help when people can use you then ditch you and go direct. It undermines your value. Maybe the only way round that it to separate the advice with the sourcing.