why you should REALLY support brokers

BrokeRage

Homer_j) "Does a direct deal automatically mean its a bad deal? In my opinion, it does not. Are we as brokers saying that people should pay indirectly through potentially more expensive products to receive the choice? I think the current system does imply that."

That is absolutely the opposite of what I believe. I am against dual-pricing and have no reservation in saying so (I think MM gave the wrong impression in one of her responses). I think "Exclusives" are wrong whether they favour the branch or the broker.

The Dual-pricing situation is a regulatory problem because it is making it more expensive, in some cases, to get advice from a broker. Previously, a consumer could utilise a broker without being penalised by having to pay for the broker's time or accept an inferior deal.

I agree with NeilQuinn entirely, but disagree with Homer about the RDR. HWIC mentioned charging a fee for mortgage research and then getting the protection business. The RDR will remove commission from there as well, so that business model is a dead duck.

I think that those in favour of fee-based advice should wake up and smell the roses. If dual-pricing has taught us anything, it is that the FSA will not defend independent advice and the big financial institutions actively want to destroy it.

BrokeRage

Sorry Homer. I disagree with your latest post too. Lenders want to avoid competition wherever possible. They do not intend to have factory-gate pricing long-term and the problem is that most people THINK they can do their own mortgages and make their own decisions, but consumers are unable to cope, on the whole, with skilled, scripted, sales machines.

wisbech_lad

Heh. This reminds me of my own industry (airlines) Travel agents hated the internet, and fought tooth and nail to keep commissions, or to make the channels neutral. (same pricing direct or via agent) They lost. Travel agents are now niche (package holidays, corporate travel management) Basically, where they can add value. But for plain, vanilla, simple products, most people go direct. Because of the FSA, the issues are not exactly the same. But for a bog standard 65% LTV deal, why use broker? It will be for the difficult cases that an adviser adds value. Unfortunately (for you guys) it tends to be the "bog standard" people who can pay. The credit impaired, not so much. At least travel agents have had the advantage that those with the most complex needs (corporates, safari holidays) also are those who are able, and willing, to pay for service

HelpWhereIcan

BrokeRage wrote: »

HWIC mentioned charging a fee for mortgage research and then getting the protection business. The RDR will remove commission from there as well, so that business model is a dead duck.

Actually not what I said, and not what I meant either.

HelpWhereIcan wrote: »

Now is the time for brokers to seize the initiative back from lenders. Go professional. Work on a fee only basis.

I have my fee, a happy customer and an intact reputation.

I am advocating the fee based approach to ensure that we get paid for the work we do. The fee paid covers the work done - no more dealing with tyre kickers or giving advice for a case to fall through and receive nothing on it.

If commission is removed from Protection Business then a fee will need to be charged for advice and/or administration on that as well.

The RDR does not call for all commission to be removed

http://www.ifaonline.co.uk/public/showPage.html?page=791553

http://www.citywire.co.uk/adviser/-/blogs/business-development/content.aspx?ID=302958

but looks to push Customer Agreed Remuneration and promote trail 'commissions' or fees to pay for ongoing advice/servicing which is only fair.

I had a customer this week who took a Friends prov policy out through B&B a few years ago who did not realise that the company would be getting trail commission for 'ongoing service & advice' which they were not getting.

I should only get trail commission if I continue to service that client's needs and they agree to it. Nothing wrong with that being set out as part of regulation.

BrokeRage wrote: »

I think that those in favour of fee-based advice should wake up and smell the roses. If dual-pricing has taught us anything, it is that the FSA will not defend independent advice and the big financial institutions actively want to destroy it.

Which is why we have to make our own representations to clients etc.

The comparison to Travel Agents is not 100% accurate, but valid to an extent.

Financial Services are always going to have more of a demand for advice than Travel Agents due to the amounts of money involved and the long term nature of contracts and, sometimes, their complexity.

That said, if the internet has led to the death of the Travel Agent for normal things like, say, booking a flight or hotel I would love to know why most of the main Travel Sites are either agents or owned by agents - very few people will actually go direct to the airline's site without first visiting a comparison site. The click through commission from airlines will do very nicely for the likes of expedia - with no work or liability for advice needed - and some of those clickthroughs go to ticketing agents.

Do not forget how the majority of mortgage comparison sites are either brokers or feed leads to brokers.

People who are time poor also pay fees and are often the ones who most understand the value that can be added (but need to receive that value as well). Complex does not mean bad credit, it can mean a large loan, complicated, multiple sources of income or consultancy contracts, a messy divorce, a desire to hold a mortgage in another currency etc etc.

We are in danger of talking up the risks to independent advice here. The current issues actually mean that the average man in the street may not get free access to genuinely independent advice in the future, but that does not mean the death of the mortgage broker. We may just have to deal with only those willing to pay for advice and make use of closer links to other professions like IFAs, accountants etc.

The banks have something to fear from the RDR as well - the latest proposals to ensure that they have to describe their service as sales rather than advice is a good move IMHO. Not that I think the RDR is perfect or even needed, just not the all encompasing bogie man it has been made out to be.

homer_j_3

Whether or not you agree with me or not BrokeRage, it is irrelevant.

My thoughts are just that as yours are just that also.

I hope your campaign gets the results that you want.

Kez100

Out of nosiness (and that is all it is - please ignore my post if you want) what drop in work have you seen? If you take an average month early last year, say, and May 2008?

homer_j_3

I wasnt self employed last May so cannot tell you the differences which would mean anything.

Conrad has said openly on here that he may well be 25% down this year. These are the minimum levels that I would expect for most but you have people that have a good remortgage book and you will have people like me who do not and get their business through word of mouth - albeit the volumes are not massive.

I came out of being employed at the wrong time but I do not regret it and I am now looking to do resurrect my financial adviser qualifications again as well as doing some other bits on the side. If all goes to plan, I will be no worse off this year than what I was last.

Kez100

I see, so you will expand your work to include insurances, savings etc which you already have some experience in but just need to swot back up on so you know today's market?

homer_j_3

I am looking to expand my services yes and yes Dunston has given me a nice easy paper to help me get my knowledge upto speed.

AndyBlack_2

homer_j wrote: »

Lead generation companies are all the same in terms of the hook people in and although they put warnings up for people saying "this is what you are doing and the consequences of this are" - people do not read them.

I would applaud the day that one came along and said, for £50 we will get you an appointment which will sit. You do not pay until your appointment has confirmed and you will get a refund if they cancel.

What if you paid a one off fee for unlimited leads and not on a per lead basis? Would this come under the same bracket? If you were offered a service where the annual fee could be covered by only one successful lead... for the potential of unlimted leads... would this sound interesting?

I would like some genuine feedback from those of you who are brokers, good or bad. It would be good if you could give your opinions on such a service.

Thanks

Andy