why you should REALLY support brokers

Dan_Collins_2

I get the feeling we are just not wanted! I think that the fruad cases of late have hit hard and they want to lend less and cut out risk.

PS. I am crap at maths, a wizz on a computer and I have never got anything wrong regarding client cases!

Conrad

Graeme7777 wrote: »

Hi,


Unless you can get consumers to attach a value on your service I would suggest that it may be difficult to proceed without relying on commissions.

Graeme has hit the nail on the head.

My market sector is not the smart 'simple case' consumer - they DO NOT need me, nor should they attatch any value to what I do. Why on Earth should they pay me a fee when its very simple for them to compare lenders and work out which deal is best - it really is'nt difficult. Lets not forget brokers can be an ice cream man i week and apparntly is able to compare mortgages and give advice folloiwng a couple of weeks course and a few supposedly supervised sales - c'mon! He adds no value and confers no advantage. To even call him an adviser is really a joke - would you allow a Doctor anywhere near you that had come from an unrelated business just a few weeks before?

As I keep saying there are far to many brokers. The real market is the difficult case sector, thats where I add value and alter outcomes, thats where I can charge a fee.

As for insurance, I refer clients to an IFA that only does protection. His knowledge is vastly superior to any mortgage broker I've ever met (or managed in the past). For example he will spend days comparing the minuciea of various polices, consider Tax factors, look at claim criteria etc, in other words a dedicated professional.

MortgageMamma

Conrad wrote: »

Graeme has hit the nail on the head.

My market sector is not the smart 'simple case' consumer - they DO NOT need me, nor should they attatch any value to what I do. Why on Earth should they pay me a fee when its very simple for them to compare lenders and work out which deal is best - it really is'nt difficult. Lets not forget brokers can be an ice cream man i week and apparntly is able to compare mortgages and give advice folloiwng a couple of weeks course and a few supposedly supervised sales - c'mon! He adds no value and confers no advantage. To even call him an adviser is really a joke - would you allow a Doctor anywhere near you that had come from an unrelated business just a few weeks before?

As I keep saying there are far to many brokers. The real market is the difficult case sector, thats where I add value and alter outcomes, thats where I can charge a fee.b

As for insurance, I refer clients to an IFA that only does protection. His knowledge is vastly superior to any mortgage broker I've ever met (or managed in the past). For example he will spend days comparing the minuciea of various polices, consider Tax factors, look at claim criteria etc, in other words a dedicated professional.

Whilst I like you Conrad and normally agree with most of what you say, I do find you a little egotistical at times, because your posts are always "some brokers are little more than ice cream men that have been on a few weeks course and I am the great I am" I'm sure you do a good job with all your clients, but really we do not need to hear about what a superstar you are and how your business model is far superior to everyone elses. I started this thread with the emphasis on the value that brokers bring and to make consumers aware of the fact they are, and always have been compromised by our regulator. Whilst I believe everyone should have their say and is entitled to their own opinion, sometimes I think your points would be better made if you were not always glorifying your own business model (which I don't have a problem with by the way). I just feel like you barge into threads like a bull in a China shop and start ranting about other peoples business models which could, for all you, I and the public knows, be far more successful than yours.

HelpWhereIcan

BrokeRage wrote: »

You are wrong though about RDR. It is trying to remove up-front commissions and replace them with up-front fees. Even the links that you provided effectively say this. You don't even have to read between the lines to see that....they have been forced away from that goal by reality, for now, but protection commissions will cease within a year.

Again I fear you have misread my post. What I said was

HelpWhereIcan wrote: »

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 think that is where we may have to leave it as we obviously disagree on the merits (or otherwise) of the RDR and the future direction of the industry. Does not make either of us wholly wrong though.

Part of the problem that we (as brokers) all have is a fear of asking customers to pay a fee. I had/have it myself but my latest experience yesterday is helping me to turn it around.

Gave a customer a reccomendation for a direct only deal. Advised that she would probably have to deal with it herself, but that she will fit the Abbey's criteria ok and told her what she would need to give them and the likelihood that her application will fast track and what that means to her.

She then said, unprompted

"But I really don't have the time to deal with this. How much will you charge me to take care of the application for me?"

A bit taken a back, I advised her that I would not receive any commission for the deal and that she will not have any rebate to offset the fee.

"No problem" she said " How much will you charge?"

I let her know, have a signed authority and if the local branch will liase with us I will be glad to take the hassle away from her.

This lady was a fairly senior nurse, with teenage kids, a husband who works away who is time poor but definately not rich. She saw value in my advice and having someone do most of the donkey work for her.

BrokeRage

neas wrote: »

Im just confused though. So you are saying a price comparison website in terms of a good credit high deposit customer cant find as good a deal as a broker?

Im confused at what magic you guys work.. because the best rates shouldnt be allocated just for brokers that in essence is wrong in itself. Cut the middle man out for ideal customers... thats what i'd do. That was my question... how can a broker find a better deal than someone investigating it themselves? in terms of someone with a good credit score, high deposit low risk etc.

I agree with your point that the best rates shouldn't be reserved for brokers, nor for direct deals. It should be a level playing field and brokers should prosper or not on the service they provide.

We don't do magic really, just diligence. I'll give you an example. Woolwich (Barclays Bank) are one of the main purveyors of dual pricing. You can apply direct on their website, which is an absolute nightmare I understand. I helped someone with a direct phone application on March 22nd. No valuation has been instructed yet, no forms have been issued yet and his tracker deal is not even reserved until he returns the pack he hasn't yet had.

My average time to get a Woolwich offer out this year is four days, using an online application tool (MTE or MAX, both work fine but are specifically for brokers) with the deal reserved on the spot. The income protection we can provide is about 30% cheaper than the Woolwich policy on a like-for-like basis and life/Critical illness cover is not just lower-priced but we have a choice of 10-12 providers, plus a couple of dozen property insurance providers.

We also take responsibility for the recommendations that we make and we are known to make mistakes but put them right immediately (like refunding a valuation fee if we asked the lender to do it too early, as an example).

I understand the reasons for your question, because mortgages are not rocket science, but they are pretty complex. Which is best, a 5.75% five year fixed with a £1,499 fee and a 5% penalty throughout, or a 5.85% with a £999 fee and a penalty that reduces (5/4/3/2/1%) over the five years on a £200,000 mortgage? That is a simple question to a broker, but what if the first is with a mutual building society and the second with a plc (for example) and the property was under-pinned 10 years ago or got flooded 5 years ago. Your comparison site won't help then, nor will the lender's call centre and you cannot sue yourself!.

Spotting a decent deal is a minor part of the service, it is the application process and the problem-solving skills of the broker that count most, plus the provision of good-value protection products.

Conrad

AndyBlack wrote: »

For this type of lead, would it not be worth paying a one off annual fee of a few hundred pounds for unlimited leads?

Andy

The reason I've never paid for a lead is that noone offers what a term the 'Tescos model' where I can buy 1 item only and if I dont like it, never buy it again.

It really is that simple. So far every lead company thats ever approached me wants me to buy in bulk and commit to minimum costs. Now I ask myself, if these leads were any good, why cant I PAY AS GO without any binding contact?

You see I keep buying Rice Crispies beacuse they work!

HelpWhereIcan

Conrad wrote: »

As for insurance, I refer clients to an IFA that only does protection. His knowledge is vastly superior to any mortgage broker I've ever met (or managed in the past). For example he will spend days comparing the minuciea of various polices, consider Tax factors, look at claim criteria etc, in other words a dedicated professional.

Obviously does not have access to a decent research database then. :rotfl:


At the very least, I would suggest he subscribes to defaqto or Cover or Health Insurance & protection for their product reviews so he can build up his own database.

http://db.riskwaters.com/public/showPage.html?page=cover_feature&av1=cover_story&av2=1437&av3=30

http://www.hi-mag.com/healthinsurance/browse.do?section=P&adname=his_prodreview

It does not takes days to find out about these things - I suggest he takes a leaf out of your book and learns the difference between working hard and working smart.

Conrad

MortgageMamma wrote: »

I do find you a little egotistical at times,

we do not need to hear about what a superstar you are and how your business model is far superior to everyone elses.

Sorry Mamma, I didn't wish to be offensive.

Believe me I worry all the time now as even though I thought this was comming, it really is severe so it affects us all.

I wont change my mind though that many brokers are inept salespeople.

My business model is not superior, no way, I wish it were! I just do not like the way brokers attract punters with thier 'free service' and conceal thier true intention which is to sell insurance.

MortgageMamma

Conrad wrote: »

Sorry Mamma, I didn't wish to be offensive.

Believe me I worry all the time now as even though I thought this was comming, it really is severe so it affects us all.

I wont change my mind though that many brokers are inept salespeople.

My business model is not superior, no way, I wish it were! I just do not like the way brokers attract punters with thier 'free service' and conceal thier true intention which is to sell insurance.

You have to remember that there are SOME brokers left who just do the job because they like it and for the feel good factor. we all need to earn money granted, but I'm sure if thats what it was all about we could find more profitable occupations. I actually heard of a broker who took up dog walking, 6 dogs at £8 an hour and made more than she did as a broker!

As for me, I'm going to apply to go on Dragons Den on BBC2 because I have the most fantastic business idea but need about £30k to get it off the ground. Wish me luck!

Graeme7777

BrokeRage wrote: »

Is that daily, monthly or annual rest Graeme? (I know you can, but a broker should be good at arithmetic, not mathematics).

The number of rests doesn't matter, BrokeRage; looking at the formula it seems as if it can accommodate any frequency.

I'm afraid that I have to disagree with you when you suggest that this is mathematics and beyond the scope of an advisor's knowledge. (I can assure you that I am by no stretch of the imagination a mathematician!)

I can relate the experience of meeting an advisor (not bank-based) a few years ago. He seemed to rent his office on an ad hoc basis (nothing wrong with that) so he didn't have a PC to hand. While we were chatting I asked him to work out the results of a few different scenarios and even with the help of a calculator he couldn't come up with any sensible answers.

I wasn't asking him to give me definitive answers that I could "take to the bank", rather just a reasonable estimate of the impact of a few simple decisions.

This example is not meant to cast aspersions on mortgage advisors as a whole, but rather to illustrate the point that I made in an earlier post about advisors needing, in my humble opinion as a non-professional, to add value to borrowers. I don't work in the mortgage or property industries but I don't need to consult an expert to tell me that HSBC offers product X or that Natwest's otherwise identical mortgage is better because it charges a slightly lower APR. With all of the information available to us today we no longer need someone to tell us the obvious.

Instead, I want an advisor to be able to advise me on my choice of products BEYOND the simple comparison of APR, to explain the impact of changing the term or making pre-payments or withdrawals. In short I want you to help me create a "strategy" for financing my home in the most cost-effective and convenient way.

Coming back to my original comments about the calculator, I don't think I'm being unreasonable to expect my advisor to have a very clear understanding of how the arithmetic behind the repayment of a loan works, so that he or she can calculate the impact on my pocket of different ways of financing the house. For example, what happens if I want partially to protect myself from changes in interest rates by financing the house with some mix of an fixed-rate and variable-rate loans. Of course there is no need to be able to do such calculations with a calculator if Excel or someother software is available but I must say that my confidence in the broker's knowledge will increase huglely if I can see that he or she really seems to have a handle on what's involved rather than just punching a few numbers into a mortgage programme.

BrokeRage, I promise that I'm not having a go at you or any of your colleagues with this post. As you can see elsewhere in this thread I am a supporter of mortgage brokers and wish you all well. All that I, as an average consumer with no expertise in the mortgage market (and a mathematical wally!), am trying to suggest is that I think that there will always be a role for expert advisors (especially when times are tough and people need sound advice more than ever). I just think that those brokers who add little value (i.e. just sell whathever they can) to borrowers face a more difficult future.

Now I'll shut up and stop hijacking the professionals' debate.

I hope you'll keep us posted with progress about your campaign.