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advice, they have influence over their members The FSA's recently published Financial Risk
and that their actions create the incremental Outlook revealed that 769 mortgage intermedi-
value they seek. ary firms quit the market in 2008; given the
nature of the recession we currently find our-
Misguided selves in, one can only surmise that this figure
This has meant that distributors, especially the will be much higher for 2009. Therefore, firms
mortgage operations, are not able to be the themselves must be willing and able to make
'sticker clubs' of the past. If they maintain this changes in order to continue as going concerns.
business ethos they are misguided, particularly In this regard, good practice, professional com-
as intermediaries are looking for much more petence and, as advisers, addressing the lifestyle
from their distributor. In effect, to survive needs and requirements of clients, will set one
today, mortgage brokers must acknowledge that firm apart from another.
mortgages are not the only fruit in the garden.
Quality of advice, client retention, appropriate Competence is key
diversification and value generation should be As has been mentioned previously, competence
at the heart of all intermediary firms. Brokers is key, be that professional or regulatory.
are now looking to their major distributor Intermediaries must therefore invest sufficient
partners to supply them not just with access to time and energy to developing appropriate
new product sectors but also training and sup- competence particularly in any new fields they
port to ensure they maximise these opportuni- may be entering. New and increased cross-sale
ties, whilst ensuring they have appropriate opportunities can certainly fill the income gap
permissions, competence and the ongoing that has been left by the current mortgage envi-
infrastructure to serve their clients' best inter- ronment; however they can only be taken
ests, not just while mortgage volumes are advantage of if the firm and its advisers com-
down, but in the future, i.e. ensuring they treat mit to gaining the competence which will ulti-
their customers fairly. mately add value to the service they provide to
It is not simply enough to operate a provider clients.
panel in a certain sector – how does this help Regulatory competence is another method
the intermediary firm that has not advised, for by which firms can distinguish themselves from
example, on a non-regulated investment or the competition. It has been said many times
equity release product before? Intermediaries but intermediaries do not often make the best
using a distributor are not just expecting access administrators and therefore maintaining com-
to the many associated cross-sale areas; they are pliance can often prove a significant, although
also looking for broader help to grow their not insurmountable, challenge. Excellence in
competency in these new areas. Alongside this business and compliance management is
they may also want compliance support to achievable for all; indeed having an outsourc-
ensure they do not run into difficulty by advis- ing arrangement with a distributor can bring
ing and offering these new products to their economies of scale and for many a higher level
clients. of regulatory competence.
Strategies Client management
So, it can clearly be seen that lenders have Now is also the time for firms to develop the
changed their distribution strategies to cope necessary process and adopt systems that serve
with the new world order and that the chang- better client management. To add to this over-
ing nature of the intermediary job requires that all function, firms can make significant savings
they demand far more from their distributor in by opting for a sourcing or back-office system
order to attract and keep their clients. Advisers made available through a distributor. This will
are certainly grasping the fact that the market add to the firm's business and regulatory effi-
they may once have enjoyed as purely mortgage ciency without compromising the quality of the
intermediaries is gone forever. Plus, we should research or the advice. A business without such
also not forget that while the Retail robust operational architecture is usual less
Distribution Review (RDR) does not affect valuable than one with it.
mortgage advisers, it is very likely that individ- Overall, firms have a difficult market to con-
ual registration (and therefore accountability) tend with and therefore difficult decisions to
is on the regulatory radar. Procuration fees and make. However, state of the art distributors are
commission, as we currently experience them, providing a range of products and services,
and as adviser models evolve may soon be plus additional and ongoing business support,
complimented with asset-based structures and to enable firms to meet the changing needs of
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firms may therefore wish to look at the other the regulators, lenders and providers, and their
fee-charging options that exist. clients. Opportunities continue to exist howev-
have strong relationships with their intermedi- Paradigm has spoken many times about the er the old set of 'rules' and processes do not.
ary members and who are aware of their busi- fact that firms who only function on a transac- Distributors are certainly changing to meet the
ness and clients needs. Essentially, distributors tional sales basis are unlikely to survive in the expectations of all stakeholders and we will
today need to demonstrate to lenders and current marketplace. We can continue to repeat continue to offer both variety and stability for
providers that, without compromising best this message because it continues to be true. the new breed of mortgage intermediary firm.
www.mortgageintroducer.com March 2009 Mortgage Introducer
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