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Phil Whitehouse,
head of The Mortgage Alliance
Normal is as normal does could have been a line from Forest Gump but taking an actual line from the film and some providers’ offerings have certainly been like a box of chocolates over the past few years. In essence there were times when intermediaries didn’t know what they were going to get and ‘normality’ swiftly became a thing of the past. The word ‘normal’ obviously depends greatly on the volatility of its surrounding influences. There has been nothing ‘normal’ about the credit crunch in terms of how individual businesses have and should have reacted but as the resultant tremors seem to have calmed is there a ‘new normal’ descending over the mortgage market? Well it’s a fact that we have all had to adapt to new lower levels of business volumes. Long gone is the ‘old norm’ of mortgage business flooding through the door and brokers assumed the role more of order takers than a sales person.
Current conditions feel like a million miles away from the pre-credit crunch
the country and so to justify the cost of keeping them open, lenders have to drive as much business through them as possible - hence dual pricing and an ag- gressive cross-sales policy to maximise the revenue per account holder. I know that lending figures have been analysed to death, but it’s worth remind- ing what they’ve looked like over the past few years as compiled by the BSA. When looking at the 2008 and 2009 totals, it’s easy to see why capturing multiple revenue streams through the branch and direct networks to subsidise profitability has become such an issue for lenders. Brokers have been no differ- ent in this regard and the ‘new normal’ as it were is to try and capitalise as much as possible on alternative revenue streams. Gone are the days when, as an intermediary, you could rely solely on executing mortgage business.
22 mortgage introducer MAY 2010
days of old but we must remain positive and there are still opportunities available for willing and able intermediaries. Investigating how best to maximise ancillary sales is one particular area that is being looked at by many but there is still work to be done. In terms of generating extra revenue streams intermediaries must ask themselves if they are really committed to cross-selling services and products as this is not something that should be entered into half heartedly. The ‘norm’ now simply has to be in grasping the revenue potential offered by such products. Getting back to the basics by incorporating efficient and effective sales processes will help ensure intermediaries stand out from the competition and provide the platform to earn decent levels of income despite the decline of the market. It is all about evolving into being a better adviser across a number of areas and having the right strategic partners in place to really maximise opportunities offered by each and every client across all their financial requirements. Firms have naturally had to look at internal structures, overheads and staffing requirements and evaluate the cost effectiveness of outsourcing certain resources. Embracing technology should
“ THE NEW NORMAL AS IT WERE IS TO TRY AND CAPITALISE AS MUCH AS POSSIBLE ON ALTERNATIVE REVENUE STREAMS.”
The natural area of expansion has been in insurance products - both gen- eral as well as life and critical illness - and the level of penetration has been higher than ever before, as evidenced by data from the Association of British
also have been, and continue to be, on the agenda. Strategic relationships have also become more vital than ever. Firms must be certain that the partners they chose are more than competent. Of course, a good record offers reassurance, but it is equally important to ensure your partner is equally receptive to change. If intermediaries haven’t already done so then maybe it’s time to reassess existing relationships and not be afraid to ask some difficult questions of these partners as well as of themselves. So the ‘new normal’ is certainly not living in the past and sitting on the sidelines waiting for old mortgage volumes to return because frankly they won’t. Intermediaries must continue to get even closer to existing client bases by offering a wider range of products and services to address an array of financial needs to ensure that the client remains one for life. Attracting new clients is not easy but with imagination and a willingness to try different approaches it is far from impossible. Adapting to the ‘new normal’ doesn’t mean following what everyone else is doing but one thing intermediaries should have in common is the appetite to continually increase advisory skills to maximise all the available opportunities.
Insurers which shows new regular premium accumulation and protection sales.
When comparing the 2005 to 2009
figures between the BSA’s net Lending figures (see p21) and the ABI’s New Business premiums, one can see that the massive decline in net lending is not at all mirrored by a similar de- cline in new business premiums. This can only mean that there has been a substantial proportionate increase in insurance sales.
mainTaining profiTabiLiTy
The point is that the current market conditions are forcing lender and intermediary alike to rethink how they will maintain and build profitability. The insurance penetration has thus far been the most obvious and natural area of growth. However, the industry
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