Cover


has pointed to the sort of mortgages granted at the peak of the market when they shouldn’t have been and the consumer was ill-advised.” “That is a really difficult tide to swim


against,” adds Gwilliam. “No matter how hard you try to present reverse arguments, and there are many, ultimately you have to think of the weight of column inches in national newspapers against us – that the mortgage industry is “bad” is stuck in everyone’s psyche. There will have to be a massive sea-change in order for that view to change.” Gwilliam says that because of this


there is no longer a belief that a career in the mortgage industry has security and is worth investing in. “Because people have lost trust, the


industry can’t attract people by word of mouth and that was typically how people got into broking pre-credit crunch,” he says. “One of the reasons the mortgage


sector grew to the level it did between 2004 and 2007 was through word of mouth. I was taking calls from people in all sorts of different sectors, keen to know how to be broker, business development manager or underwriter. If enough people talk about it, then it becomes self- perpetuating. Now we have absolutely the opposite.” Gwilliam says it’s not just the media


which is down on the mortgage industry. The consequence of the drastic cutbacks seen in the intermediary sector over the past three years has been thousands of disgruntled ex-brokers struggling to cross-train and feeling as though they’ve been left high and dry by the industry. “Many families and communities have


been affected by those redundancies. The industry can’t be blasé about the negative impact of all of that. We can’t just walk past this issue. It has to be explained and rationalised if we are to reinstate trust. “We need to communicate to the public


why the industry’s better for all that happened,” he says. “I don’t think the industry has quite gone through the grieving process yet – we haven’t been able to identify the good that’s come out of everything that’s happened. But if things


are going to improve we need a consistent message to go out into the community. It will take years before that negative trend reverses.” Mortgage crisis aside, Tenet’s Richards


attributes the decline in the number of new advisers coming into the industry to the regulation introduced in the mid eighties.


“BECAUSE PEOPLE HAVE LOST TRUST, THE INDUSTRY CAN’T ATTRACT PEOPLE BY WORD OF MOUTH AND THAT WAS TYPICALLY HOW PEOPLE GOT INTO BROKING PRE-CREDIT CRUNCH... IF ENOUGH PEOPLE TALK ABOUT IT THEN IT BECOMES SELF-PERPETUATING” “In the early eighties there were


undoubtedly too many unqualified advisers and the introduction of regulation was clearly required,” he says. “The industry saw quite a big reduction in numbers at that time as many decided they’d simply get out of the game rather than qualify. “That was a deliberate reduction


because the regulator’s objective was to reduce the number of advisers. But after 22 years of regulation we should be a long way past wanting to reduce number of advisers. We aren’t it seems.” The other major difference between


then and now is the path an adviser takes to get into the industry. On the mortgage broking side, traditional training


24 mortgage Introducer SEPTEMBER 2010


grounds were the big banks and insurance providers. But on the protection side of the fence,


one major shift has occurred that had hit the influx of new blood into the industry hard. Peter Chadborn, a protection IFA at


CBK Colchester, says the demise of “the man from the Pru” is where it all started. “A lot of the traditional training grounds


for IFAs and brokers have disappeared in the past decade,” he says. “The old training ground of home service, where advisers visited the homes of their clients to collect premiums, was no longer cost-effective following rules saying commissions had to be disclosed. “There was a sea-change in 1994


when charges on products had to be disclosed – it took about four to five years to wind down. It was at that point that products began to be sold much more on price, because customers could see the charges and wanted to bring the cost down. The ‘man from the Pru’ model became completely untenable as a result, meaning that apprenticeship route disappeared.” “People working as home service reps


stopped just falling into the industry and it killed off that training route,” he adds. “Now becoming an IFA has to be a conscious decision. The bank adviser route is really the only training ground left.” Richards agrees. “Since the demise of


direct sales forces, the industry lost an important and effective route for new entrants to join the industry which is where many of today’s most successful IFAs started their careers. “As the intermediary sector is


predominantly made up of small firms, few have the time, capital or infrastructure to recruit, train and retain new advisers, further exacerbating the situation. With the impending risk that RDR will have a negative impact on the adviser population, we are likely to enter a period where well qualified advisers will be highly sought after, rather than firms facing the increasing cost to recruit and train and retain new advisers.


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