The Interview
Bring me sunshine
The mortgage is just one part of the whole transaction Legal & General wants to do with its customers, as Sarah Davidson finds out from L&G’s Stephen Smith and Ben Thompson
An umbrella is a useful thing. Come rain it keeps you dry. Come shine it keeps you shaded. It’s (deliberately) an apt logo for Legal & General – protect yourself whatever the weather, it says. Indeed Legal & General’s business is entirely about financial protection and planning in various formats. It covers pensions, insurance, retirement planning, investments and importantly for this discussion, mortgages. Stephen Smith, director of housing
and external affairs, and Ben Thompson, managing director of mortgages, take this philosophy to heart. Protection is a case in point. Brokers
and networks have been jumping on the protection bandwagon for the past two years left right and centre, suddenly seeing life cover and critical illness insurance as cash cows for struggling mortgage brokers. But as opposed to the majority of the mortgage market, Legal & General has always considered protection integral to its proposition – it’s been part of the plan all along. “That’s the difference between Legal &
General and other networks,” says Smith. “Our business model is built around the idea that the mortgage is not the central product. Other networks are catching up to that idea now but traditionally our typical appointed representative members were life insurance sellers who did mortgages. What’s become clear over the past three years is that you can’t make
a living just selling mortgages. That was always clear to us.” The idea that the mortgage is just one
part of the whole transaction Legal & General wants to do with its customers via its members illustrates neatly its wider business strategy. “At the heart of Legal & General is the
view that mortgages are the sprat to catch the mackerel,” explains Thompson. “Protection and general insurance is our heartland and though mortgages became more central in the marketplace through the boom period I think we’re now going back to financial services and financial planning generally.”
BuIldIng relaTIonshIps That holistic approach to financial advice encapsulates pretty much everything Thompson and Smith are trying to do at Legal & General at the moment. “Strategic alliances are the future,” says
Smith. “I think distribution has got more grown up and will continue to do so. We see further consolidation happening and more alliances between different groups in the industry.” For their own part, Thompson is trying
to broaden Legal & General’s access to financial advice expertise and help the mortgage club members deliver a more holistic service to their clients. “Over the past three years we’ve tried
to widen the services we offer through the club and link back to Legal & General’s
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core business. We looked at whether there were ways for us to leverage our corporate relationships to benefit brokers and consumers and then flow the mortgage business back to our preferred lender partners,” he explains. One of those partnerships is with
Haywards Surveyors and KFH Financial Services. “They do the life insurance and
mortgage sale via us and we feed them with surveys back in the other direction from our lender partners. It hangs together in a sort of virtuous circle,” says Thompson. “We also have some successful
alliances with big firms. One of those is with a firm called Honister Capital which was formerly Money Portal – their main focus is on wealth management and financial planning rather than mortgages and insurance. About two years ago we arranged a tie-up to provide them with mortgages and insurance expertise while they offer our members expertise on the wealth side.” Thompson says the club has other tie-
ups in the pipeline and indeed it recently announced a referral deal for its members with
Largemortgageloans.com for high value mortgage business. “That’s exciting for us because four
or five years ago in a high volume environment it made sense for firms like Honister to do the mortgages themselves,” says Thompson. “Now
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