2,500 advisers on a day-by-day basis,” says Shearman. “That face-to-face relationship helps them understand how to build their business and ensures the quality of what they do is as good as it possibly can be.”
The qualITy bug It’s been said so many times now it seems old hat, but it’s still a concern for many brokers in the field. Lenders have moved from quantity to quality and that means restricting distribution relationships to key partners. But what is Openwork doing to differentiate itself from other distributers and what has it achieved to give its ARs a competitive advantage?
“This is a critical issue and one that
I can’t see going away for a while,” says Shearman. “Because every single adviser in Openwork is an AR we are accountable and responsible for the advice they provide on every single mortgage case. We also provide a guarantee of that advice so that if things go wrong for the client we will make it right.
“I understand from our lender partners that Openwork’s business performs generally 20% better than their average in terms of 3 months plus arrears.” That quality of performance and the stability of advisers in our business counts for an awful lot, Shearman claims. “Wherever a lender has adopted a
tiered structure for their distributers, Openwork is in that top tier. ING has gone with Legal & General and Openwork as distributers for their entry into the market. There’s a reason for that – part of it is scale and part of it is the quality of business they know they’re going to get,” he says.
Despite this confidence Shearman believes there is a lot of work to be done building bridges between lenders and networks.
“I still think most mortgage distributers have failed to get to their rightful place at the table with most of the major lenders,” he says. “There are exceptions to that but there is still too much focus within many lenders on increasing direct business, leaving intermediaries with the leftovers. There
are some logical reasons for that – a fixed cost base in branches springs to mind - but it’s also because distributers have failed to broaden and deepen their relationships with lenders. “Our challenge is how we get Openwork or any of the other major distributers on the agenda not only for mortgage business but also for GI, protection, pensions, investments or even risk.”
Shearman has already begun to put this strategy into practice. “We’ve found ways to work across Lloyds Banking Group on mortgages, GI, conveyancing, structured investment products and pensions. We have to look at all the opportunities that exist with our partners.” Similar relationships exist between the network and Santander and Cater Allen on the investment side and with Barclays Wealth.
a brIghT spoT This strength of relationship with lender partners has also served Openwork members well on the buy-to-let front. Openwork enjoys panel relationships with all of the players in this market, despite some lenders having strict curbs on which distributers they do business with. “Overall our share of the intermediary lending market is about 8% though it’s slightly higher in the buy-to-let market,” says Shearman, “We play quite heavily at the professional end of this market and have just over 9% of intermediated business.” Shearman is confident that the sector is one of the bright spots for the year. “This year will see buy-to-let business rise between 12% and 15% on 2010,” he says. “You’ve got a generational shift towards renting as opposed to buying combined with a massive drop in social housing. Buy-to-let is going to be really strong – it was up 10% by volume last year. In the first quarter of 2010 12% of our mortgage business was buy-to-let, rising to 18% in the fourth quarter and 20% in January of this year.” In an effort to support this uplift Shearman says the network plans to hold adviser workshops across the country from the end of this month covering
how to best to package buy-to-let and improve broker expertise in this market sector. “We’re looking at running a series of buy-to-let master classes over the coming months looking at the scale of opportunity and ensuring our advisers are clear on how to deal with a portfolio landlord, looking at limited versus unlimited companies, HMOs, student lets etc,” he says. “We will also cover the fact find questions advisers should be going through with a landlord as well as what is appropriate protection, general insurance and rental guarantee cover for this sort of business.”
The road ahead So if Openwork had a crystal ball? “Mortgages will be pretty flat this year and next before we see some growth kick in the back end of 2012,” says Shearman. “But we should remember there has been a lift in the number of broker products compared to a year ago and criteria is gradually improving. “Dependency on the big five lenders to intermediaries was 92% at its peak. That’s now down to 80%. Accord, Northern Rock, Platform, Kensington, Principality, Coventry, Leeds and ING are gradually moving their numbers up which is beginning to help. It’s great to have a bit more product variation and deals to serve customers who couldn’t get a mortgage a year ago.” Shearman is also confident on the opportunity for brokers.
“Consumers need advice, now more
than ever,” he says. “An interest rate rise is coming and clients need help to remortgage. That in turn offers brokers a chance to advise their clients on protection and GI. The best bit of advice I could offer brokers is not to lose their focus on the complementary sales that sit alongside the mortgage.” Aside from the obvious lending constraints Shearman is positive about the market in 2011. “The majority of threats are now behind us,” he says. “Any network, club or intermediary business still with us this year has been through the worst.” Let’s hope his crystal ball is right. n
mortgage introducer APRIL 2011 45
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