News Review: Financial Advice


Wise people listen to advice by


Stephen Smith, director,


Housing and External Affairs L&G


A word in your ear is always better than tapping away at a keyboard or a disembodied voice at a call centre isn’t it? And getting advice,


rather


than blundering around on your own and regretting what you have bought is also al- ways better. Most aspects of today’s life, particularly those where money is concerned, seem to be getting more and more


complex. phone contract Buying a for example


or choosing an energy suppli- er - let alone the huge almost once in a lifetime decisions like getting a pension or buy- ing a home.


“People need advice for complex transactions and the mortgage intermediary sector stands ready and able to fulfill this need” People need advice for these


complex transactions and the mortgage intermediary sector stands ready and able to ful- fill this need for homebuyers and for those looking to rear- range their finances through a remortgage. I believe that the


Financial Services Au-


thority sees this too and that the Mortgage Market Review, the final rules for which will


be released in the next few weeks, will land firmly on the side of all sales of mortgages being advised apart from a few minor exceptions.


Worth fighting for Advice has been one of the most contentious aspects of the debate around the MMR proposals but it has seemed clear to me from the start that the FSA intended to bring an end to consumers being “sold to” in a bank branch and go- ing away thinking they have had advice, whereas in reality they have had no such thing. Te consequences for our


industry of this decision can’t yet be called. It could still go one of two ways. One school of thought is that lenders, faced with the need to find large numbers of experienced and


qualified staff, would


come out and pillage the in- termediary sector armed with big


chequebooks and steal


away the best advisers to work in their branches. Te other view is that lend-


ers will take a long, hard look at the performance of their existing


advisory staff in


branches and the fixed cost that these represent and will conclude that it will not be worth the investment of time and money to up-skill it to the requisite level. It may also seem pointless when there is an enthusiastic intermediary sector ready and able to shiſt lots of mortgage product for them on a variable cost basis.


Broker boost Over recent months, I think the way this will


land has


become clearer, based in no small part on the frustration of senior mortgage folk at


18 MORTGAGE INTRODUCER OCTOBER 2012


Better for customers Tere are benefits all round from consumers receiving advice. For


the consumers


themselves they, if they use an intermediary, benefit from a choice of products and lend- ers. In 2007 the Association of Mortgage Intermediaries did some research which proved that the right choice of prod- uct advised by an intermedi- ary


could save consumers


many thousands of pounds over the life of their mort- gage compared with going to a bank branch. Te consumer will also receive advice about the other products which


lenders with the inability of their branch and call centre staff to make volume sales, even when presented with ad- vantageous dual priced prod- ucts. So now we hear of a num-


ber of lenders, some quite large, which plan to run down their in-branch advi- sory workforce. Admittedly there is also one which seems to be going in the other di- rection, but I think this is an outlier and that the general trend is for mortgage lenders to use mortgage intermediar- ies to move extra volume as lending levels recover, rather than build up their own sales forces.


“The future is clearly adviser- shaped”


they may need to protect their home and their lifestyle as part of the holistic advice a good mortgage and protec- tion adviser will provide. For the adviser, a proper


advised sale based on getting to know the customer’s needs and aspirations will form the basis of a long term relation- ship, with the possibility of both referrals to friends and family and of repeat sales to the customer themselves. And for the lender, they


benefit from receiving appli- cations from well-informed and advised consumers, who understand what they are buying and whose borrow- ing will be protected against many of the problems which may arise further down the line. Te future is very clearly


adviser shaped. Te final rules for the MMR will con- firm this, and I think we can look forward to a bright fu- ture where advice is recog- nised and valued. Certainly AMI plans to do much more to promote public awareness of


the benefits of advice on


mortgage sales over the com- ing years, and this should meet a growing recognition of this value from customers. And in moving in this di-


rection, the regulators seem to be recognising the truth in the old saying: stupid people always think they are right; wise people listen to advice. Lots of wise consumers com- ing our way - lots of business to be done.


www.mortgageintroducer.com


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