I take my car in for a winter service every January. I avoid the plethora of franchise service stations – many of which offer the world for less than £100 – and take my car to a small, independent specialist.
I’m on first-name terms with my mechanic and I instruct him to go over the car in great detail. I then replace anything that he advises me to replace. This doesn’t come cheap and I wince every time he hands me the bill, but this pain is quickly replaced by a feeling of security, knowing that the investment I have made means that my car is being looked after and that my wife and children, who spend a great deal more time in it than I do, are safe.
I trust my mechanic. He does a fantastic job and I pay him a fair price for his service. Why then does my mortgage adviser, who directly impacts an investment worth many times more than my car and who can directly impact my family’s financial wellbeing, not charge me anything for his time?
He takes a procuration fee, of course, so the service isn’t free, but no one would expect to receive advice from their doctor, lawyer, accountant or indeed mechanic without paying a fee. So why should a mortgage adviser, who performs a service that can take anywhere between 10 and 20 hours (excluding case time that doesn’t complete) work for an often tiny commission payment?
As I see it, the problem here is twofold. Firstly, to attract good people to an industry you need to have attractive earning potential. Becoming a mortgage adviser isn’t simple. The industry is heavily regulated, and it’s about to become even more so with the Mortgage Market Review (MMR). A person who is thinking about entering the industry needs to know that the remuneration they can expect is worthwhile. If we want to build a strong industry, we need to attract good people.
Secondly, I’m being asked more and more by mortgage advisers to provide leads with larger loan amounts in order to maximise earning potential where a fee isn’t charged. While I sympathise with the adviser, where does this leave the consumer? “Sorry your business isn’t worth enough to warrant giving you the service and advice you need.” This is not a fair way to treat customers and is a bad way to run a professional industry.
Having done business with mortgage advisers for a long time, I’ve heard all the excuses under the sun for not charging a fee: they’ll go direct, they’ll go to another adviser and, more often than not, “we just don’t charge a fee”, with no commercial rationale other than that they didn’t do it last week so they’re not doing it this week. This apathy is at the heart of the problem.
Being a mortgage adviser isn’t about dropping the client’s details into a sourcing engine and telling them which product appears first. Buying a house is the biggest financial decision most people will make. Advisers shouldn’t be seen as a comparison service; they should be seen as professional advisers and the customer should pay a professional fee for this service.
If the best option is to stay put, the client should pay for this advice. If the best option is to take up a product that is not available through the intermediary channel, again the client should pay for this advice. An adviser’s earnings should not be based on completions, but rather on the work performed.
Although this may be a bitter pill to swallow, it is time to step back and assess the service you’re actually providing if you, as a mortgage adviser, don’t feel that you can justify charging the client for your time. My personal view is that the majority of mortgage advisers do a fantastic and necessary job and that the consumer is better off having used them. I see no reason why people should resent paying for this service.