Few sectors in our market seem to pick up as many headlines as those generated by product transfer business, and when you add in the industry furore around the FCA’s proposals which seemingly generate a more benign environment for execution-only activity, it’s perhaps no wonder.
Why should this be the case? Well, my view is that this is clearly a ‘pinch point’ between adviser and lender – and that’s putting it mildly. It raises deep-seated industry issues that historically exist between both sides and perhaps patch into a mutual distrust and an argument that has been going on for the past two decades, namely who owns the client?
I recently read a Mortgage Solutions MarketWatch piece on this very topic and it was illuminating to read the different advisory viewpoints and the impact lenders targeting borrowers earlier in the process of renewal is having. From the one firm that said it is losing 25% of this business direct to lenders, to the firm who feel 90 days prior to the end of the deal is too early to contact a client, to the firm that says it does not suffer in this way because its clients see the value of advice.
It went a long way to showing how some advisers might feel they’re between a rock and a hard place on this, and the underlying truth that for some lenders, while the initially-introduced business is vital to their existence, that doesn’t mean they won’t use all the tricks in the book to re-sign that borrower without any advice element.
So, what can be done, because it’s obvious that certain lenders – particularly the larger mainstream players – are not going to stop in their pursuit of this business, and now arguably the regulator is creating an environment which allows them to do this more assertively. Indeed, the resource and investment that is being poured into technology to illicit greater levels of this business, probably tells you how some lenders see this ‘battle’ going.
Looking at this, we might argue that product transfer/execution-only are potentially two sides of the same coin, and without the adviser working at securing the former, while putting in place the key arguments for the borrower not to go with the latter, then they are likely to see more business going direct.
Perhaps, in that case, we need to move away from a ‘X months before the end of a deal’ contact strategy with clients because there’s a very good likelihood that if they haven’t heard from you in at least the last year and a half, they may not consider themselves to be clients of yours at all.
And it’s at this point that – should the lender come calling with a direct/execution-only deal – they decide there is no loyalty to the adviser who conducted their last business, and given this seems a decent offer, then it will be just as quick for them to do it themselves.
One understands a mindset which says, ‘I can’t contact a client as early as a lender can’ because new deals can’t be arranged, but I still don’t truly buy it. What is stopping the adviser from being in regular contact with a client during the full duration of their mortgage? From checking that everything is going well, to outlining new services, to providing a countdown to the end of their deal, to suggestions around potential referrals of other family members and friends, to outlining other key product areas and news which might have an impact on their lives and financial decisions.
As long as you have the correct marketing buy-in from the client, keeping your business and services front of centre throughout a borrower’s mortgage term seems, in a very true sense, common sense.
Plus, certainly within our network, we have the technology and systems for firms to keep on top of this contact calendar, to ensure the right marketing messages are going out regularly. The client then (hopefully) recognises the good work you have completed for them, and they’re aware any direct-from-the-lender offer should be taken back to the adviser, because circumstances are likely to have changed, and there’s an incredibly competitive market to be reviewed. Not forgetting of course, the protections that impartial advice gives to a borrower which they’ll simply give up by going direct.
This might seem like a very basic marketing strategy, but I’m also not so certain that all firms are following it. Don’t be afraid to seek out the support you need, especially if you’re not getting it in this area, and don’t be afraid to keep those client contact motors moving at all times. As mentioned, lenders won’t be pulling back from this way of securing business, and neither should you shy away from doing all you can to keep those clients on board.