To misquote REM, ‘It’s the end of the year as we know it…and I feel fine.’ 2019 is drawing to a close and I’m sure most advisers will be looking forward to the break – however long that might be for them – and perhaps getting some welcome R&R.
The period over Christmas and New Year is a time when most of us get to take a full break from the stresses and strains of work, and I always recommend that my colleagues take the opportunity to recharge the batteries and to get some time away from the mortgage business.
However, there’s no such thing as a bad time to plan for the future and, certainly over the last 12 months or so, we’ve seen a different shape emerging to the mortgage market. By the time you read this, the much-anticipated follow-up to the FCA’s Mortgages Market Study might well have been published – what it contains and how the industry puts the potential new rules into practice will shift the playing field and environment for all mortgage stakeholders, particularly I suspect advisers.
That’s somewhat beyond our control. What is, however, well within our control is how we as advice businesses adapt to the changes in our sector and make the most of our opportunities.
I think we’re all acutely aware that in areas such as specialist and later life lending we’re likely to see a growing borrower client base requiring advice, with potentially more complex income and personal circumstances to work through. That’s clearly an area where advisers should be looking to focus on, if they’re not already.
For later life of course, beyond RIO and mainstream mortgages into retirement, there is the equity release sector, which comes with its own specific authorisation and qualification requirements. It will be interesting to see how the FCA responds to the recent criticism of how it currently treats later life lending with a number of commentators suggesting it is too disparate, and runs the risk of customers being recommended the wrong product, simply because they do not hold the authorisation/qualifications to advise right across the piece.
I read recently that 60% of advisers plan to study for further qualifications within the next 12 months, and while the research was predominantly aimed at financial advisers, I suspect a similar number in the mortgage fraternity looking to expand their skills and qualifications during 2020 to enable them to advise in the LLL/ER arena. Or to more actively refer clients to a specialist advisory firm: we have both models successfully operating in our network: facilitating the development of member firm’s in-house ER advisory skills and authorisation, or referral to our expert and award-winning partner, Viva Retirement Solutions.
Equity release is a strong training pathway to follow in our industry, particularly if advisers do not have a referral arrangement in place in order to satisfy customers who are more suitable for such products. Whether the client is able to get qualified advice directly from their mortgage broker or from an affiliated expert/specialist, there should be no risk of the customer going elsewhere, or indeed of them being recommended the wrong product.
What we can say with some authority, is that the advisory profession is likely to become more specialist in nature as we move forward. Of course, there will be residential mortgages to arrange for vanilla borrowers, but the industry can expect this business being facilitated by tech or, dare I say, execution-only. The rise of product transfers, and the much-reduced income this generates for firms, is also an area to be aware of – my advice is to make sure we’re not turkeys voting for Christmas on this one.
The good news however is that there are specialist sectors to embrace, and the need for advice within them is high. It’s a question of getting the right skills, qualifications and authorisations in place to deal with them and to make sure you can actively target clients who require this type of advice. Plus, let’s not forget access to lenders and providers in these sectors, the right technology, and a commitment to making the most of all opportunities.We’re certainly providing our AR firms with such access and support, and if you don’t feel you’re getting what you need, then please use the next couple of weeks and the break ahead to establish what you need and who is best placed to deliver it to you