One question I get asked regularly is “what is affecting advisers in the current climate?” I think the easier question to answer is “what isn’t?!”
In 2023, we felt the effects of the cost-of-living crisis and tackled the additional regulatory requirements of Consumer Duty, all to the backdrop of a declining mortgage market. It is safe to say that 2023 was another one of those years where you either batten down the hatches and wait for the storm to pass, or you roll up your sleeves and get stuck in. It would seem we have acclimatised to the turbulent winds of the past few years, with much of the adviser community falling into the latter category. This is highlighted in the SimplyBiz member survey where 69.8% of mortgage advisers are feeling positive about the advice landscape’s prospects in 2024.
We are all affected by the significant shifts in the advice landscape of the UK financial services market, driven by economic uncertainties, regulatory changes, and evolving consumer preferences. As traditional revenue streams face challenges, advisers must embrace innovative strategies to stay afloat. Diversification of business is emerging as a crucial lifeline, offering resilience and adaptability in the face of adversity.
The decline in the UK mortgage market is not a sudden storm but a culmination of various factors. Changing interest rates and regulatory reforms have created an environment where traditional mortgage lending may offer a range of challenges. As financial institutions grapple with these issues, diversification becomes a strategic imperative.
One way to navigate the turbulent waters of the mortgage market is by exploring the integration of technology. As fintech continues to reshape the financial landscape, mortgage and protection providers can leverage advanced analytics, artificial intelligence, and blockchain to streamline operations and reduce costs. This not only enhances efficiency but also opens opportunities for new revenue streams through new and existing customers.
Protection technology has had some major advances in the past few years, and better customer outcomes have steered us to a position where there is something for everyone. There is a platform to help with most aspects of the advice process, which not only drives efficiencies within adviser businesses, but also offers time back to do what they do best; deliver good customer outcomes.
In a market grappling with uncertainty, consumers seek guidance. Mortgage and protection providers can position themselves as trusted partners by offering financial education and advisory services. This can include seminars, webinars, or online resources that empower individuals to make informed decisions not only about home ownership and refinancing but also protection strategies. With no charge or fees for such services, mortgage and protection providers can help advisers create a new and sustainable income source while building long-term customer relationships.
Collaboration is a powerful tool in the diversification toolkit. Mortgage providers can explore partnerships with other financial institutions, fintech firms, or even non-financial entities. Collaborating on innovative products, cross-selling services, or co-branding initiatives can help unlock new revenue streams while sharing the risks and rewards with strategic partners. A clear example of this is where portals such as Ipipeline and Synaptic are integrating with critical illness research tools, such as CIExpert and Protection Guru, to create a powerful and compliant recommendation tool.
The evolving mortgage market brings an increased focus on risk management. Not only are mortgage advisers diversifying by offering insurance products that mitigate risks associated with lending, they are also branching out into products such as unemployment insurance, income protection, and business protection. These products not only provide an additional revenue stream but also enhance the overall value proposition for customers.
In summary, the declining UK mortgage market demands a strategic shift in mindset for financial professionals. Diversification of income is not a luxury but a survival strategy. By exploring new products, embracing technology, venturing into untapped protection opportunities, providing financial education, and fostering collaborations, mortgage and protection advisers can weather the storm and emerge stronger.
In this era of uncertainty, adaptability is the key to sustained success. The mortgage market may be declining, but for those willing to explore uncharted waters and diversify their income streams, there are opportunities to not only survive but thrive in the face of adversity.
Emma Vaughan is head of protection and health solutions at SimplyBiz
