It can be easy to overlook small and medium sized advice businesses in the mortgage market, but they contribute to a significant part of all intermediary transactions while at the same time offering customers vital support. Their presence in the market improves the accessibility of advice and the work they carry out brings us closer to closing the advice gap.
In fact, while nearly 70 per cent of all advisers work at businesses with over 50 advisers, nearly nine in ten of all advice businesses are made up of five advisers of fewer.
The growth of the intermediary sector has, in part, been fuelled by the improved choice offered to customers – not only in the type and price of products available, but also how consumers are able to find advice. While technology is helping to facilitate new advice channels, such as, chatbots and video calls, digital-first approaches must always be supported by human alternatives. In-person meetings with advisers are a key part of accessing advice for many, especially among certain demographics such as older people, or those in rural areas.
This is especially important when considering that fewer than 50 per cent of those living in rural areas are aged under 45. Improving the locality of advice helps to ensure that all consumers can access the necessary professional guidance when it comes time to assess their finances.
Smaller advisers are uniquely suited to engage with these ‘fringe’ customers. While the decline in the number of high street stores and bank branches looks set to continue, local advice businesses are helping to bridge the gap between marginalised consumers and professional guidance. These businesses are utilising their locality to engage with smaller communities. Building long-standing relationships with clients allows advisers to understand their specific circumstances more thoroughly, opening the door to high quality, holistic advice.
Of course, for all they bring to the market, smaller advice businesses do face their own challenges.
Providing comprehensive advice is becoming more difficult, with new products and advice areas – such as later life lending – continuing to broaden the responsibilities of advisers.
For bigger businesses, this is a more manageable prospect, but for those firms with just a handful of advisers, having specialist knowledge in all areas of the market is a big ask. This is an area where technology is helping. Tools such as Legal & General Mortgage Club’s SmartrRefer make it possible for firms to work collaboratively, referring clients to other advisers where they may benefit from their specialist knowledge. For smaller firms, referring work is a way to create valuable commercial partnerships with other intermediaries, as well as ensuring customers receive the highest quality consultation.
With less financial resource at their disposal, it can also be harder for smaller outfits to market to their customers. Not only this but finding the time to drive research and development can be tough when there are so few employees to share the load.
In many cases it makes sense to outsource the management of these operations. Third parties such as mortgage clubs help smaller firms to close the gap. For example, our club offers members myriad tools and products to help improve the efficiency and accuracy of the advice they give. One example is SmartrCriteria, a digital criteria search tool that offers advisers nine years’ worth of searches and 606,000 criteria outcomes from over 100 lenders.
The intermediary sector benefits greatly from the input of smaller businesses as they help the industry to continually reduce the advice gap and ensures that customers receive the right guidance and ultimately, develop financial plans to ensure their long-term well-being.
Craig Hall, head of broker relationships & propositions, Legal & General Mortgage Club
