Thankfully, the sector has recovered from the record-low lending volumes it experienced in the wake of Covid-19 – but for those brokers who rely solely on mortgages for their income, now could be the time to think about upskilling.

“None of us know what is around the corner and brokers need to think about planning their business for the long term,” advises Openwork mortgage director John Cupis.

So, how do brokers go about branching out into areas such as income protection, general insurance and wealth management?

Protecting your business

Diversifying is usually at the forefront of brokers’ minds during market slowdowns, so they could be forgiven for not placing it at the top of their ‘to-do list’ in the current buoyant market.

“There’s always the need for brokers to improve themselves and look into new areas, but the difficulty at the moment is finding the time to learn those markets,” says Just Mortgages director of self-employed business Carl Parker.

“As a result of lockdown and the stamp duty holiday, there is a huge backlog of mortgages and brokers are predominantly having to focus on existing work rather than exploring potential new revenue streams.

“However, with the holiday set to end in March, demand may reduce, so brokers will need to look at diversifying in preparation for the potential slowdown,” he warns.

Protection and general insurance are natural choices for brokers wishing to expand their offering and are of particular importance given the current pandemic.

The pandemic has brought the need for protection to the fore, whether this be protecting against loss of income or protecting a client’s health.

Covid and its long-lasting effects have also dem-onstrated just how complex a borrower’s medical needs can become.

“Brokers should talk to the client about how they are going to protect their mortgage if, for example, one partner is not working, either due to ill health or losing their job,” says Cupis.

“While brokers are carrying out the mortgage fact-find, they are also building a profile for GI and protection,” he adds.

The fact an increasing number of borrowers are taking five-year fixed rates also means there is a strong likelihood a client’s insurance needs will have changed since they last spoke to a broker.

“It is important to ensure that protection is sold on as many mortgages as possible. This not only protects the clients but it also helps protect brokers’ future income if there is a drop in mortgage volumes,” says Cupis.

Another growing area for brokers to consider is that of wealth management – especially for the over-55s.

“The over-55s are the fastest-growing and largest population group in the UK today,” says Cupis.

“Those are the ones with all of the housing equity and the pension wealth, so it’s a huge opportunity for all advisers to start thinking about what advice they can give their clients in later life and retirement,” he says.

Parker agrees that wealth management is a potential growth area for intermediaries.

“With the current unpredictability of the stock-market, there is a huge need for good-quality guidance,” he says.

“During lockdown, UK savings balances increased by a reported £157bn in quarter two of this year, as day-to-day expenses reduced for many households and the hospitality and retail sectors were shut. As a result, [there is] a huge amount of additional wealth sitting ready to invest.”

Wealth of opportunity

One of the main barriers for brokers when it comes to upskilling is the time and cost involved – especially during busier periods.

Yet there are advantages to retraining in the current Covid-19 market.

“Our Openwork Academy has switched all of its training online, which represents a massive reduction in travel time for brokers and the cost of any overnight stays,” says Cupis.

“Our training centre is in Swindon, which isn’t easy for everybody to get to, so the online training is less disruptive for people in their normal lives,” he says.

The academy offers brokers the chance to improve their protection and GI knowledge, as well as gain a Level 4 qualification for advising on pensions and investments.

“We do offer some fast-track schemes that run over 12 months, but the process usually takes around 18 months,” says Cupis.

“Brokers will sit the appropriate exams and be fully qualified and authorised to advise on pensions and investments at the end.”

Just Mortgages currently has five brokers going through Openwork’s Wealth Academy.

“Once qualified, these advisers will be working with their own clients and taking referrals from other Just Mortgages brokers who have customers that need wealth advice,” says Parker.

“The qualifications are at an understandably high level, with the total qualification time estimated at over 600 hours – equivalent to a year-long degree – which, when the mortgage market is buoyant, it can be difficult to find the time for. Although, ultimately, the rewards justify the effort,” he believes.

“The initial outlay for these courses can be a deterrent, but just like students studying for a degree, the payoff should be worth it in the longer term,” he says.

He suggests brokers look to refer their clients while they upskill themselves. However, training is just one part of the equation when it comes to diversifying.

“A broker might upskill into wealth management but that needs to translate into their client bank,” says Cupis.

“By taking into account their age, income and the location of a broker’s client base, we can profile them and calculate their propensity to buy other products.

“If a broker wants to move into wealth management, they ideally need to have older clients with a good income or employment prospects, and in a location that will make them predisposed to taking on savings and investments,” says Cupis. “We can do the same for protection, as well as helping with marketing materials and support on the ground.”

The training equation

Aside from the technical side, brokers already hold many of the competencies required to upskill, believes Parker.

“The soft skills required to be a broker are extremely transferable,” he says.

“Being able to communicate with clients of all demographics and backgrounds, creating positive relationships and providing great service by under-standing clients’ needs and wants are all skills that both brokers and wealth managers need to have,” he says.

However, upskilling is not for everyone.

“We’re not saying all brokers need to become multi-skilled as that doesn’t suit everybody,” says Cupis. “A lot of Openwork advisers refer their clients between each other, so wealth firms refer their mortgage clients and vice versa,” he says.

Online Mortgage Advisor managing director Pete Mugleston agrees that while it might work for some, mortgage advisers don’t need to drop everything and become an IFA to make more of their opportunities.

“Brokers can make money from wealth management with a strong partner relationship, a solid process, and the belief and drive to make it all work – retraining won’t be for everyone and isn’t necessarily essential in order to diversify,” he says.

Solicitor and pension referrals, for example, take brokers just a couple of minutes and can earn them hundreds of pounds, says Mugleston.

“Many brokers have the blinkers on around the mortgage and often neglect the wealth of potential in front of them,” he says.

Cupis believes one of the main advantages of brokers learning the skills themselves is the long-term financial reward.

“Eventually, a broker might want to sell their practice or retire, and if they have built up a reasonable wealth client base with good funds under management, there are people who will pay for that. This facet is not as true in the mortgage world, which is more of a transactional business,” he says.

Cupis admits that finding the time for busy brokers is not always easy.

“When it comes to upskilling, brokers have to put the time and effort in when they are also probably very busy working – so it’s not a straightforward and easy solution but it is one that is worthwhile,” he says.

“Mortgages are a fiercely competitive world and the digital technologies are a long-term threat to all of our businesses, but upskilling will help protect against that.

“If you only offer one thing, and a competitor comes in and disrupts that business, you do not really have many places to go,” he warns.