Nick Baxter, director, Mortgage Promotions
If you have ever known a builder, plumber, carpenter, electrician or such like you will know that it is usually their house that has the most unfinished jobs.
Maybe lawyers skip corners with their own conveyancing and accountants miss their tax return filing deadlines. There seems to be a never ending spread of businesses that make their living operating in a marketplace, but are lousy at looking after their own requirements in that same sector. Talk to any one of the so-called leaders in our industry and ask if they use an IFA to advise them – in most cases, the answer is they do it themselves.
However, against this background more sole traders are looking to sell their business. Their timing could not be better, there are consolidators starting to form with the sole purpose of buying up small firms and leveraging more value from the client banks by taking a more inclusive sales approach with the existing clients. Consolidators will, however, be looking for more than just a large database of consumers that the intermediary has once done business with. A firm will have to show a long-term relationship with those customers and an ongoing income stream from them.
So it seems that if advisers are going to be able sell their business when they want to and at a reasonable value they clearly need to undertake two actions.
The first is to get involved in the sale of mortgage related products that have a long-term income stream. It still amazes me that many brokers just sell the insurance contracts of the lender in some slavish throw back to the past when insurance was written with the lender as the broker and customer were grateful that the lender ‘granted’ the mortgage. Such an approach is dangerous. Is it really likely that the insurance contract of the lender is going to be best for the customer – I don’t think so? Is it really treating a customer fairly to automatically use the contract provided by the lender – unlikely!
No, with regard to insurance sales the message is clear (with the correct permissions) brokers have to get up to speed at assessing customers’ needs and satisfying them. Not only is this vital from a compliance point of view, but the only way to develop long term income to any business is to achieve superior levels of customer satisfaction. That can only be achieved by becoming an expert and solving peoples problems, whether they are looking for the cheapest cover, most comprehensive cover or looking to cover unusual items.
Of course, having looked after the client first the broker should ensure that the product provider they choose is one that is of the same mind as the broker. After all, there is no point in a broker building their retirement plans around the ongoing value of renewal commission if the product provider pulls the plug on it as soon as the adviser sells the business to a third party.
It is not only a question of the right forward planning, but brokers should also work with the right product providers.
www.mortgagepromotions.co.uk and partner at Baxters Business Consultants, www.baxtersbc.co.uk