Hard Change

Today I thought I would share my unedited column that I wrote for Money Marketing.

Apart from the fact it means I don\'t have to think of anything else to write, I think it is important to reiterate these points in the ever-changing market we now face....

In hard times I often find myself looking for quotes that help put perspective into whatever the given situation is.

I recently came across an apt one from Charles Darwin who stated, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change”.

Brokers at the moment are faced with fewer lenders, fewer products and tougher underwriting.

Our earnings are under threat from many quarters, with possible proc fee reductions a real danger.

So how are we all to cope in this new world ?

I believe it is time to get back to basics.

When I first started in this fine industry brokers really were brokers, who worked to negotiate the best terms on each deal rather than cherry-picking and simply following the latest crazily low rate on offer.

A proper fee was charged for professional advice and a full financial review was also done as standard.

Brokers are needed more than ever in this environment. We are best placed to get minute by minute information on rate withdrawals and new products, and are able to reserve many of these products for our clients so they do not miss out on products.

Being able to shop around instantly and lock into the best product quickly saves clients thousands of pounds.

The sheer scale of these changes at present means much hard work, wailing and gnashing of teeth, but it is in these conditions that brokers rise to the fore.

Any broker worth their salt not charging a decent fee in these conditions is doing themselves and the rest of the broker market a disservice.

To all brokers I would also say that life cover, protection and general insurance are not dirty words.

I remember my old days at Charcol when we were targeted to bring in 40% of our business from Financial Planning.

I also remember that I called this “immoral” at the time because in my revolutionary days I believed that this led to the inevitable pressure to sell endowment policies, but that is another story.

Sometimes we need reminding that making sure a client is well protected is an important compliance requirement.

Many brokers have lost the art of “disturbance” techniques that are vital to ensure our clients do not find themselves with issues at an important time.

Likewise lenders need to look carefully at their distribution as many already are.

The relationship between lenders and brokers is even more important in these tough times.

I agree that brokers must understand what lenders are going through and offer support rather than being too quick to just criticise them.

Where I differ from some other luminary’s opinions is on the theory that lenders can control distribution better by offering direct through branches.

Tightly managed independent brokers can work with lenders here as they can market direct to clients saving the lenders’ marketing expenses and filtering through the exact parameters required.

For example, a smaller tranche of £10m on a remortgage basis between 50% – 75% LTV at a bespoke rate is easily achieved and managed.

Lenders need brokers and some are missing the benefits now, and arguably in the future, if they cut proc fees too much.

Just as lenders will remember which brokers supported them in the hard times, brokers will have just as long a memory.

So change is inevitable, and when things change we all react differently.

The one thing we need to ask ourselves is are we prepared to change and adapt to the new environment we find ourselves in?

Survival may just depend upon it.