Competition improves standards. Choice is vital to create a healthy market. Variety is the spice of life. We have all heard these comments and similar, whether at business meetings or in the pages of the business press. And I agree with them too, especially when it comes to the mortgage network sector.
There has been much debate recently about network size and strategy. Is big beautiful? Is it all about quality? What are the essential ingredients in a perfect network? I have my own views on this subject as you would expect and I will air them again in a moment. But the point I really want to make, first and foremost, is that one size doesn’t fit all. What will attract one broker to a network may well turn another off and vice versa. Brokers’ choice of network will be based on their own personal criteria, not on the criteria the network bosses tell them to use.
Here we are some two and half years or more post Financial Services Authority regulation and, largely speaking, the various network propositions are now working in harmony, even though there is still the occasional spat in the mortgage press.
Interestingly, we have all set out a slightly different stall to attract a certain type of broker in line with our business strategy. As always in any competitive market you have complete extremes, for some, numbers are the most important as volume is key. For others, quality and experience are the most important, and then you also have some who are building a sizeable business to sell or float. All of these options will be attractive to different brokers and diversity is a wonderful thing in any market. It breeds choice, which in turn leads to competition and ultimately higher standards.
The raison d’être for the existence of mortgage networks remains the same as ever. They should seek to offer members a one-stop shop, with access to everything from compliance and technology to exclusive deals and enhanced procuration fees. That almost goes without saying now and, in fairness, today’s mortgage brokers know exactly what they want and need, and they do their research to find the network that fits their business needs.
Let’s not forget one key ingredient – financial stability. We have all made substantial investment to create or in some cases add an appointed representative network. But it is equally important to be able to run that business at a profit for ongoing stability, as no one wants to be involved with a network that threatens to go under, mainly because, if it does, it takes the brokers proc fees with it and that could in turn ruin a broker’s business.
In today’s market, it is all about strategy. No matter how big or small the business is, you must have a clear strategy and work towards achieving it. And making a profit needs to be part of that strategy if you hope to be around for the long term.
One of the biggest investments has been IT. Think of a number and double it and that gets you somewhere near the actual cost. For many mortgage networks an IT system has been a key part of their proposition – it protects the broker and it protects the network. However, the people factor is all important. IT alone doesn’t form relationships and help build a business partnership – that is down to the relationships of the field staff, both business development managers and training and competence supervisors.
So at the end of the day, it is a matter of choice for the intermediary and choice must be a good thing. Networks need to make themselves relevant to their members if they are to grow and prosper. But one thing is for sure – as always, intermediaries will dictate the market in terms of needs, and we need to be watching and ready to adapt or we will get left behind.