I read with interest recent mortgage trade press coverage inferring that the number of sellers a network has should be the benchmark in ascertaining what a good network looks like.
It is interesting how this myth has been taken up and adopted as the best way to measure what is thought to be good. To me it seems the more important question is – who is this supposed to be good for?
Call me cynical, but could this numbers game be one that is attractive to those people who hope to sell their networks to the highest bidder once they have enough people on board?
It would certainly make sense to talk numbers if you need to gather a big enough mass to make selling an option, as profitability is unlikely to be a selling feature for these sorts of networks.
My strategy is somewhat different. For me it’s about longer term relationships and business partnerships that increase profitability for both the network and the appointed representative. It’s about the quality of the brokers we work with and how much business they write, not numbers of advisers who may not even be selling mortgages on a regular basis.
The key measure when it comes to a longer term strategy should be profitability. Call me old-fashioned, but I am looking for Mortgage Intelligence to stand the test of time and stick around for the intermediaries who have put their trust and business with us, not dump and run when the time is right.
There is also the small matter of volume distribution, which tends to be more prevalent in the established mortgage distribution channels. That changes the dynamics, as those who are calling the shots on AR numbers at times conveniently forget that some networks have more than one distribution channel – and it’s pretty certain that an AR channel plus a channel of directly authorised firms with a total of more than 8,000 sellers will be producing an awful lot more business than a network of 500 sellers.
Why is distribution important? Because it enables you to negotiate market-leading exclusives and attractive terms. There will continue to be consolidation and smaller networks could find it hard to survive. The next 12 months will be important in that only financially strong networks will survive.
We have a much clearer picture these days about what networks stand for and the different models they have adopted, so making an educated guess about which will thrive and prosper and which will get swallowed up is much easier than it was immediately after regulation.
Every network’s strategy is different and brokers are now more streetwise regarding networks’ offerings and which strategy suits their business model.
The get rich quick schemes have a place alongside all the other models and it isn’t up to me to decide the winners and losers. The market will decide that. But for me, the true measure of a network’s success will always be the bottom line, because money still talks.