For the past three years mortgage brokers have been more concerned with firing than hiring as they tried to stay afloat in a dreadful market. The number of brokers has dropped from an estimated high of 36,000 pre-credit crunch to about 10,000 today.
Annual gross mortgage lending plummeted from £360bn in 2007 to just £135bn last year, so broker figures have mirrored the declining market. The housing boom is over and lending and broker numbers will never scale such heights again. However, as the recovery begins to take hold the mortgage market will need to grow.
For that to happen broker numbers will have to rise, so firms will have to consider how to attract and train the best talent.
The credit crunch has tarnished the reputation of the financial services sector for some people, which means attracting those with the right qualities into the industry is not as straightforward as it may have been before the credit crunch.
Peter Gwilliam, founder of recruitment firm Vitrus Search, says recruiters should focus on job security before attractive remuneration.
“The key to attracting anyone to any industry is job security and career prospects,” he says. “My clients are looking at the funding and integrity of a firm and want to know what it can offer them as a career. Training schemes can play an important role in demonstrating investment in an individual by the firm. Four years ago the only questions were on salary and bonuses but times have changed.”
Many brokerages appear to have taken this advice on board and a number of training schemes are available for those looking to enter the industry. Bigger firms, such as Countrywide and London & Country, have programmes designed to encourage people from outside the industry to become brokers.
Countrywide’s training scheme lasts a year. It starts with new recruits undertaking a five-week programme, spending three and a half weeks on Countrywide’s systems followed by one and a half weeks achieving the CeMAP qualification.
Steve Ferguson, training and recruitment manager at Countrywide, says the benefits of its scheme are well known.
“We have people coming to us having heard about our training scheme,” he says. “The support we offer staff is a big selling point for us. We have always looked to bring in people from outside the industry. If they have the right enthusiasm and promise, we will train them to be professional advisers.”
Ferguson adds that about a third of Countrywide’s brokers are under 30 and it is focussed on bringing in young brokers.
London & Country adopts an academy system to train staff, which it has maintained throughout the crisis.
John Charcol has been recruiting heavily in recent months and has run a well regarded training scheme in recent years.
With mortgage market growth expected in the next two or three years, firms will need a new generation of advisers. But it is not as simple as hiring good sellers any more, as a tougher regulator and impending individual regulation mean there is more emphasis on compliance than ever before.
Attracting a high calibre of candidate has not proved easy for London brokerage Coreco, which has been forced to take matters into its own hands. It will start the first government-sponsored apprentice scheme for brokers in June.
Matthew Lowndes, managing director of Coreco, says there is a desperate need for new blood in the industry.
“As an industry we are ageing and there is not enough young blood coming through,” he says. “With broker numbers estimated to be around 10,000 we can’t afford to lose any more and must attract more people to the industry. Nobody in their right mind would have become a broker in the last three years and there has been no opportunity for firms to hire either. We have looked to recruit and found it incredibly difficult to find the right people, so we decided to train our own people.”
Coreco spent five months setting up the scheme with Orpington College and interviewing 80 applicants. After whittling it down to 15 for the second stage of interviews, it hired two apprentices who are due to start next month. Working with the National Apprenticeships Service, the recruits will work for a living wage and study for 12 to 18 months for advanced CeMAP. The government-sponsored scheme means the college will provide the educational requirement through CeMAP but the brokers will work at Coreco.
Will apprentice schemes like this become more popular as brokers start to recruit in a post-credit crunch world?
“More brokers will have to use apprentice schemes and I would encourage others to get involved,” says Lowndes. “There is a great opportunity for apprentices as talented youngsters are not going to university because of the cost. The standard of applications was high.”
Coreco is not the only firm that realises the need for new blood and other brokers are considering similar schemes. Broker Mortgage Talk plans to set up a training programme in the autumn with its network, Legal & General, to attract advisers to the industry. L&G will run a three-month programme to train advisers from outside the industry and help them earn the requisite qualifications. While the network is training the recruits, they will also work at Mortgage Talk so they can integrate into its business.
Verona Frankish, business recruitment director at Mortgage Talk, believes a number of bigger networks will also turn to training programmes for new entrants as the market begins to recover.
“There isn’t about to be a massive influx into the industry like there was five years ago,” she says. “But there is a problem with attracting people. Now things are starting to improve a little, we want to get our training and staff ready to be in a position to grow in 2012 and 2013.”
She says the cost of entering the industry is higher for directly authorised brokers but bigger brokerages can cope with it.
Alexander Hall seems to agree. It has 23 trainees and has started attracting individuals from outside the industry.
“We decided to boost the number of trainees we took on last year to prepare for a growing market,” says Andy Pratt, chief operating officer of Alexander Hall.
“Many are close to completing their qualifications and will help us as the market begins to pick up.”
Pratt says Alexander Hall always looks outside the industry to attract talent, rather than at existing brokers.
“We have been disappointed with the calibre of brokers in the market and have found it much better to invest in individuals with the right character and develop them,” he says. “There are other benefits too, as it also breeds loyalty and is a great way of retaining staff. Trainees are also usually younger and that adds dynamism to the company and keeps everyone on their toes. Having a learning culture is good for improving the quality of the business.”
Another brokerage, Your Mortgage Decisions, also has an initiative to bring in fresh talent from outside the mortgage industry. The scheme consists of a two-week induction followed by a nine-month mentoring programme. Recruits are allocated a ’buddy’ to help them improve their sales techniques, and monitor phone calls and company visits.
Dominik Lipnicki, director at Your Mortgage Decisions, says it will take on staff without any mortgage or sales experience and train them.
“Our training programme definitely attracts people,” he says. “Having the back-up of sales and compliance training with administrative and technological assistance is a big selling point. That is why our brokers are here and they can see the value it adds.”
Lipnicki says brokerages have to go out and search for talent as most people don’t grow up wanting to be brokers.
“We have to be proactive in attracting people to this industry as there are few who leave school wanting to be a mortgage broker,” he says. “It is the type of profession that you fall into by knowing someone or coming across it. So we have got to go out to find the right people, even from other industries. Every industry needs young blood and when it is not an automatic career choice, it is even more important.”
Some have suggested there should be an industry campaign to attract people. This could involve a more active presence at universities and schools career days through an industry trade body or individual firms.
Martin Reynolds, founder of Agent Tracker, says there are no centralised training programmes to attract new recruits.
“The Association of Mortgage Intermediaries could organise a training programme but no-one wants to pay anything at the moment,” he says. “The last three years have been so tough that no- one has wanted to do any hiring. But financial services has always been an attractive industry and there are good opportunities for graduates as it gains a more professional image.
“We have changed dramatically and it is not the type of industry you can just walk into. It’s not just sales but fit and proper persons tests and technical knowledge that are needed. You can’t be a cab driver one day then have a career in financial services the next.”
Gwilliam says the broker industry must also address the massive reputational damage of the financial crisis and be proactive in its search for quality.
“The industry has to recognise it has been tarnished by the financial crisis,” he says. “And this reputational damage makes it harder to attract the right people. We have to re-engage and re-identify the sector’s qualities and highlight them. The industry has made a lot of progress in ending bad practices and putting customers first but outside the industry it is not well known.”
Gwilliam adds that the industry needs to engage with schools and universities to promote itself, either as a collective industry initiative or on a regional basis with individual firms.
“People won’t come to brokers by choice any more so there has to be a proactive attitude,” he says. “The broker community has often been an ageing industry but when advising younger clients, it can be helpful to have younger brokers who can relate to them.”
Recruitment firm Pure Resourcing is starting a graduate recruitment drive for the mortgage and financial services industry by working with colleges and universities across the UK from June 1.
“It is about trying to make financial services attractive to young people again by showing vibrant, exciting and lucrative opportunities in this sector,” says Ian Reseigh, managing director of Pure Resourcing.
Mike Fitzgerald, sales and marketing director at Emba Group, agrees there is a need to hire younger people.
“Thousands of brokers have left the industry in the past few years and the last thing on anyone’s mind was recruitment,” he says. “And the last thing any educated person wanted to do was come into the mortgage market because there was hardly any work and it was full of regulatory uncertainty.”
Fitzgerald expects to see more of this year’s graduates looking at financial services than last year and believes the reputational damage of the crisis was no worse than that suffered by solicitors and accountants.
Frankish says the biggest damage from the crisis is that people don’t think there is as much money in the industry any more.
“The reputation of the industry has taken a knock and potential brokers don’t enter because they don’t think there is enough money to be earned,” she says.
“A few years ago you could earn up to £100,000 a year but that doesn’t happen any more. You can make a reasonable living but there isn’t that kind of volume in the sector now.”
Fitzgerald adds that for the industry to attract people of the right calibre the regulatory situation must be resolved to make compliance requirements clear.
The heavy burden of the Financial Services Authority’s compliance demands are often cited as a barrier to training new entrants. There is a consensus that higher standards are a good thing and reforms such as individual registration have wide support but can have negative consequences.
Frankish says the regulatory uncertainty about the Mortgage Market Review makes entrants more reluctant to become brokers.
“New entrants are concerned about the uncertainty surrounding regulation,” she says. “We have to tried to stay ahead of the game so we can show new recruits that we are dealing with the MMR and Retail Distribution Review.”
Reseigh says a lot of good people are struggling to secure a job in financial services because of the impact of the recession.
“A lot of good people are credit-impaired because of the credit crunch and in some cases cannot get authorised,” he says. “If you could get those people back into work, that would help fill some of the skills shortage. One solution for an industry struggling to attract enough people is to relax the authorisation process.”
To become a mortgage broker you must qualify to the ifs School of Finance’s level 3 CeMAP or equivalent. A broker must also gain authorisation from the FSA and pass a fit and proper persons test.
Individual registration, expected to be brought in about 2012/13, will lead to more rigorous checks on individuals who wish to offer mortgage advice. These requirements mean not all brokers can offer training programmes and some smaller brokers think it is simply not worth their while to look outside the industry.
Reseigh believes one reason for the lack of new entrants is that too few firms have training programmes.
“On top of this, when some of the bigger brokers do have programmes they often find their staff are being poached after 12 to 18 months,” he says. “This has the effect of deterring smaller companies from starting their own schemes.
“Firms start to wonder whether it is worth investing in a training programme and perhaps they should focus on improving staff retention. There is an issue with the culture of working long hours and weekends and the industry needs to find a work-life balance.”
Ferguson admits there is a concern at Countrywide about other firms poaching brokers when they complete their training.
“It does happen and we have to grin and bear it,” he says. “When someone has come through our programme it is inevitable they will seem attractive to other firms and some do get poached.
“It can be frustrating but it is better for us to bring people into the market than take on fully qualified brokers. There are also a huge number of brokers who return to us having left, as they realise the support doesn’t exist elsewhere.”
Mike Perrin, head of sales at Largemortgageloans.com, which has 11 brokers, says it sees no need to hire anyone except experienced brokers.
“There is no reason for us to attract recruits from outside the industry and incur the basic training and development costs when we can hire experienced brokers who are able to demonstrate a track record of success,” he says.
Perrin says there are likely to be fewer people considering being a broker now, due to market conditions.
“Another concern is that if a recruit has not worked in the industry before, there is the danger they might not enjoy the role or not be good at it,” says Perrin. “By recruiting experienced staff we are reducing the chance of someone not fitting the role. In the future there could be a value in training programmes for non-industry experienced applicants but currently there is no need.”
Emba Group is looking to take on two more brokers but they will also be experienced brokers.
“We are only looking to hire experienced staff because it is complicated to take on new people and train them up,” says Fitzgerald. “It is right that compliance and competency tests are required but it is a big investment of time and money to take someone on.”
Fitzgerald says brokers could target staff at estate agents or banks because the switch to mortgage brokering would be easier. He believes these staff could grow the independent sector and start the brokerages of the future. Such a philosophy is the essence of building a brighter future for the broker market with talented individuals. The mortgage market must dust itself down and prepare to push on over the next few years, rather than remaining an ageing and insular industry.
To attract the new breed of adviser, the industry must recognise the effect of its reputational damage and seek to tackle it. That means becoming more professional and promoting itself, both as individual firms and as an industry, in schools and universities.
Training schemes and apprentices will play a crucial role in convincing young people that there are career prospects in brokering. Perhaps then, the industry can once again attract people rather than watch them leaving in their droves.
From McDonald’s branch manager to top Countrywide consultant
I entered the financial services industry less than three years ago with no experience of the sector. Before joining Countrywide I was working as a McDonald’s branch manager with only retail work experience. I took out my first mortgage at the age of 18 and it spurred my desire to work in the industry.
After going through the experience of obtaining a mortgage at such a young age I wanted to help others by advising them through the life-changing process. Although I knew I wanted to work in the industry, I had to hold off making the move until I was financially capable.
Having applied for a mortgage role, I was turned down due to my lack of experience but I persevered and spotted the Countrywide job advertisement. Attending the interview was daunting but the attraction of the firm’s training and development programme was appealing.
There is a shortage of youngsters in the industry because they believe they lack experience
With no experience, I felt the company would be the best place to begin my career. I joined its training programme and completed my CeMAP qualifications within 18 months. Aside from the core qualifications, Countrywide provides day-to-day training programmes and mentoring schemes, which are adapted to help the individual.
In addition to the five-week training course and my fellow financial services mentor, I also worked closely with the estate agency team and was provided with ample information, which at first felt overwhelming but was worthwhile. This gave me confidence and put me in good stead for my first clients – a remortgage customer and a client who was purchasing a new family home.
To ensure we are constantly up to speed on any regulatory changes, all consultants are invited to ad-hoc training sessions run by management teams. Advisers are also put on continuing professional development modules and annual refresher courses to maintain standards. It has been hard work but enjoyable.
Last year out of 650 mortgage consultants, I was one of two Countrywide mortgage consultants under the age of 30 in its top 20 consultants across the country. And I was named top mortgage consultant in my division for my performance in 2010.
I think there is a shortage of younger people in the industry, partly because individuals believe they are either too young or need years of experience to join the industry.
I am a prime example that this is not the case. Joining a company such as Countrywide gives individuals the support and the guidance they need but you also need a keen desire to learn, persevere and to maintain a positive attitude.
I believe that these are the characteristics required by any young individual considering joining the industry.
Firms recognise it is better to bring in staff from outside and train them
As our industry moves from survival mode to planning a future, why would anyone want to work in it? The reputation of financial services is not what it should be even though there is the capacity for some to earn well. But that is not what will motivate the right people. Certainly it will help but it has to be the attractions of the job that will make people want to join the industry.
Regular contact with people looking for your help is a great reason to go to work every day. Having solutions to their problems and the ability to protect them in the event that the world throws its worst at them has to be motivating.
To become qualified and respected enough for others to take your advice has to be worth embarking on a career in the mortgage industry. While some forward-thinking mortgage firms have established robust training programmes directed at new entrants, most direct their efforts at recruiting experienced sellers.
What we need are professionals with good knowledge, empathy and understanding
Given the issues we have faced with banks failing, capital markets closed and government bailouts, the UK has been caught in the blame game with the fault being laid at the door of the mortgage industry.
Certainly, aspects of the US intermediary market were prime movers in generating the crisis but it was never this alone. However, the public perception of bad brokers, liar loans and fraud needs to be swept away.
Whether this is best done by older advisers who may appear more experienced or the young untarnished by the past is irrelevant.
What we need are professionals who have good knowledge, understanding and empathy, who are capable of delivering high quality advice on debt, mortgages and protection. This is what will deliver improved public perception of the market and restore faith in what we do. Firms that are looking to the future and have the capacity to invest in talent recognise that it is often better to bring in new advisers and train them using their advice model.
That makes follow-up and the customer relationship management process easier. Over the years I have worked with advisers of all ages and it is not their age that differentiates them. Their attitude to customers, their flexibility within a process and their desire to get the right outcome is what usually sets them apart.
Attracting quality rather than just filling spaces is a hard balance to achieve
As the familiar cry of ’You’re fired’ fills the room once again you can be in no doubt that Lord Sugar is back on the screen, hacking his way through the latest band of hapless recruits on the BBC television show The Apprentice. Thankfully, not all recruitment processes follow the same method. We have continued a structured adviser recruitment programme despite the tougher market conditions.
Many brokerages will have found that some staff have moved on after deciding that the market poses too many challenges and it’s time for a change. In addition, as the market has stabilised, firms are planning for improvement and need to bolster numbers.
Recruiting quality staff is not as easy as you would think, even in a fragile economic environment. Rather than recruiting experienced advisers from elsewhere in the industry we have taken a lot of graduates without experience. The benefit is that you can provide bespoke training.
Taking on graduates without experience means we can provide bespoke training
However, previous experience is always a valuable commodity and an important part of the recruitment mix. Once the inhouse training is complete our advisers develop their skills supported by experienced supervisors until they graduate into the wider sales teams and continue to learn from experienced advisers.
The difficult part is achieving the right balance and attracting quality rather than filling spaces, only to spend time and money training someone who is unlikely to prove a good fit with the job. There is no point overselling the job and we make it clear that it will prove to be a challenge. A recent recruitment drive led to about 250 CVs being reviewed, only to be whittled down to six successful applicants.
Apprenticeships no longer apply only to reality TV and have been picked up as an initiative to help young people build their qualifications and a career.
We have embraced this and have a number of employees already using the apprenticeship scheme to work toward an NVQ level 3 qualification. This is good for applicants, provides the company with links to local colleges and is a validation of the quality of our training.
The experience has been encouraging so far and, for a change, it’s nice to link the word apprentice with the phrase ’You’re hired’.