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To thrive, brokers must find the right partners

If you have ever known a builder, plumber, carpenter or electrician, you’ll know that their houses often have the most unfinished jobs.

Perhaps lawyers cut corners with their conveyancing and accountants miss their tax return deadlines too.

There seems to be a never-ending spread of firms that are lousy at meeting the requirements of the sectors they work in.

Talk to the leaders of our industry and ask them if they use IFAs for their personal finances and in most cases they’ll say they do it themselves.

Against this background, more sole traders are looking to sell their business.

Their timing could not be better as consolidators are starting to form with the sole purpose of buying up small firms and leveraging more value from their clients by adopting more inclusive sales approaches.

But consolidators want more than just large numbers of consumers that brokers once did business with. They want to see longterm relationships with customers with ongoing income streams.

So if brokers are going to sell their businesses when they want to and for reasonable sums, they must do two things.

The first is to get involved in the sale of mortgage-related products with long-term income streams.

It still amazes me that many brokers only sell the insurance offered by the lenders supplying customers’ mortgage deals.

This approach is dangerous. Is it likely that these insurance products are going to be the best offered in the market? No.

It’s not treating customers fairly to automatically use lenders’ insurance products.

The message is that brokers must assess customers’ needs and satisfy them. This is not only vital from a compliance point of view – it’s the only way to develop long-term income.

But brokers can only do this by becoming experts and solving clients’ problems, whether they are looking for the cheapest or most comprehensive cover.

And here’s the second thing brokers must do. Having met their clients’ needs, brokers must ensure the product providers they use are singing from the same hymn sheet.

There’s no point in brokers building their retirement plans on the ongoing value of renewal commission if product providers pull the plug on it as soon as they sell the business to third parties.

So it’s not only a question of the right planning. Brokers must also find the right partners.

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