Think twice before turning clients away

Shoe shops are having a tough time as the economy wallows in recession but as retailers suffer, cobblers are experiencing a boom.

In fact, the shoe business isn’t a bad market to be in at the moment – it’s simply a case of being in the right sector. And the same goes for the mortgage market.

Although the total number of transactions is down some sectors are holding up well, and the challenge for brokers is to diversify into these more buoyant areas.

But although they undoubtedly want to diversify an awful lot of brokers haven’t yet got around to doing so. Why? The simple answer is human nature. We are creatures of habit and few of us enjoy change, especially when it involves moving away from what has been a profitable business model.

Some brokers are also reluctant to move away from the professional advice arena into areas such as debt management but the slowdown means that if they don’t consider fresh ways to generate income they will suffer.

One solution is for brokers to think differently about borrowers they may previously have felt unable to help. Here are some examples.

  • I can buy leads for as little as £3 each but they are all first-time buyers needing 95% LTV deals I can’t place.

    These leads may not be mortgage clients today but they could be in the future when the higher LTV market returns.

    Buying leads at a low price and staying in touch with them is a cheap way to develop a client bank which could bear fruit later.

    And although brokers may not be able to arrange mortgages for such borrowers immediately, they may need insurance and assessing their protection needs could generate sales today. Even if their short-term plan is to rent they may need contents insurance.

  • The applicant’s credit profile was so bad the only advice I could give them was to rent.

    They may not have a mortgage but what happens if they become unemployed? They still need to pay their rent and maintain their lifestyle. And what if they fall ill for a long period? There are products available which cover rent and lifestyle costs for up to 50% of gross annual income.

    Also, if brokers have clients who are landlords they could introduce such clients and receive an introducer fee. If the landlord says payment protection insurance is compulsory the broker could generate an additional sale for each introduction.

  • The client was on an SVR I could not beat.

    This may be the case today but it won’t be so forever and keeping in touch with these clients will allow brokers to capitalise when competitive products reappear.

    Consumers’ concern about the economy is changing their attitude towards protection. They are more willing to buy cover products and with the rates on life protection coming down, brokers can probably reduce their clients’ outgoings.

    This is far from an exhaustive list but it shows how, with a change of attitude towards prospective clients once seen as beyond help, brokers can generate additional income and build their client base for the future.

    This is a time when brokers need to think differently. Fresh ideas and new approaches are not necessarily a load of old cobblers.