Craig Hall is head of broker relationships and propositions at Legal & General Mortgage Club
Despite the significant disruption caused by COVID-19, the intermediary mortgage market adapted well to the challenges of remote advice, having continued to help many achieve their homeownership ambitions.
In fact, excluding product transfers, intermediary transactions made up 79% of all mortgage business in 2020.
Headline rate fixation leaving mortgage borrowers thousands of pounds worse off
However, that is not to say that advice businesses are free from the challenges of the crisis and many small and medium size enterprises (SMEs) especially are continuing to feel the effects.
The switch to and now back from remote working, combined with increased financial insecurity and fewer resources than their larger competitors has meant many smaller advice businesses have been working in the ‘now’ while they prioritise client applications.
However, this could mean they are neglecting the development of their own business and investing in their future pipeline.
We know that as purchase demand begins to return to more normal levels, advisers will need a greater focus on refinance business and attracting repeat clients.
Look after the client
Repeat business is undoubtedly key to success in the mortgage market, with the opportunity to engage with a client as they progress through the mortgage journey helping to open the door to additional products and services.
Whether it is facilitating protection or helping someone to mitigate the effects of long-term interest build up, ensuring multiple touch points with a client is a sure-fire way to emphasise the value of mortgage advice.
Of course, with many borrowers choosing 2-, 3- or 5-year fixed rate products these days, there are frequent opportunities for advisers to re-engage with their clients.
However, firms will still need to draw borrowers away from the temptation of execution-only channels if they want repeat business.
For this reason, ongoing communications with customers shouldn’t be limited to discussions about mortgage finance alone.
Many clients will be keen to hear from advisers about the state of the market generally; they will want to know whether house prices are continuing to rise, if their mortgage lender is in good health, and if interest rates are likely to increase over the short-term.
Sharing these insights will not only help advisers to cement their position as industry experts, but also position them as important allies to borrowers.
Understandably, this can be more challenging for smaller businesses, as they have less internal resource available to handle these types of activities.
That is where it can be helpful to outsource some of these responsibilities to ensure they still happen, but without slowing internal operations.
At the start of the crisis, Legal & General Mortgage Club launched its marketing toolkit, aimed at helping our adviser community to promote the benefits of their advice, to attract new and repeat business opportunities.
Seeking such tools not only helps advisers to adapt to the new climate, but it also makes it easier for them to keep clients informed about what it means for their mortgage journey.
In this sense, it can be helpful for SME advisers to have someone on their side to help take up the slack when they need to focus their efforts on sourcing mortgages and packaging complex cases.
Importance of long-term relationships
Building long-term client relationships provides advisers with the perfect opportunity to prove the value of their financial advice and to secure repeat business.
This is about more than just finding opportunities to review a person’s mortgage situation, although that is a cornerstone of the role.
It is about having those all-important holistic conversations to better understand how a client’s personal situation may have changed to create a need for other financial products like income protection.
There is still a clear need for the market to educate consumers about protection, with our latest research finding that just 21% of those who have not seen their income change due to the crisis and only a third (35%) who have been impacted saying they will consider taking out life insurance.
These numbers are scarily low given the reality of the crisis.
Those who have taken on the responsibility of looking after children or other loved ones since they last sought a new mortgage, along with the many others who have been financially impacted by the crisis, could all stand to benefit from protection as well as a competitive mortgage.
By taking this more personalised approach, advice businesses have an opportunity to go above and beyond what a simple CRM system can offer.
And by turning customers into long-term clients, advisers help to secure their business pipeline and future-proof themselves.