Owain Thomas, contributing editor at Mortgage Solutions and chair of the Newcastle Supper Club, kicked off proceedings by asking if aggregators were making inroads into the local market?
“The aggregators are based on volume business, pure and simple,” said one broker.
Another said: “They’re interested in vanilla business only, but that’s a big part of the market,” adding “they’re good training grounds for new advisers.”
However one Supper Club participant conceded that aggregators’ “big marketing budgets” did result in “them taking clients from us” in the local market.
Concerns about the challenge of encouraging younger customers to attend face-to-face meetings quickly arose.
“With millennials going directly online, they avoid face-to-face conversations, but face-to-face advice is much better,” said one participant.
Another said: “For anybody 30 years old or more it’s no issue going face-to-face. But how are we going to engage the next lot of first-time buyers coming through for face-to-face advice?”
Other participants noted growth in product transfers was a potential risk coming hand-in-hand with the popularity of digital-based advice.
“A few years ago our split of business was 40 per cent purchase, 40 per cent remortgage, and maybe 10 to 20 per cent product transfer. It’s now at least 30 per cent product transfer. Lenders have wised up, their rates are a lot more attractive and we have access to that,” said one broker.
Bespoke broker service
The group generally agreed that purchase deals were the among the best opportunities to build relationships with customers.
“If you get a customer at purchase, or as a first-time buyer, and do the job properly, you should have a customer for life. That’s our opportunity, as brokers, to ring fence them, to do all the protection, to build a relationship. You don’t need to be in touch all the time, you just need to diarise it properly,” said one broker.
“If the purchase is complicated, when you take into account adverse surveys, and all the things that go with it, the aggregators struggle with it,” added another participant.
A third broker said: “The aggregators attract clients, but then a lot cases fall out before completing. Particularly if something goes wrong on the homebuyer’s survey. As brokers, we have the experience and connections to help to put the deal back on, chasing solicitors.”
The conversation turned to the best ways of communicating with clients.
“It has morphed to include text, email, Skype – you have to develop business to become face-to-face, staying aware that some clients don’t want it,” said one broker.
Another shared his firm’s experience of running events to engage with possible clients locally. “We did a first-time buyer event two and a half years ago. We kept it vanilla, explaining how loan to value affects the interest rate, how the term impacts payments. We had a surveyor talk about a basic and homebuyers’ survey and a solicitor go through the legal process.
“We ran a Facebook campaign for three days and filled the room with 20 people. Since then we’ve done quite a few of them,” the broker said.
Another outlined activity designed to enliven business through estate agency branches. “We’ve gone around our estate agencies, where some of the younger negotiators weren’t performing very well in appointments. We trained them on how we get appointments, why, the motivation and reward. It has helped,” the broker said, adding “but appointments generally through agency branches have fallen.”
On the question of retention, the group agreed that contacting customers as they neared the end of the mortgage term was now second nature.
“We send an email on completion saying ‘thank you for your custom,’ and that we’ll be in touch near to the end of the mortgage product. That way the company, adviser and client all have a record of when the mortgage is ending,” said one broker.
Strategies for retaining customers particularly on fixed rate products were high on the agenda too.
“We’re really ramping up contact with clients on five year fixed rates,” said one broker.
Another added: “Back in the late 1990s, people were coming off rates of eight or nine per cent and fixing for five years at six per cent because they thought it was a good rate. Two or three years later you could re-broker the business, with additional lending, at three or four per cent and it was best advice. You can’t do that now.”
“We’ve come up with a plan to contact our five-year fixed rate clients at the two or three year stage offering further advances and second charges. You can get second charge rates of 2.5 per cent with no fees. A clever lender would be one who pays us for further advances,” the broker said.
Several brokers added that they were aware of lenders whose technology systems send an automated text message to customers when the broker logged in to research product transfer options.
The Financial Conduct Authority’s moves to support the execution-only space prompted a collective moment of head shaking at the Supper Club.
“Madness. Early repayment charges, big fees — people don’t understand what these products are doing,” said one broker.
Several participants lamented comments made by TV expert Martin Lewis advising viewers to seek out advisers who don’t charge a fee. “He’s getting it wrong, pushing people to do execution-only and it’s costing people who believe they’re getting the cheapest rate,” said one broker.
Another added: “It’s the next scandal. You’re encouraging people not to take advice. It’s gone full circle.”