Where did the business achieve its aims and expectations? In what areas is it producing positive results? And conversely, which part of the business has not delivered as well as you might have expected?
What will interest all business leaders as much as it interests me, is the changing nature of the mortgage market, how advisory recommendations and consumer choices impact on that metric, and whether a move in direction can have either a detrimental or positive effect.
Product transfer shift
One area we can certainly track a shifting pattern in is the increased number of product transfers (PTs) advisers are now writing.
I think we’re all aware of the positives and negatives of this, not least the fact that writing increased levels of PTs is likely to mean a drop in income when comparing repeat business with a purchase or remortgage.
Whether we like it or not the prevailing wind on procuration fee payments for PTs is that lenders will continue to pay less, certainly when compared to a remortgage.
There will be lenders who argue a product transfer takes less work by the broker and therefore the fee should reflect that.
From my vantage point, the adviser should be conducting broadly the same amount of work, because they need to consider and validate the PT product while ensuring they’re aware of client needs and circumstances, as well as compare it against the rest of the market.
If, after that work has been completed, it’s decided the best course of action is the existing lender’s PT, then so be it, but I’m not convinced this fully justifies a substantially lower procuration fee.
Importance of protection
The other point to be concerned about if your business is steadily increasing its PT business, is around the ancillary sale opportunity – particularly when it comes to protection.
It’s a simple fact that in our sector advisers won’t arrange as much protection with PT clients as they might do with a purchase or remortgage, and this can have a greater impact on the income per adviser metric.
You won’t need me to tell you how important diversification is, and if by writing more product transfer business you might be neglecting protection or GI, then I would suspect this needs to be a priority area to review.
We certainly encourage our member firms to treat all PT cases as you would with other clients, and make sure they don’t walk out of the door under-protected or needing to go elsewhere for products you could deliver yourself.
The business mix within any firm needs to be right, and with a product like PT, which might to some look like an ‘easy option’, could have a disproportionate impact on the overall business.
It’s not for us to take that easy option just because it’s there, and in my opinion there’s no need for lenders to treat that business as requiring less diligence and expertise when it comes to proc fee payment either. That is, however, a race and an argument I suspect still has plenty left to run.