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Switching networks isn’t difficult, yet many make it so – Rees

by: Mat Rees, CEO of Beneficial Network
  • 13/05/2024
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Switching networks isn’t difficult, yet many make it so – Rees
Deciding to switch networks is not a decision many brokers take lightly.

Months of research and effort go into choosing a network, and the prospect of making the wrong move will weigh heavily on the minds of many brokers.

The reasons for switching will also vary widely and ultimately depend on the individual aims and objectives of each broker. For some, the desire for change will be due to the need for greater support with regulatory compliance and professional development, such as training and marketing opportunities.

For others, it will be the chance to help the growing number of clients seeking some form of specialist finance by tapping into new areas of the mortgage market, such as second charge mortgages, bridging finance loans or commercial mortgages.

Yet despite these clear objectives, many brokers making the switch to Beneficial say moving networks can be costly and cumbersome, with the pipeline freeze period of at least 3-6 months imposed by many networks causing cash flow problems, therefore making it difficult to leave.

 

Challenges with switching networks

Confusion over network costs is also cited as a key reason why both directly authorised (DA) and appointed representatives (ARs) hesitate to make the switch.

In many cases, these financial arrangements can be quite complicated, with the network charging a fee based on a percentage of the broker’s income, with additional fees also charged for other services like support or technology systems.

Given the challenges of the last few years, certainty over outgoings and earning potential is likely to be extremely important for brokers, particularly in the current and uncertain economic environment, and transparency around fees is an important part of that.

At Beneficial, we believe our clear-cut flat fee structure makes switching networks easier for brokers, as the transparency around the cost of joining the network helps us foster an environment conducive to growth.

 

A costly decision

Aside from the freeze on pipeline business, one of the most significant barriers to switching networks is cost. This can be extremely off-putting in cases where the fees escalate substantially as the broker expands their client base.

This is especially true for those brokers choosing to switch networks because of the opportunities available to grow their business, either by gaining greater access to training and personal development plans or by being able to tap into the network’s extensive panel of mortgage, protection and general insurance providers.

We offer a referral service for those brokers that don’t have the time or the inclination to advise on certain mortgages themselves.

This may be because it is an area of the market they are not yet up to speed with, or simply because they are focusing on a more complex case and would prefer to outsource the more “vanilla” clients.

Either way, having the option to refer and still get paid half the commission is rewarding and means brokers don’t need to turn clients away.

Networks should encourage their members to grow and thrive, not penalise them with higher fees for taking on more business. Understanding what each network offers and the type of support, values and culture they foster will be an important consideration for any broker looking to switch their mortgage network.

Obviously, there will be many brokers who are happy with their network, and that is great too, but for those looking to make the switch, choosing a network that offers greater transparency, puts the broker at the heart of every decision and fosters an environment for growth will certainly place them in good stead for the future.

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