The shrinking number of mortgage advisers in the UK: Key concerns and insights – Davidson

After peaking at 46,234 in 2007, the number dropped to around 24,000 the following year due to the financial crisis. Alarmingly, we now find ourselves back at a similar low point. 

This trend can be attributed to three primary factors: 

1. Fluctuating mortgage approval volumes
2. An ageing broker population and recruitment struggles
3. Increased levels of stress

As the managing director of an SME mortgage broker firm, I’d like to delve deeper into these issues. 

Fluctuating mortgage approval volumes 

For brokers, fluctuating mortgage approval volumes translates to inconsistent income. Many self-employed advisers start each year uncertain about their earnings, which can be a precarious situation for those with financial responsibilities and families. 

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The past five years have seen the market shift between periods of high activity and long lulls. During slow periods, advisers face significant stress and uncertainty. Conversely, when business picks up, the rush can be overwhelming, especially when managing clients who are emotionally invested in the mortgage process. This pressure often falls heavily on the advisers. 

Moreover, when the market is thriving, many firms lack the capacity to fully capitalise on the opportunities, leading to a persistent feeling of missed potential. 

Increased levels of stress 

The workload for mortgage advisers has never been heavier, yet proc fees have not increased during my 27 years in the industry. Any rise in income has primarily resulted from higher loan amounts rather than percentage adjustments. Many firms struggle to turn a profit without charging fees, particularly given the current prevalence of product transfers over remortgages.

In this environment, clients often expect more from their brokers without fully understanding the value of the services provided. 

Additionally, lenders frequently adjust rates to gain market share, adding to the complexity of the role. Last-minute product pulls may not be such a big issue in a declining rate environment, but they contribute to adviser frustrations, driving some to leave the profession. 

An ageing broker population and recruitment challenges 

Recruitment struggles are deeply intertwined with the issues mentioned above. Potential new entrants may question whether the financial risks of joining our sector are worth the potential rewards. Many existing business owners feel the same way. 

Moreover, our industry relies on thought leaders and entrepreneurial individuals to drive growth. However, the economic environment must be conducive to taking those financial risks. 

The ageing broker population is another concern. Many current brokers come from backgrounds in home service insurance or banking, where comprehensive training programmes once existed. Today, these pathways are far less common. 

Consequently, who will recruit and train the next generation of brokers? Few firms currently hire individuals from outside the sector and provide the necessary training from the ground up, yet the opportunity to take a chunk of the market by doing just that is enormous for anyone daring enough to take the risk. 

Conclusion 

The data highlights a crucial reality: while lenders are investing in digital channels, the majority of clients still require personalised advice, something lenders typically do not provide at scale. 

The broker community now accounts for over 80% of advised sales, underscoring our vital role. It’s imperative that this acknowledgment is matched with tangible actions and respect from lenders, not just words of appreciation. 

In summary, addressing the declining number of mortgage advisers is essential for the health of the mortgage market. We must enhance recruitment, support our existing workforce, and ensure that the vital services provided by brokers are valued and sustained in the years to come.