When the tide goes out, the strength of your mortgage network matters – Howells

But to me, it feels highly relevant to the mortgage market today.

After several years of volatility, it would be easy to assume the sector has already been through its stress test. Advisers have navigated the pandemic, the mini Budget, rising interest rates, affordability pressures and shifting borrower expectations. In many respects, the intermediary market has shown remarkable resilience. But resilience should not be confused with invincibility.

The reality is that we are still operating against a backdrop of considerable uncertainty. Geopolitical tensions remain high, public finances are under pressure, inflation has not disappeared from the conversation, and the path of interest rates is still being watched closely by households, lenders and policymakers alike. The mortgage market may yet enjoy a stronger period of activity, but it is just as plausible that we face further challenges before conditions materially improve.

That matters not only for borrowers and lenders, but also for advisers and the networks they choose to partner with.

In stronger markets, weaknesses can be easier to overlook. Rising transaction volumes can support revenues, mask inefficiencies and give businesses more room to manoeuvre.

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When activity slows, however, the quality of a firm’s financial management, governance and capital position becomes much more visible.

The role of the mortgage network

For mortgage networks, this is particularly important. Networks carry significant regulatory responsibilities. They must have the resources, systems and capital strength required to support appointed representatives, maintain oversight, invest in compliance and meet the expectations of the regulator.

That responsibility does not reduce when market conditions become more difficult. If anything, the pressure increases.

The question advisers should therefore be asking is not simply whether their network proposition looks attractive today. It is whether that network has the financial resilience to keep supporting them if the market becomes tougher tomorrow.

This is not a theoretical concern. When networks encounter serious financial difficulty, the impact can be significant. Advisers may face disruption to their business, uncertainty over future support, reputational concerns with clients and, in some cases, risks around commission payments.

For firms that rely on recurring income and smooth cash flow, that can quickly become more than an administrative inconvenience.

Advisers are rightly diligent when choosing lenders, platforms, protection providers and technology partners. They assess service, financial strength, product breadth, operational reliability and long-term suitability. The same level of scrutiny should apply to network partners.

A network should not be judged on headline commission terms alone. Nor should the decision rest solely on technology, branding or short-term incentives. These things matter, of course, but they sit within a much wider question as to whether this is an organisation with the scale, discipline and resources to support advisers through every part of the market cycle.

Financial strength is not the most exciting part of a proposition, but in uncertain markets, it can become one of the most important. A well-capitalised network is better placed to continue investing in compliance, technology, training and business development when others may be forced to retrench. It can take a longer-term view, support firms with confidence and provide stability when advisers need it most.

That stability has value. It gives advisers confidence that their business is supported by a partner capable of withstanding pressure. It gives clients confidence that their adviser is operating within a robust framework. And it gives the wider market confidence that advice is being delivered by firms backed by sustainable infrastructure.

No one can predict exactly when the tide will go out, or how far. The mortgage market may strengthen in the months ahead, or it may face choppier waters. But advisers can make choices now that influence how well-prepared they are for either outcome.

The best time to assess the financial strength of a network is before that strength is tested. When conditions become difficult, it may already be too late.

For advisers considering their future, the message is simple: look closely at who you are partnered with. In a changing market, financial resilience is not a nice-to-have. It is a fundamental part of protecting your business, your clients and your future income.

As Jim Rohn, the celebrated American entrepreneur, said: “The pain of disciplined choices weighs ounces, the pain of regret weighs tons.”