Rob Clifford, CEO of Stonebridge, said that until around five years ago, the firm was more of a “traditional network”, operating within regulatory expectations.
“A network has no obligation to tell a firm how to run its mortgage business, except from a regulatory compliance point of view,” Clifford added.
However, Stonebridge has since changed its strategy to mentor member firms.
This does not always include growth plans, as Clifford noted that many were “comfortable” at their size, but could mean guidance with the operating model, marketing, technology and other aspects of running a business to optimise consumer outcomes.
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At first, Clifford expected some brokers to refuse the interventions, but said the response was “remarkable” and evolved into many initiatives, including its Growth Forum and Business Development Forum.
“Some of the most successful firms were the ones who said, ‘yes please’,” Clifford added.
Cornerstone starts its support process from the onboarding stage, with CEO Haydn Thomas explaining: “One of the first questions we ask in the recruitment journey is ‘what’s your exit plan?’”
The network produces bespoke plans for firms, supported by regular face-to-face meetings.
Nicola Ventrella, operations director at The Right Mortgage and Protection Network (TRM), said attitudes had changed because “customers [were] expecting more from our brokers” and, in turn, brokers expected more from networks.
TRM tells firms it wants to be a “partner” and “does not like to gatekeep ideas”, with Ventrella adding: “If we’re doing certain things for ourselves as a business and we have someone internally who is really passionate about it, then we want to share it with appointed representatives (ARs).”
Growth no longer at the forefront
Philip Emanuel, growth director at Cornerstone, said previously, a network’s success would have been based on its size and profitability.
He added: “That’s changing dramatically. We see ourselves as being a bit different, and that’s where exit planning comes into it. Not enough ARs are really run as businesses; a lot of them are run like commission clubs, and they eat what they sell.”
Thomas said Cornerstone was not concerned about growing if it was comfortable with the size of its business and the senior leadership’s relationship with principals.
Ventrella agreed: “It’s an expectation, it’s probably more the norm now, rather than the exception. Our members come first, they’re our customers, and they’re more likely to stay if they feel valued and supported. If we help them grow, by default, we become a stronger network.
“We’ve always said we don’t want to be the biggest network; we want to grow at the rate we want to grow so we can still provide this support, and brokers aren’t just a number.”
A mutually beneficial relationship
Emanuel said if done correctly, supporting AR firms was advantageous as improved practices helped Cornerstone de-risk itself.
Ahmed Bawa, CEO of Rosemount, said making advisers feel included was why many wanted to join.
Bawa added: “It’s the reason we don’t lose people. If you can bring people into that relationship where it feels like a partnership, that works really well.”
He said some firms struggled because of high turnover rates, which was expensive due to associated costs like training and business development management (BDM) support.
Giving AR firms a community
It was agreed that the mortgage sector could be lonely, so a sense of belonging had become equally as important as regulatory support.
TRM provides assistance with mental health and wellbeing, and has often “been at the end of the phone during a difficult time”, Ventrella said.
“We pride ourselves that from a director and leadership position, all of our mortgage brokers have our mobile numbers, they can pick up the phone and ring us… We’re there for them,” she added.
TRM also has a closed forum on Facebook, where members can get help on cases at any time of day.
To ensure all firms are taken care of, Rosemount has one employee for every five advisers, which Bawa said was a higher ratio than some firms, which sometimes had as many as 60 advisers to each member of staff.
Bawa added that some firms got so big they forgot about their advisers and ended up instructing them, instead of working with them.
“We are the total opposite; anyone that I work with, I will personally make sure they fit and that we know who they are, their plans and their future,” he said.
Thomas added: “This industry is pretty lonely if you’re a small AR or firm; there aren’t a lot of places to go for help. You can reach out locally, but that will tend to be with a firm’s competition, and many don’t want to do that.“
Within Cornerstone, Jonathan Needham and his brother Andrew created a segmented community, Needham Financial, which provides additional support to advisers.
It was established following the sudden death of the Needhams’ father last year.
Needham said networks existed to keep firms compliant, give them access to providers, and reconcile commission, and in the past, networks would have been seen as “regulatory gatekeepers”.
He said to be set apart, networks had to “be prepared to provide a service to the brokers”.
He added that Needham Financial was about creating community, culture, shared learning and building confident business owners, which started with understanding why an adviser was doing what they did and their “ultimate motivation”.
Needham said his ‘why’ was to “build something in memory of our dad” and create financial security for his family.
“That’s why I’m doing what I do; if you’ve got a very clear sense of your end goal, it gives you clarity instead of bumbling along,” he added.
Needham acknowledged that networks needed to make money, but said it got to a point where a decision had to be made between being profitable and being recognised as an “environment that offers the best support, coaching, and direction… it’s your best friend, it’s your closest confidant, sometimes, it’s your marriage guidance counsellor, your social worker”.
“What it isn’t is not a clinical platform to simply trade on, as there are far too many of those,” he added.
Needham said many brokers were locked into contracts with networks that did not benefit them, and it was “unfortunate that a new-to-industry broker starts having multiple conversations with different networks, then ends up on a call with a recruiter who isn’t necessarily going to be managing that relationship”.
He said: “They’ll try to convince you that the moon is made of cheese, and then they’re away,” adding: “There needs to be a greater degree of policing within the industry around what brokers are told and what they’re not told; exiting networks should be a lot easier.
“There should be a greater degree of freedom of movement. If there was, the level of service that advisers would be getting from networks would look totally different.”
Inspiring business strategy
More recently, Stonebridge extended its range of non-traditional support to provide financial investment, offering to provide capital to help with a member firm’s strategy.
Clifford said: “What we don’t tend to do as a strategy is buy equity stakes in our member firms, as it is always tricky for networks or others to acquire a minority stake in a proprietorial business, whether that’s about agreeing on an equitable price or how the new shareholder manages the founders effectively.
“We have the capital and can provide loans and grants for the right firms with the right ambition and plans.
“We’re prepared to not only give moral and pragmatic support, but also financial support and have tested this model with great success.”
He said networks were more than just organisations that policed advice and supervised brokers; “a good network really gets close to members and asks how it can help beyond providing technical and regulatory expertise”.
Clifford said: “Clearly some member firms seek funding from elsewhere as a route to growth or operational efficiency – and we welcome that too, as well as offering our support, such as corporate finance and legal advice where needed.”
Stonebridge does this quite regularly, as in the last couple of years, it has provided at least 15-20 development grants to member firms.
Stonebridge member firm Mortgage 1st has worked closely with the network on its growth plan for many years, including financial backing. More recently, Mortgage 1st also raised capital from an independent third party to further accelerate its growth plan, including M&A.
Emanuel said there was not enough of a business strategy running through the ARs they came across. Some advisers were good salespeople, but not good businesspeople, Emanuel added, so it became Cornerstone’s job to identify that, create a plan and steer them in the right direction.
Speaking of the business plans Cornerstone offers, Needham said it had become “topical” for firms to make their business sale-ready, particularly as firms like Sesame Bankhall Group and Pivotal Group were acquiring advice firms.
For those nearing the end of their careers, TRM has a retirement initiative – The Right Retirement – launched in 2019.
Some 100 advisers have retired through the programme, which facilitates a handover process of their firm’s clients to an AR of TRM.
“For many advisers, their firm is their life, and we want to preserve that legacy,” Ventrella said.
The programme is open to all advisers, including directly appointed (DA) firms and those not with the network.
“We touch base [with firms] once a month at minimum to make sure they are happy and can address any issues. Every quarter, we have a strategic meeting, where we look at their business and what the outlook is, whether that’s looking to take paraplanners on, sell or buy business leads,” Bawa said.
This also includes marketing strategies and learning about the opportunities with artificial intelligence (AI). Additionally, Rosemount provides a white-labelled cash flow model that advisers can use for free.
Further, there are peer group meetings, where member firms suggest what they want from Rosemount.
