Mark Harris, managing director of Savills Private Finance (Savills PF) is a man of impeccable timing – apart from being late for his Mortgage Solutions interview.
His ascent to becoming head of one of the most successful mortgage broker services in the UK has been preceded by making the right choices at the right time. And this is paying off as Savills PF reaches its tenth anniversary.
Savills PF started as an adviser firm on 2 May 1997, and brokered its first deal in June of the same year. The business started with a head count of six and now has 225 staff. It reported turnover of £30m in 2006 with profits of £5m. Its aim is to get to £50m in the next four years.
Most of its growth has been organic, apart from the acquisition of Sherwins in 2004, which became SPF Sherwins – a rebranding that “took quite a lot of thought”, Harris says wryly. Joking aside, Harris, who has taken a step back from speaking to the press on a regular basis since hiring associate director Melanie Bien, is keen to speak about Savills PF’s decade of success.
He says: “We have had a strong market in which to grow, with interest rates in a low cycle and obviously the buy-to-let boom. If I was starting out today, I would be far more nervous. A start-up business today would be muted. There will not be another Savills PF. I do not mean this in a boastful manner. I mean that in hindsight, our timing for launch was perfect.”
He joined NatWest as a bank clerk in 1985 and took several roles, eventually becoming a lending officer. Harris already had a few years in the working world under his belt, having left school at the age of 16. As a lending officer at Natwest, he passed on a lot of insurance work to the insurance brokers. As a result, Harris became an IFA. “In those days, to become an IFA, you did a quick test and you were an IFA the next morning. A fact-find constituted a date of birth and whether the client smoked or not.” In those days, the bank was the largest IFA in the country through its life insurance services. Towards 1993, the bank launched Natwest Life. However, Harris quickly found that selling life insurance was not for him. He says: “Having a NatWest Life ‘vanilla’ product was quite a difficult sale compared to the Equitable and Standard Lifes of the world, so I took an opportunity to leave the bank. A friend of mine had just started working at John Charcol. I always had a strength in mortgages so I decided to give it a go.”
Providing solutions
Harris took a commission-only advisory role at John Charcol in 1995. But he was destined to stay there for only 18 months. “I really enjoyed the mortgage side of things,” he says. “Mortgage broking is very different from selling other financial services products, because you do not have to create the need. The need is already there – you just have to provide the solution. So I really took to it well.” But he spotted an advertisement placed by property advisers Savills, which stated that it would be establishing a financial services business.
He remembers: “Three of us applied for the role for the launch team. We were all successful and joined with an administrator, the managing director and his marketing manager. So there were six of us at launch and then it evolved from there. This was in 1997.” A powerful team, including Mike Boles, Stuart Robinson, Alex King and Mark Chilton, spearheaded the new venture, overseen by Duncan Young. Young left in the early stages, followed by Chilton who departed in 2001.
Harris is often and incorrectly associated with the John Charcol boys, who then went through the business of being acquired by Bradford & Bingley, and re-acquired by its original founders. But Harris was already off creating Savills PF and missed the upheaval that John Charcol went through. Although he was told that he would return to John Charcol sooner or later, Harris was sure that he could make the new venture a success. The appeal of Savills was the brand and that it had an image associated with the high net worth. Plus, it was a start-up business – an enviable challenge.
Now in 2007, Savills PF is known for its association with the residential mid to high net worth – clients in their mid-thirties to late forties, earning on average £150,000 per year and borrowing £500,000 at around 75% loan-to-value. Then there are the buy-to-let clients and landlords building hefty portfolios.
He comments: “The buy-to-let market really started to evolve in 1999 to 2000 with lenders seeking margin returns. Now every lender wants to be in it. Every week, there seems to be a new buy-to-let lender launching. I am not sure how many more lenders we can expect to deal with. As a whole-of-market business, we are confident that we are absolutely representative. Anyway, we have done well out of buy to let.”
Harris is quite protective of the brand and what it represents, and is keen to be clear. “The fact is that we are often reported as a London-based brokerage, which drives some of our guys mad, as over half of our staff do not work in London. We have 22 offices – we are the only truly national brokerage out there and our coverage is extensive.” Comparisons to John Charcol are inevitable, as well as Purely Mortgages, set up by ex-colleague Chilton, and London & Country. But Savills PF does not see itself deviating away from its current model, although Harris says that the firm can be almost everything to everybody.
“I think London & Country has got it right and cornered its market. It is very well run, telephone-based, with one site in Bath. We have gone the other way and asked ‘what is our unique selling point?’ Our proposition is face-to-face, hands-on advice. That does not mean to say that we do not operate on the telephone or that we will never work over the internet. It is about giving our clients flexibility – if they want to speak to us over the telephone, we will do it. But most of our customers come to meet us. We can operate on the phone, whereas other telephone operated firms cannot operate face-to-face.”
As fee-charging brokers, Harris believes strongly in their model. He says: “To be a no-fees broker, you have to have a very low cost base and have a very slick operation. Even Purely Mortgages tried that, but it could not survive and had to bring in a fee proposition. We do not have anyone saying that Savills PF is recommended because it is cheap. We are recommended for doing a good job and we charge a fair price for that job.”
Harris is also a big fan of retention strategies. “The Halifax has been forward thinking in what it has done on this, in ensuring that the customers get the best choice. In the old days, you were always working against the lender. You never knew what they were going to offer. Now, we have transparency. The lender says these are the retention products and we as brokers can sit with our clients and tell them what the choices are, what it will cost and together we can make an informed decision. Sometimes, retention is the right way to go, as long as we are offering best advice.”
Many have argued that retention strategies are only as good as the relationship between the lender, the intermediary and the client. But Harris has very little sympathy for those broker firms that do not go the extra mile to maintain contact with clients. “I think that if intermediaries do not keep in contact with their clients, that is their own fault. We have an active programme of customer contact through our marketing, newsletters and promotions, to ensure that when they come to the end of their product, we are in touch with them. And if we know what the lender is providing, the adviser can sell against its offer. The fact that most lenders now recognise brokers in the mortgage process and pay them has got to be good for the consumer.”
Many were curious as to why Harris’ outfit joined the Concordia deal last year – which included along with Savills PF, Alexander Hall, Hamptons International Mortgages, Chase de Vere Mortgages and Cobalt Capital. After all, Savills PF appears to be financially stable and has no reason to be reliant on any other business model to sustain itself.
Harris admits: “We had least to gain, but we also had gains to make. We are big with some lenders but not with others. We have some systems and processes with some lenders but some other members had better relationships. For example, we had a lot to learn from Alexander Hall and its call centre. Out inclusion could be seen as slightly defensive, as had it gone on without us, it would have immediately been bigger than us. We felt better in than out – no-one can ever be too big to learn new things.”
Best practices
Concordia was born out of conversations that started several years ago. Nine months in, Harris says Concordia is doing well, but he stresses it is only a ‘collaboration’ where the members share best practices, using their collective buying power. Harris did not understand some of the criticism that arose after the deal was announced.
He says: “I really did not see it as a big deal. There are more important things happening in the mortgage industry than five firms collaborating. But I suppose other people have got positions to protect. We are just quietly going about our business and I think more was made out of it than was necessary. It surprised me.” As to whether Concordia will break off as its own mortgage club or network, Harris will rule nothing out. “Things evolve. But there are no current plans to extend the membership, there are no plans to create a club or a network – it is none of those things. It really is a simple way of sharing best practices. It is not a significant part of any of the five’s businesses. It is something we give one day a month to, which means that we spend 19 other days doing far more pressing things.”
With the news of Foxtons’ sale for £390m to private equity firm BC Partners, it will be interesting to see how the Savills group will continue to grow, and as a result, how Savills PF will share in this growth. Harris admits that less than 10% of business comes from the estate agency side, which is “both good and bad”. He adds: “It is bad in terms of untapped potential. We think there is more for us to get.”
Savills PF re-appointed James Rodea from Cluttons Private Finance to work on this issue. Rodea was a broker at Savills PF until 2000 and rejoined to specifically drive that relationship with the parent company and get that 10% business relationship up. Harris believes that the group though has acknowledged that more energy can be put into the relationship. With Rodea’s help, this seems like an obvious area for it to grow – “some easy wins” as Harris puts it.
Easy wins are not easy to come by for Harris’ beloved team Crystal Palace. He tries to get to some home games when he can, but like many of the football team’s fans, it is not always a gratifying experience for him. Unlike the football team, Savills PF looks set to continue in its success under the watchful eye of Harris, and it certainly has a lot to celebrate this month as it reaches its tenth birthday. n
