Teacher, taxi driver, pizza delivery man. These are just three of the many occupations being pursued by the 11,000 mortgage advisers who have left the industry in the last three years, with a further 7500 choosing to retire, according to exclusive research by Mortgage Solutions.
However, if these jobs are the destinations of former advisers, it is likely that they were the jobs from which brokers came too, as brokers and networks desperately recruited to keep pace with the rapidly expanding market in 2005–7. As the market recovers in 2011 and 2012, do firms really want to recruit new blood from the same old places? Where should the industry be looking for the professional financial planners of the future?
Industry estimates for the number of active advisers in the UK mortgage market have fallen from 33,000 in mid 2007, at the peak of the market, to just 14,500 in May 2010, representing a drop of 18,500 (56%) in three years.
Generally, the credit crunch is felt to be the major cause of the decrease in adviser numbers. However, increasing regulation and advisers’ lack of ability or desire to cope with changing market conditions are cited as contributory factors.
As one adviser put it: “Demographics, the credit crunch, provider tightening of regulatory systems, terminations and lower turnover and weakening cash positions have made it unviable.”
Around 60% of all leavers are thought to have gone to other industries, many into financial services-related areas such as banking and debt management, with the remaining 40% simply going into retirement. A measure of the perceived quality of some of the leavers can be judged by respondents’ suggestions for post-mortgage industry careers. Some of these included building and construction, driving instructing and, more ominously, will-writing.
About 20% of those leavers are expected to return to the mortgage industry. It is thought that mortgage gross lending volumes need to climb to around £215bn, compared to 2007’s £363bn and 2009’s £143bn, before recent leavers consider returning.
However, there is a school of thought questioning why the sector would want them back. As one leading mortgage broker observed: “I think the market has changed for good for these people. No employer would take these advisers back, and, on a self-employed basis, if you have stopped servicing your clients, then there will be nothing to come back to.”
When lenders return to the market, a reduced intermediary sector is not expected to have a significant effect on their plans for scaling up volumes. Intermediaries themselves are confident they will be able to scale up as quickly as lenders. However, respondents expect lenders to be more selective in their choice of distribution partners than they were in 2007, so recruitment of high quality mortgage advisers is seen to be a longer-term issue.
So where will the high-calibre mortgage advisers of tomorrow come from?
There are many reasons why mortgage advising is not seen as an attractive career, but lack of professional standing and lack of training and development are cited by several respondents. In short, it is not seen as a proper career.
What can the industry do collectively to tackle these issues? Leading intermediaries feel that there is a need to establish an industry-wide training and qualification programme, linked to a number of possible career paths, and promote it to prospective new mortgage advisers.
In addition, mortgage advisers and networks can work with schools and universities to encourage new blood to join, but the government and the financial services industry needs to get personal finance education onto the school curriculum as a matter of priority.
A number of major players have expressed interest in the idea of holding recruitment days for non-industry candidates. Leading networks and national brokers would be available either through workshops or stands to talk to those interested in joining the mortgage adviser market. Respondents felt that the 20- to 30-year-old age group – made up of graduates, banking staff and salespeople – would be a natural target for such events, although several made the point that more mature entrants would be more understanding of clients’ needs, given their own life experiences.
It is felt that product providers should be engaged to sponsor or support such events – and bring other skills and resources in addition to their financial support. Likely sponsors include intermediary-focused lenders, insurance companies, networks, national estate agency chains and national brokerages, although care would need to be taken to balance all parties’ interests.
For example, most product providers are also trying to recruit their own staff. Indeed, brokers often train staff and then lose them to lenders.
A two-week residential independent ‘mortgage adviser industry’ course for potential new entrants – allowing the new crop of advisers to pick a company to join once they have successfully completed the course – received general approval, with 60% of the sample responding positively.
The final thought comes from a network director, who sounds the alarm bells for the mortgage advice profession.
“A professional training body is needed to help advisers train for the opportunities and requirements in the financial services industry – but stop referring just to mortgages. There is no future unless protection, wealth and fee charging play a major part of any advice process.”
Intermediary research
Interviews were conducted with networks and advisers attending the British Mortgage Senate, June 2010. Responses were collected via a self-completion online questionnaire about the UK mortgage adviser market and recruitment strategy.
There were a number of closed ended (typically Yes/No) and open-ended questions (where respondents could give a free-form answer) to give a range of statistical and comment-based data.
33 responses were received (out of 45 asked to complete the survey) which gave a 73% response rate. This means that the results can be viewed as representative of the opinions of the UK mortgage intermediary market. All quotes are anonymous, as agreed with respondents in return for their taking part.
Consumer research
At the beginning of July 2010, 3119 consumers were asked ‘How likely would you be to consider working as a financial adviser, should the opportunity arise?’ as part of Opinium Research’s Daily Omnibus online survey.
13% said that they would be ‘very likely’ or ‘quite likely’ (with the score rising to 18% of men and 20% of 18-34 year olds).
So there is no doubt that there is significant prompted interest in working as a financial adviser, particularly amongst young men, although other research suggests that ‘financial adviser’ is not spontaneously mentioned as a possible career by school, university or post-graduate students.
The industry will need to work much harder to communicate the idea that being a financial adviser is a career option if the sector wants to attract new recruits.
