So, should brokers be setting up their own execution-only online processes, with optional calls, in response to this part of the market?
Richard Adams, managing director of Stonebridge Group, says the regulator’s stance shows this is an area which should be avoided.
Tim Bradford adviser Shaftesbury Mortgages, believes brokers can use new technology to benefit their business, but that execution-only is not want clients want.
John Phillips, group operations director at Just Mortgages and Spicerhaart, adds that human interaction still provides a vital part of the advice process.
There is a great difference between advisers and firms utilising technology to help with the greater administrative burden, and attempting to replicate those lenders who operate an execution-only system which, to my mind, sidelines professional advice out of the process completely and should not be supported.
My own understanding is that the regulator is very anti-execution only and has told the lenders this in no uncertain terms. The Mortgage Market Review (MMR) made it much more difficult for execution-only to be completed anyway and while some lenders retained this option, I’m not sure many (if any) advisers would want to go down this route.
In a market where advice seems more important than ever, we should be encouraging borrowers towards advice rather than execution-only, even if they’re completely au fait with certain product options.
However, this seems like a long way from advisers having systems which, for instance, cut down on double-keying or have client details on file that can easily be used to pre-populate forms, and such. After all, the admin that comes with placing a mortgage case can be considerable and, in areas like portfolio landlord lending, is only likely to be increased by the recently-introduced changes.
Our own Revolution system has been designed with that in mind, and we want more advisers to be using, for example, CRM systems that can do all this and much more. Advice, however, should always be at the heart of the process.
You’ve got to be a little bit careful with execution-only – for most people, buying a house is likely to be their largest financial investment and so they should not be tempted to ignore advice and just go down the execution-only path when spending hundreds of thousands of pounds.
For those who like using online methods, there’s unfortunately so much information overload online. Often people start going down that process and then they find themselves confused and overwhelmed so phone me up wanting advice.
There is a point to having online transactions and execution online, but the majority of clients I see want clarity and the advice I can provide.
In the world of these new technologies, people don’t need to see you face-to-face but if you can use things like facetime and Skype you can still give the advice but without being physically in front of them to talk about it.
For example, I had a conversation with a 70-year-old about interest-only mortgages last week – via facetime from their property in France.
We’ve got to be very careful when it comes to execution-only and I’ve decided to concentrate on where people really value my expertise about what is the best mortgage for them.
I live in an area where I know people and they know me and I know they value the expertise and advice that I give.
We have seen more online brokers coming into the mortgage market. How the market will develop going forwards is largely unknown. However, I do not think brokers should be setting up their own execution-only online processes.
Similarly to the online mortgage application, I think the vast majority of people will resort to talking to an adviser at some point during the process, even if they have gone through the online application.
Online mortgages still make up a small part of the market because, at some point in the process, those buying a home will inevitably want to speak to a human adviser. Human interaction is still the most important element of the advice process that is valued by our clients. After all, for many of us, buying a property is the biggest purchase we will ever make.
Face-to-face is still the most effective form of communication, allowing the mortgage broker to build a relationship with their client. Body language is extremely important when it comes to communication, such as the client’s facial expressions and body posture.
All of these cues are lost in emails, online and even via telephone. It is also a trust building experience and, if the client hesitates on any of the questions posed to them, the broker has the opportunity to have another conversation to delve into any issues.
An online form wouldn’t highlight any of these issues.
And what about assessing the client’s attitude to risk and mortgage protection? More often than not this needs to be sold to clients, as loan protection isn’t often at the top of their agenda when buying a property. This is another reason why brokers will remain an essential part of the advice process.