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Mortgage brokers it’s time to prove your lifetime value (or lose your clients forever)

Mortgage brokers it’s time to prove your lifetime value (or lose your clients forever)

Competition for your clients is increasing.

Nearly half of all product transfers done in 2018 was done on a non-advised basis. As the FCA highlighted in their Mortgage Market Study Interim Report, a significant minority of consumers (30%) purchase a mortgage despite there being an alternative mortgage that was “unambiguously cheaper than their chosen product”.

As brokers, we understand the value of the advice we give to the clients when we see their feedback and the positive outcomes on a daily basis. However, we need to adapt our behaviours to convey this value to our clients. Expectations around the services we offer and how we communicate with clients is ever-changing and we need to ensure that we keep up with these changes.

The current environment means more clients are taking five year fixed rates – nearly half of all fixed rates taken in 2018 were five years or more. Clients are more likely to require advice on options they may not have considered previously such as porting, further advances and second charge loans, as well as the other important decision brokers are often called upon to help with such as weighing up the financial and emotional costs of moving versus home improvements; if and how they should consolidate debts. These areas are increasingly likely to be the time where brokers are able to demonstrate the lifetime value of their advice over the alternatives.

One of the most neglected aspects of a brokers role is managing the client journey from the point of completion through to the end of the initial product period. There is a huge opportunity to improve this journey with regular, targeted communication that reminds the client that their broker is still available to them and their best source of knowledge.

Adding value to the product transfer process

Lenders are focusing more on client retention and improving the ease with which you can switch products. Whilst a broker may not be able to offer the same level ease of clients as a product transfer, they can add demonstrable value by conducting a market search to ensure the client is really getting the best product for their needs.

Whilst product transfers often pay a lower proc fee, they provide brokers with the opportunity to keep that client informed and active in their client bank. When a client cuts out the broker on a product transfer, the likelihood of that client returning in the future drops off a cliff. You lose the relevant information about their new mortgage and can’t communicate as effectively with them when their new product ends.

Whilst no two clients are the same, having a client-focused, robust, compliant processes will ensure that clients received a smooth, consistent journey in every interaction.

We know that brokers improve their client’s experiences and feelings towards their mortgage. We need to remind our clients of the value that we add over the lifetime of their mortgage and the benefit of regular conversations with their broker.

Hemel Shah

Hemel Shah

Sales Director

Hemel is an industry expert with over 9 years working as an adviser within two of the UK’s foremost mortgage broking firms. He is focused on helping the mortgage industry engage and communicate with clients to ensure that they receive the best advice.

Why did I give up a successful career as a broker?

Why did I give up a successful career as a broker?

  • I had a successful career as a mortgage broker with over 9 years at two of the top brokerages in the UK
  • I have gained an in-depth knowledge of the mortgage market and the key players within the market.
  • I had an established book of clients with whom I had a great relationship.
  • I had a great work-life balance that gave me flexibility and time to dedicate to ensuring my clients received the best service I could offer.

 

So why did I give all of this up to join a fintech firm focused on mortgages?

I am incredibly fortunate and grateful to have spent the last 9 years working alongside some very dedicated and knowledge people. Their generosity has allowed me to develop a great understanding of the mortgage industry and I felt that I could leverage this knowledge to help even more people than I have done on an individual level.

I also saw the other side of broking where frustrations set in. Whilst speaking to clients and learning about their lives has always been interesting, our industry can be very process driven at times which, in turn, can lead to bad habits and laziness.

Anyone that has ever spoken to or worked with me knows that I’m a fan of technology and I’ve been intrigued by the changes in the mortgage industry over the past few years. The ideas of automating processes and, using blockchain technology to reduce the level of bureaucracy piqued my interest and I spent quite some time looking at opportunities that I felt would aid the advisor and client experience. Going into technology focused around mortgages felt like the right step.

It is my belief that every client in the industry would benefit from taking advice – I’ve seen people who never thought they could get a mortgage buy their dream home and I’ve seen people desperately in financial troubles that needed the outside perspective on an experienced advisor to help guide them from the brink and onto stable ground.

When I first started talking to my now colleagues at Eligible, I saw a deep-seated desire to help the industry progress and ensure that every client is given the opportunity to improve their circumstances. I found a culture that matched my beliefs and filled with capable people that can help leverage the knowledge that I’ve acquired to help tens of thousands of clients each year get the advice they deserve at firm and lender level.

The mortgage journey can often be a confusing and daunting process for our clients. We can easily lose sight of this in the day to day busyness of being a broker. Providing engaging, educational content to clients that helps prepare them for their remortgage not only creates a better journey but it reduces the anxieties that our clients feel. They now know why they need advice, who to speak to and what the process entails – all before they pick up the phone.

Our industry is changing and my goal is to make sure that clients understand our value. There are different expectations and ways of working but the ongoing value of advice is paramount.

Hemel Shah

Hemel Shah

Sales Director

Hemel is an industry expert with over 9 years working as an adviser within two of the UK’s foremost mortgage broking firms. He is focused on helping the mortgage industry engage and communicate with clients to ensure that they receive the best advice.

Feature: Mortgage Strategy

Feature: Mortgage Strategy

Is the mortgage market reaching a tech tipping point?

A few years ago, if writing about how the pace of technology had changed the workplace, it may have been necessary to provide examples to serve as a gentle scene-setter.

However, the infiltration of technology into all of our lives has been so aggressive and encompassing that doing so doesn’t seem necessary.

While financial services as a whole appears to be redefined by ‘fintech’ on a daily basis, the mortgage industry has so far remained comparatively static. But why is this the case?

Read the full article here

Client Retention Is Important!

Client Retention Is Important!

The Technology Behind Client Retention

In virtually all industries, repeat business typically represents the highest quality business at the lowest “customer acquisition cost”. The mortgage industry is no different, where in many instances, the highest margin business is advising existing clients on remortgaging – because its those clients that cost the least to acquire and require the least amount of time and effort to complete.

Yet the institutional and systematic support for retaining – or, even better, maintaining – these clients relationships is often lacking. Technology, and a new breed of service providers to the mortgage industry, is developing quickly to overhaul the means of retaining these existing high-value clients.

 

Current House Price Trends Are Increasing The Importance Of Remortgages

The importance of remortgaging business to advisers and lenders is being accentuated by the current house price dynamic, particularly in London and the Southeast., Remortgages have become a bigger part of the mortgage market as house price appreciation has slowed and the number of transactions has fallen. In fact, in the first quarter of this year, remortgages overtook “house buyers” as the largest category of borrowers.

 

Rising Interest Rates May Prove A Catalyst To Remortgage

At the same time, interest rates remain near record lows, meaning many borrowers would benefit from remortgaging – although the tables may be turning…

Recent indications from the Bank of England suggest that it will increase its Base Rate before year end. Swap rates, upon which mortgages rates are typically based, have already increased substantially to reflect this: 5-year swap rates have moved from 0.5% to 0.75% over the past two months . Rates remain extremely low by historical standards, but they have begun to move higher – providing a catalyst for borrowers to remortgage now.

As interest rates have kept falling in recent years, despite repeated proclamations that they are “as low as they can go”, consumers have perhaps felt that it is their interest to wait to remortgage. However, if the current uptick in interest rates continues and particularly if it is spurred on by a high-profile move by the Bank of England to increase its Base Rate, consumers may see rising rates as a catalyst to remortgage “before it’s too late”. In short, the friction created by changing interest rates is likely to spur demand for remortgages.

 

The Increasing Impact Of Technology

The conclusion from all of this is something that the mortgage industry – indeed many industries – has always intuitively known: customer retention is important!

The good news is that technology, when deployed properly, can provide transformative support to client retention. From ad-hoc digital engagement that keeps an existing client “warm” to systematic, timely prompts so advisors know when to proactively re-engage customers that would benefit from remortgaging, technology can help efficiently harness this pool of high-quality, repeat customers.

Many of these approaches draw on lessons learned in similar industries, like financial advisors or wealth managers, including some of the tools associated with robo-advice. “Fintech” service providers now entering the mortgage industry are focused on digitizing parts of the industry that will benefit from the efficiency gains of increased automation.

But it’s not just about providing customer management services to advisers and lenders. Technology is here to improve the customer journey: to make the interactions with the providers of mortgages more impactful – and simpler. As customers utilize better, more digital experiences in other industries, they will come to demand of it of mortgage arrangers and providers. The mortgage industry must meet that demand, or incumbents will be challenged by new entrants that will.

 

The Human Adviser Will Remain At The Heart Of The Relationship

One-to-one advice and a tailored product offering based on a true understanding of a client’s needs are best achieved under the direction of a real person. The technology is here to make that person’s job far more efficient than it has been in the past.

By utilizing the appropriate technology, advisors and lenders are able to craft an appropriate hybrid approach: one that encompasses both the efficiency gains of technology and the unique benefits of the human touch.

Eligible is the UK’s first white label digital mortgage platform for intermediaries and lenders alike. One of its core products, Mortgage Watch, is a remortgage analytics and digital customer engagement tool that optimizes the management of existing customers in order to increase client retention.