The value of advice

If there was ever a time when the importance of decent mortgage brokers was made clear, it is now. For those who haven’t been paying attention to things, here is a list of some of the reasons why, in chronological order: Covid-19 and its attendant mortgage payment holiday; the boom in house prices during the pandemic alongside near-zero interest rates, the mini-budget put forth in October 2022, which caused interest rates to go up, taking nearly half of all mortgage products off the market; and now ‘sticky’ inflation, which has seen the average five-year fix go above 6%.

That particular piece of news is, at the time of writing, all over the BBC website front page. Our industry is hardly unknown, but its elevation to the top of the national mind as a source of stress and, in some cases, tragedy, sharply demonstrates the importance of good advice. We can’t predict the future, but we can encourage cool heads and sensible borrowing.

Yet, when I look around our industry today I sense complacency. Many individuals with whom I speak are driven by a genuine desire to offer good advice, but when I look at things structurally, I am concerned. An example of what I worry about in the short term is Consumer Duty. Regardless of one’s opinion on the content of these new rules, the Financial Conduct Authority (FCA) gave plenty of warning that they were coming. Yet earlier this year, the FCA issued a report detailing concerns over firms’ ‘overconfidence’ in implementing the new requirements. We’ll see how this goes this summer.

However, I am far more worried about something else. It is far away on the edge of the horizon, but it will get here eventually, and that is the question of demographics. In April 2022, the FCA released figures showing that only 5.7% of investment advisers are under 30. While this data does not describe mortgage brokers specifically, I fear this trend crosses over all of financial services.

I am not saying this because I believe older advisers are out-of-touch and irrelevant. In fact, I am arguing the opposite - that their wisdom and experience is priceless and we can’t afford to let it simply fade away as more and more mortgage brokers hear the siren call of mid-week golfing and afternoons spent relaxing in the garden. They need to be passing their years of accumulated knowledge on to staff who are young, high-energy, and hungry, so they can stand on the shoulders of their predecessors.

Are banks and building societies investing in new mortgage advisers? Not to the extent they need to be. And estate agents seem to be moving further and further online, reducing in-house advisers. The nation needs well-trained mortgage advisers, something drilled home to me when, at a conference I attended recently, a high street lender stated that 90% of his firm’s business is through intermediaries. But we are not upping the supply to match this.

Additionally, when we do train new brokers, many people argue that the training regime as it currently is insufficient in the content it covers alongside having too narrow a scope, and that many places encourage a ‘sink or swim’ philosophy, which simply doesn’t get the best out of many young people who would otherwise make for excellent brokers.

The advantages to being a mortgage broker are clear to the people reading this, but we can’t keep this to ourselves, as though it is some secret. The excellent salary prospects, the satisfaction in bringing through a complex case, the honour one has in helping people who are often at their most financially vulnerable and hopeful - these are incredible benefits to this job. And now, today, when the mortgage market is so hectic and confusing, the importance of the last two points are heightened even further.

We need to tell young people that the sky is the limit in this industry. And that it is open to anybody who is driven enough.

The Association of Mortgage Intermediaries, the Intermediary Mortgage Lenders Association and the Diversity and Inclusivity Finance Forum have done excellent work in starting a cross-industry mentoring programme that will see the initiation of one-to-one and reverse mentoring sessions to enhance careers and open up opportunities, but we can’t rely on trade bodies to do everything.

The need for mortgage brokers is only going to become more urgent. It’s up to us to do something about it.