Brokers need to quickly win back trust and remind consumers of the quality of professional advice. Having been elsewhere in the financial sector since late 2008, it is great to be back in the mortgage market, particularly with signs of market recovery, but I fear that a new threat is facing brokers.
From research data shown to me recently, it is clear that the consumer distrust of banks has spread to every type of financial business – we all somehow became tarred with the same brush in the eyes of consumers. Trust is hard to win back. It is unclear to whom consumers will now naturally turn for trusted financial guidance.
Even the Government-in-waiting fears that consumers will need persuading as to the necessity of advice – the Tories’ economic manifesto says it is about “encouraging a culture where people do proactively seek financial advice”.
Notwithstanding the Tory push, might more and more consumers trust themselves to self-select all their financial products? For years, comparison sites did a good job of efficiently providing consumers with a platform for product comparison but which typically drove consumers to see a broker as a consequence of that self-discovery. But their complementary existence is changing, partly due to consumers’ wariness of banks and intermediaries.
Add to that, the fact that many consumers seem to have fallen out with the old fashioned face-to-face advice model which I find really regrettable, having spent a career championing real advice from real people. They are looking for convenience and the ability to apply online for some products, but are thankfully uncomfortable with choosing certain products without a conversation. Somehow, comparison sites seem to have won the trust of consumers despite statistics such as one quoted by the British Insurance Brokers Association stating that 94 per cent of people using comparison websites felt they did not have the chosen product properly explained. We need to make certain that consumers do trust brokers sufficiently to seek proper advice.
Our primary goal as an industry should be to reiterate the hugely valuable personal service of an intermediary. We need to develop financial services and a way to engage consumers in a way that meets their needs.
We can take perhaps take some comfort from the fact that volumes of consumers buying mortgages without advice remain relatively low. Consumers often seek little more than an indication of availability from comparison sites and still require human reassurance. They then take advice from peers or professionals. The typical first-time buyer’s father gives so much advice that it is a wonder the FSA are not after a subscription fee from him but can it really replace the insight of a professional mortgage broker?
In my view, getting a second opinion from a friend or family member is better than crossing your fingers and hoping for the best, but clearly it can be flawed. Our sector needs to work deliberately and quickly to restore faith and repeatedly remind consumers of the importance of our trustworthy guidance.
Rob Clifford is a founder and director of If I Were You