It seems only yesterday when we were looking at consumer confidence and a heated housing market keeping the mortgage sector well propped up.
Many commentators at the time suggested the market slowed down the inevitable consolidation of networks.
Well, consolidation has been coming thick and fast. I say firms and not just networks as we have lost around 35 to 40 per cent of advisers since 2007. It is estimated that today we have around 12,500 mortgage and protection advisers remaining and that could be as low as 10,000 by the end of this year.
What needs to happen? From a network perspective, it is critical they continue to invest in processes and procedures to ensure they have regulatory control. This is as important to their members as it is to them. Capital adequacy is a hot issue and financial strength must be demonstrated. The FSA has made it clear that cap-ad requirements must be met.
Appointed rep firms expect a network to provide regular training and development support. In a tight market, many have looked at diversification but have also realised their advisers need a strong core product proposition. A flatter market requires economies of scale and efficient systems with technology solutions.
The regulator has made it clear that size does not matter when it comes to abiding by the its principles. DAs are expected to demonstrate the controls they have in place especially with lenders aware of the “new” responsibility they will hold under the mortgage market review.
Back to the important issue for advisers – making sure you choose a strong partner with a pedigree and a track record with financial strength. It is important that you discover the network’s approach and record on training and development? Is there investment in technology? What is the cost of switching? Will you be locked in? Do you have choice and alternatives including life and general insurance providers? How often are you paid and what is their cash position?
The cheap and cheerful solution has become outdated and a proposition that will help your business survive will not be cheap or free but should be competitive and rounded with robust support.
Dev Malle is group sales director at Personal Touch Financial Services