Advertising agencies urge us to spend more during a recession and academic research supports this view by citing added shareholder value for companies that take a contingency approach. What can the intermediary market learn from the experience of some of the biggest publicly quoted companies?
First, that time and tide wait for no man. Intermediaries should ensure they take every opportunity to get their company housekeeping so they are prepared to capitalise on the eventual recovery.
Many are concerned at the advent of new legislation but the canny operator recognises that the retail distribution review could leave a shortage of qualified people in the adviser talent pool. Gross mortgage lending is estimated to flatline at around £138bn for 2011 to 2012 but rather than seeing this as a negative, shrewd intermediaries can gain a competitive edge.
By 2015, it is estimated that gross lending will rise to £178bn and the number of mortgage advisers will increase from 10,000 to 14,000 . A combination of consumer needs and lender capacity will mean the percentage of business written by intermediaries will move back to 60 to 65 per cent. Over the same period, there will likely be a reduction in IFA numbers as a result of the RDR, from around 32,000 to 25,000 by 2014, then starting to grow again by 2015.
Now is the perfect time to undertake a strategic review and identify where time and energy could be most usefully employed to give your company the benefit of a thorough overhaul. Now is also the time to review what support your business needs if you do not have the investment capital to develop your own tools or want guidance in operating in a fee-charging environment. Ask whether your business can better operate as part of a community where these tools, guidance, help and support is available as part of the proposition.
The most successful of the new breed of intermediary will be investing in technology and training. But not everything requires spending money and simple housekeeping activities such as ensuring your client database is kept up-to-date will reap their own rewards when it comes to communicating with your customers and cross-selling incremental products.
In addition, there has been encouraging support from providers, in particular from new market entrants, who have eschewed dual-pricing.
Intermediaries have never been better placed to provide holistic advice and develop a multi-product relationship with their clients, building trust and loyalty, which, in turn, generates repeat business and referrals. As gross lending volumes improve, lenders will look to intermediaries to service that business, given limited capacity in branch networks and the cost of acquisition.
Dev Malle is sales and marketing director at Personal Touch Financial Services