There has recently been much discussion about the value of qualified mortgage advice and whether a professional opinion continues to be of importance to consumers. With product information and comparison tools on the web, a common misconception is there is a battle to convince consumers to pay for advice, given that so many believe they are equipped to uncover the right solution themselves.
It is no secret that some comparison sites lack impartiality and several seem to operate glorified best-buy tables as opposed to a full comparison. FSA scrutiny resulted in new regulations, including heavy caveats. Mortgage market review proposals threaten further restrictions on what information sites display.
The result is that a consumer should fully understand that any recommendation presented is based on generic assessments and rarely based on their individual needs. In a recent survey by Which?, only 21 per cent said they trust a comparison site to find them the most suitable product but use the tools to get a rough idea. The importance of proper advice is clear.
Intermediaries are about to become more important to consumers than ever. They can offer genuine product comparison, they can mediate professional relationships, provide fresh options and help to guide and shape choices.
For some time, it has been evident there are nowhere near enough qualified advisers to meet the potential demand for advice, let alone cope with further increases in demand. In 2007, there were around 36,000 authorised mortgage advisers, now there are only 9,000. When the RDR is implemented, it is difficult to predict how many advisers will remain. Two senior FSA executives have predicted that 6,100 advisers could quit.
We have to start asking ourselves if enough is being done to encourage new blood into the advice sector. The lack of routes to entry and career paths for our profession is an issue and we need to design practical solutions. The two most trodden paths – self-funding the £1,000 costs for your Cemap exams with no guaranteed employment and taking a full-time job on a very modest salary at entry level with a broker, bank or building society who might fund exams, are undesirable to many.
Sesame Bankhall’s launch of its Financial Adviser School last year should be welcomed. The 18-month course enables students to get technical competence, business acumen and people skills. Schemes such as this typically require a student to pay a deposit to study, with the total cost of around £20,000, payable in instalments, as they earn.
It is not just broker firms planning for growth who should take action to generate new advisers – natural turnover also drives the need for new blood. Sesame director of HR and development Lisa Winnard says: “Succession planning is important in this industry. We can give the younger generation the tools to trade and allow ambitious firms the opportunity of expanding.” Broker firms need to take the shortage of adviser talent seriously and plan well ahead both for succession and growth.
Rob Clifford is chief executive at If I Were You