Phil Whitehouse, head of The Mortgage Alliance (TMA), gives his tips for directly authorised brokers.
There is no doubt that the mortgage market remains tough for many intermediary firms, despite some evidence that it is moving in the right direction.
FSA figures show that the number of firms operating in the sector has more than halved, from 3,394 in June 2007 to 1,641 as of March 2011. While there has been some consolidation and not all these firms or advisers have left the market, these figures are pretty damning if not entirely surprising.
In reality, some advisers may have felt it necessary to seek the perceived security of larger intermediary firms or leave the market altogether in light of market conditions.
Either transition is understandable, but this does not leave the remaining smaller firms at a disadvantage. It could even work in their favour, thanks to now being in a position to offer a stronger and more personalised service.
The directly authorised (DA) sector has long been an integral part of the mortgage market, but, like the rest of the industry, it has had to evolve in order to survive and prosper.
Many DAs have had to break their order-taking mentality of old and transform themselves into the proactive cross-selling all-rounders that the current market dictates.
It is this shift in mentality that should form the bedrock of any DA proposition.
Despite any return in competition or softening in LTV levels and criteria, arguably the most important element that DAs must incorporate is that they do not fall back into these old habits if pure mortgage business comes back with any great flourish.
Support services, including firms such as TMA, have also had to adapt in order to meet the increasing needs of DAs across a wide range of products and services.
As such, there is no longer such a thing as a mortgage club.
While it is important to ensure the best mortgage deals are still available, there are a range of ancillary areas where extra support is required to help DAs become better advisers.
Speaking to DAs on a daily basis, it is evident that it is more important than ever to be in a position to add real value through a mix of technological solutions, training, innovation and creative thinking.
Being a DA means there is no getting away from the fact that regulation will always play a major role in the building of a proposition and the emphasis placed on this is certainly not diminishing.
However, there is help out there in the form of backing from clubs, compliance specialists and a whole range of support specialists, as well as from the FSA itself and trade bodies such as AMI.
Regulation continues to be a necessary evil and, when looking to build a DA proposition, the costs, accountability and procedures in navigating the regulatory waters have to be taken into account.
It is important not to scrimp on these, but also to be wary they do not become too much of a barrier to the potential flexibility and control that comes with being directly authorised.
Ask relevant questions of your strategic partners for their views and actions on current or impending regulatory activity.
If any distribution partner is not supporting firms on regulatory matters, then the question should be asked, sooner rather than later, as to why not.
This only goes to underline the importance of choosing the right partners in challenging market conditions, as it is this support that will help keep DA firms firmly on track.
I have spoken previously about the challenges posed by dual pricing and much of this is integral to what DAs need to incorporate into their offering, in particular the potential shift to a fee charging structure.
It is important to re-emphasise that DAs should not be afraid to implement a charging structure if they can break down and demonstrate exactly what service they are providing for the fee.
Even if it is only a minimal one for the mortgage search and transaction, as long as any cross-selling opportunity is maximised.
In terms of capitalising on opportunities, DAs need to continue getting the most out of their existing client base - building and maintaining a good databank, and using the data to revisit and target clients at the right time with the right kind of product.
Targeting new clients is tricky, but marketing and PR does not have to be expensive. Simple measures can make a big difference, such as having a good online proposition, linking up with local firms, community groups and even schools to help build awareness.
Utilising social networking is also a useful PR and marketing tool and it is often the simplest, clearest messages that can have the greatest impact within the local community and sometimes beyond.
Flexibility and the freedom of choice remain key differentials to a DA offering.
These simple factors enable the exploration of new sectors and the ability to develop relationships with high quality business partners to gain access to additional income streams.
The DA route may not always be the simplest path to take.
However, with a wealth of support available, there is no reason to suggest that it is not the right one for many as long as strategic partnerships and affiliations are chosen wisely.
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