Competition drives every market and the world of financial advice is no different.
Yes clients may still want an old-fashioned or traditional service in terms of face-to-face contact and depth of relationship, but they also want the speed, accuracy and efficiency that the latest developments can bring.
If a client can go online and get an instantaneous and accurate quote for insurance, then why on earth is this not possible in the secured loans market? If a client can get a mortgage offer in seconds then why does the paper work behind a secured loan take so long to sort out?
It doesn’t and this is exactly the point. We are getting to a stage where there is a clear differentiation between those using IT effectively and delivering a markedly better service for clients and those refusing to make the change.
But why should brokers make a concerted effort to use the best that IT has to offer?
Sourcing products with the best systems in the market will provide accurate and real time answers. It will also help find alternative solutions for clients with unusual circumstances.
By applying online, both speed and accuracy are improved and brokers can automatically create a detailed and compliant client file. An efficient sourcing and application process will result in better conversion rates and improve margins for brokers, while the improved service should help generate future referrals.
But be aware, not all secured loan systems are the same, watch out for imitations that lack the necessary accuracy and flexibility. The best show brokers, and borrowers, not only the details of the product they’ve requested, but also information about other products they may qualify for and need to consider as part of the advice/decision making process.
For example, if your client asks for £24,000, conventional sourcing may show that a loan is available with Lender A at a rate of 9.5%. However, cutting edge systems will also show that a loan is available at £25,500, at a significantly lower interest rate, meaning that your client can potentially borrow £1,500 more and pay less each month over the same term.
The same applies to income. Again assume that your client has asked for a £30,000 loan over 10 years. A conventional system will simply give you the relevant result, which based on affordability, may be no.
Therefore, if no product is available for your client, it may have the functionality to tell you which products your client can’t have and why, but you then need to look through every single product to find out the reason why and calculate manually for what alternatives may be available. Not the case with a smart secured loan system.
Great technology will work out, based on your client’s income, if an alternative loan is available over a different term and show the broker if a significantly cheaper product could be available simply by increasing the loan term by one year. If no product is available, due to loan amount or loan term, it will show you alternative loan amounts or alternative terms so you can easily find the next best product.
If brokers want to remain competitive then they need to stay on top of IT developments. In the same way an adviser wouldn’t use a carrier pigeon to send documents to a client they shouldn’t be lagging behind the times when it comes to product sourcing, application and administration. Those who refuse to keep up will become obsolete.
By Steve Walker, managing director, Promise Finance
The views expressed in this article of those of its author and do not necessarily represent those of IFAonline or any other Incisive Media affiliated organisation.IFAonline
Joined as head of strategy, multi asset, in June
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