I used to think the phrase "too many cooks" only applied if one of them was Jamie Oliver. While looking at one website the other day however, it struck me that the same is true of the number of packagers some lenders deal with.
The list of packagers in question was so large it would have been easier to record those it didn’t do business with.
Where’s the problem? Surely the huge directory of business partners bears testament to the excellent business the lender was writing? Perhaps it shows it would be easier for brokers to find a packager they could deal with?
No. The truth is packagers can be signed up to a panel with ease – but whether or not they will add value is a different matter. Having hundreds of packager relationships can do a lender more harm than good.
For starters it becomes increasingly difficult for lenders to ensure all its partners understand its proposition, and are working to the highest standards. What’s more, bad service from one bad egg can put brokers off dealing with a lender altogether. A large panel that seems a sure-fire volume-hit can quickly become a liability.
It’s clear the packager market has a large amount to offer the subprime sector, particularly in terms of marketing, distribution, sourcing, and product development. The best packagers add value through the relationship they have with the broker market, the technology they develop, and their understanding of lenders.
How can lenders best take advantage of the benefits packagers can provide? The answer has to lie with lenders themselves – and their ability to establish the right relationships with the right packagers.
Lenders will need to be more selective and only sign up those packagers who have taken the time to develop and evolve their own businesses. Through working with the best packagers, lenders can enjoy a mutually beneficial relationship and will see the rewards for their business.
For intermediaries, panels where the lender has been more choosy will act as a seal of approval. While nouvelle cuisine often disappoints with its measly portions, this is one case where quantity is no substitute for quality.
As for Oliver, at least we can count our blessings the ‘Naked Chef’ idea wasn’t thought up by Worrall Thompson.
Alan Cleary is managing director of edeus.
The views expressed are those of the individual and not those of the company he represents.IFAonline
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