"Advisers have a great opportunity to increase their market understanding by attending events like these - and we hope to see many more unlock the benefits they provide."
Our recent programme of Spring Events across the country gave advisers the chance to discuss a number of key themes and the opportunities they present. Ranging from digital transformation, refinancing and specialist lending, all the way through to the value of regional building societies. So, what were the key takeaways?
Digital transformation
Consumer behaviours are continuing to change as tech-savvy millennials want greater access to their information - all in the convenience of one place. As such, there is the need for the mortgage industry to adapt to meet borrowers’ expectations.
The mortgage journey has traditionally been perceived by the borrower as a long and tedious process. At Legal & General Mortgage Club, our vision is to help reduce the intermediated mortgage process from weeks into hours. To overhaul the current outdated process though, we need to embrace technology and work together as an industry to make the frictionless mortgage journey a reality. While helping advisers realise the important role fintech can play in futureproofing their businesses. If we don’t, outside disruptors might move in and do it for us.
Refinancing
Advisers should look to the growing opportunities that remortgaging and product transfers provide. With interest rates still near historic lows, we’re seeing the demand increase for longer term fixes. However, if the majority of business starts to come from longer-term fixes, the natural touch points for advisers and clients will be less regular and so advisers will need to find ways to replace that income and look to diversify.
Getting refinancing right can really show the true value of an adviser. Both by helping customers potentially save thousands of pounds on their mortgage, while also creating long-lasting client relationships. While some clients may not be looking to remortgage, with many people now opting to ‘improve, not move’, there is still the potential for additional borrowing, such as a second charge loan. Product transfers are also often a quick and simple process that require no new underwriting, yet have the potential to make all the difference to customer outcomes.
While execution-only product transfers are increasing as a result of this efficiency, this doesn’t necessarily mean it is for everyone. There is not a ‘one size fits all’ approach to refinancing. And unlike technology-only advice, advisers can assess which refinancing product is most suitable based on a borrower’s specific financial history.
‘Advice rich’ lending
As the demographic of the UK changes, the need for brokers to focus on ‘advice rich’ areas, such as buy-to-let, specialist and later life lending grows. Not only are we seeing a rise in the number of self-employed workers (who now account for around 15% of the UK workforce) but our population is also ageing.
The changing needs of borrowers coupled with the increased complexity of the market due to regulation, legislation and taxation really plays to the strength of an independent mortgage adviser, who can really demonstrate the value they add. Specialist lending also presents a fantastic opportunity for advisers to engage with a growing pool of customers with unique circumstances, especially in cases where the high street isn’t able to provide a solution.
Making a difference
Intermediaries play a vital role in protecting consumers and their families. We all know that life insurance is sold not bought. It might not be an easy conversation but intermediaries can help consumers navigate these complex products and take out the right policy for their circumstances. They are the shortest path to making the biggest difference.
Whether a client is getting their first mortgage, getting married or having their first child, or when their policy is up for renewal – intermediaries will be there to raise the question of cover at these pivotal life milestones and keep individuals protected.
Obtaining general insurance for clients is also now easier than ever before. Through Legal & General’s recently launched SmartQuote for intermediaries, advisers can now get a quote for their clients’ buildings and contents insurance in as little as one question, making home insurance quotes quicker for all those involved.
Value of regional building societies
Through their manual approach to underwriting, regional building societies take each borrower’s unique circumstances into account, providing greater flexibility and enabling them to better understand each customer’s needs. Their approach to lending aligns to what we see with specialist lenders, so we’re seeing many building societies naturally enter this sector.
Building societies are increasingly diversifying their lending solutions to stay relevant. Not only are they offering higher loan-to-value mortgages, but they are also dominant players in family assisted mortgages. These include guarantor mortgages; lending linked to a family members’ savings account; or a property’s equity as security. All allow first-time buyers to proceed where they may have otherwise struggled to find an affordable loan.
It’s not just first-time buyers who are benefitting though. Building societies are also assisting older borrowers, many of whom are poorly served by mainstream lenders. Whether it’s through retirement interest-only products or lifetime mortgages, building societies are taking the lead. With this area of the market expected to grow, advisers should keep a watchful eye on this sector.
Event value
There is clearly lots of exciting change happening in the industry, and these areas were all covered in our latest Spring Event programme. Ultimately, advisers have a great opportunity to increase their market understanding by attending events like these - and we hope to see many more unlock the benefits they provide.
