"Consumer Duty could, and should be, instrumental in encouraging mortgage advisers to ask these clients if they would like to explore more comprehensive financial planning."
As we mark the first anniversary of the Consumer Duty on the 31st July it seems right to reflect on the last 12 months, and while it might not seem so for all mortgage market stakeholders, it has – and continues to – deliver a profound shift, particularly we suspect for smaller advisory firms.
This regulatory shift is redefining how we all operate, emphasising the need for comprehensive and holistic financial advice.
Consumer Duty was introduced to ensure financial services firms act in the best interests of their clients, a principle that has significant implications for how mortgage advisers of course conduct their business. Over the past year, we've seen varied interpretations and implementations of these rules among both advisers, networks like ourselves and indeed lenders, creating a challenging environment.
One of the most notable changes is the requirement for mortgage advisers to provide a much more holistic financial advice service. Traditionally, as we know advisers focused primarily on mortgages, tending to leave other financial planning aspects to specialists. However, the new rules mandate we address the broader financial wants and needs of our clients, not just the mortgage, and this clearly places a greater responsibility on us to guide clients toward comprehensive financial well-being.
For smaller mortgage advisory firms, this transition presents both challenges and opportunities. The latter particularly in broadening the service offering; the challenge in how best to do this.
From our perspective, this is where a network such as ours, can make all the difference, ease the load and provide guidance through the maze; particularly relevant for those firms who might have thousands of clients, but the vast majority have only ever been serviced from a mortgage point of view.
Indeed, many advisers probably have thousands of clients who have never had independent financial advice in their lifetimes. Many people have only a workplace pension and no additional savings or investments, which means they've never engaged with an IFA.
Consumer Duty could, and should be, instrumental in encouraging mortgage advisers to ask these clients if they would like to explore more comprehensive financial planning.
By becoming part of a network like ours, they can then significantly grow their businesses by utilising these additional services, available via us. This is not just about having access to these options, but ensuring they are genuinely robust.
Having an in-house IFA proposition – as we have available with JLM - which is both comprehensive and fulfils those holistic needs, with experts available, can make all the difference. Equipping advisers to meet Consumer Duty requirements and, at the same time, enhancing the value of their business, turning what was previously an underutilised client base into a significant revenue source.
Our plans for the future include appealing to more small firms over the next 12 months who might be in this situation, because we recognise the inherent, but perhaps untapped, value they have within their firms.
By integrating these firms into our network, we can also add significant value to their proposition and to their clients. This means not only handling more mortgages but also providing a range of financial services that ensure clients have multiple touchpoints with their adviser throughout the year.
Regular reviews and coordinated services enhance the client experience and lead to better outcomes, such as estate planning leading to capital-raising opportunities for clients with buy-to-let properties, as just one example. Or, of course, focusing on investment and wealth and pension needs.
It’s therefore clear the mortgage advisory landscape has changed dramatically, particularly for those smaller firms. By embracing the new rules, understanding where you are strong and where you need support and help, you can follow a path which allow you to comply with the Duty, and enhance the client-value proposition.
We may be one year into Consumer Duty but it will run and run. Advisers who successfully navigate this transition will be well-positioned to build stronger, more resilient businesses that meet the evolving needs of their clients in an increasingly Consumer Duty-focused environment.
Considering network affiliation can provide the support and resources needed to thrive under the new regulatory framework, ultimately benefiting both the business and clients. Perhaps it’s time to explore your options today?
