5 Things to Think About When Choosing a Mortgage Network

If you’re planning on becoming a self-employed mortgage broker, then one of the decisions you will have to make is how to get authorised by the Financial Conduct Authority (FCA), so you can start seeing clients and giving mortgage and protection advice.

You have one of two choices – go directly authorised or become an appointed representative.

Although it might be the right choice for some brokers, being directly authorised means that you are ultimately responsible for making sure that your business follows FCA regulations. And that doesn’t just mean ensuring that the advice you give is suitable – from staffing and IT systems, through to marketing and financial promotions, everything you do as a business must adhere to UK financial services regulation. Going directly authorised might give you more freedom to run your business the way you want to, but it also comes with a lot more liability and risk.

When they start out, most self-employed mortgage brokers decide that becoming an appointed representative (AR) and joining a mortgage network is a better choice.

 

What is a mortgage network?

A mortgage network is directly authorised by the FCA, and effectively acts as an umbrella between you and the regulator. The responsibility for adhering to FCA regulations falls to the network. All you have to do, as an AR, is follow the network’s rules and processes.

When you’re first starting out, you’ll have enough challenges – finding clients, making connections with estate agents, solicitors and other professionals, launching marketing campaigns – so having someone else carry the regulatory burden is one less thing to worry about. Rather than having to work everything out for yourself, you’ll have support and guidance to stay compliant, grow your business, and achieve success.

But how do you know which is the best mortgage network to join?

 

How do I choose a mortgage network?

There’s a lot to think about when deciding on a mortgage network and there’s no “right” way of going about it. But there are some common points to consider when choosing a mortgage network.

To start, let’s look at some general points.

Firstly, don’t think of it as looking for the best network – instead, look for the network that’s best for you. Look at how the network’s values, culture, reputation and objectives fit with you and your business. The network that’s best for Broker A might be completely wrong for Broker B, depending on what their business offers, where they want to go, and what they want to achieve.

Secondly, you will need to manage your expectations. Networks vary in terms of size, charging structures, commission, the amount of support provided, the compliance regime and service levels. You might not find one that offers everything you want, exactly the way you want it. You might also have to do things a little differently than you have before. Remember, the network is the one that is shouldering a significant regulatory burden – so, in order for them to manage that risk, they might want you to follow processes that differ from what you have been used to in the past.

Taking those two points together, when looking at different networks, it’s important to decide what is non-negotiable (what you absolutely must have or absolutely do not want) and where there is room for compromise (what you can live without or what you can live with).

It’s also crucial that the network feels right for you. Do your interactions with their representatives have a natural rapport? Does what they say make sense and resonate with you? Do you trust them? These elements are all subjective, and rely on gut-feeling, but they’re just as important as the more objective, tangible considerations and the “nuts and bolts” facts and figures.

And what about the size of the network? Does it matter? Should the number of advisers, the amount of clients, the total value of lending, or the volume of mortgages or protection plans sold matter when it comes to deciding on which is the best mortgage and protection network?

Networks that can put up big numbers are obviously impressive, and if they’ve been around for years and have plenty of firms on their books, then they’re clearly doing something right. But bigger isn’t always better.

Sometimes, larger networks can be impersonal and there can be pressure to conform to the larger corporate identity. The things that make you and your business unique might not be so important to them. And because the network is so large, it can be easy for you to get lost in the crowd.

Smaller networks, on the other hand, can allow your own personal business identity to shine and will often take the time to get to know you as an individual. As a result, one of the benefits of being part of a smaller network is that you’ll get a more personal touch and bespoke support.

Let’s move on to some more specific points.

 

Things to look for when choosing a mortgage network

1 – Cost

Let’s be honest about this – one of the main deciding factors in joining a network is how much it’s going to cost. Network fees cover the cost of services provided, such as software and systems, compliance support, and business development, and also include FCA fees and Financial Services Compensation Scheme (FSCS) fees, as well as Professional Indemnity insurance.

When looking at what each network charges, it’s important that you understand exactly what is included in the monthly fees and what you might have to pay extra for. Fees can vary between networks, and they can vary within networks, depending on the individual mortgage business, its size, and the type of products and services it offers.

Like many things, cheaper isn’t always better. You should weigh up what you’re getting for your money. For example, Network A’s fees might be more expensive than Network B’s… but Network A might offer more business development and marketing support, meaning that you can generate more business and the extra cost is a worthwhile investment.

2 – Revenue

Perhaps more important than how much you will pay out, is how much you will be paid in. As well as helping clients achieve their dreams of home ownership, many people become self-employed mortgage brokers because of the revenue potential and financial freedom that it can provide. There’s nothing wrong with that – for your business to succeed, you need to make money.

Look at the earning potential offered by each network – the commission structure, the procuration fees and how much of the broker fee you get to keep.

Another factor to consider, when thinking about the potential revenue opportunities, is the network’s panel of lenders. Having more products and lenders available means that you can serve a greater variety of customers, some of whom might have more complex needs. A network that gives you access to wide and varied whole of market panel, will give you the opportunity to maximise your client bank – and your income.

 

3 – Support

There’s not much point in joining a network if you don’t get any support. But how much support you need will depend on you, your business, and your objectives.

If you’re new to the mortgage profession, then you’ll want to look at joining one of the mortgage networks for “non-CAS” advisers. CAS stands for Competent Adviser Status, and having this is essential if you want to have a career as a mortgage and protection adviser. Mortgage networks for newly qualified advisers will support you on your journey from passing your CeMAP exams, all the way through to advising your first client and achieving Competent Adviser Status.

Even if you’re an experienced adviser, you’ll still want your chosen network to offer ongoing training, to help you achieve your Continuing Professional Development requirements.

It’s not just training and development support that’s needed – you can be the most skilled adviser out there, but that’s no good if you don’t have any clients. Networks that offer business development and marketing support should feature at the top of your list. Some mortgage networks provide leads to advisers who have a good track record of converting those leads into sales.

 

4 – Compliance regime

Financial services in the UK are some of the most regulated in the world, so every network will have its own compliance regime. Although no adviser would say that compliance isn’t needed, it is something that can be a cause of frustration. Poor compliance regimes have been known to prompt advisers to leave networks in the past.

A good compliance regime is one that encourages good customer outcomes and good business. It should be supportive, rather than punitive. It should be practical, rather than restrictive. Compliance should protect both the customer, the business, and the adviser.

All networks will carry out file checking as a minimum. Some might also carry out observations or call listening. The amount of file checking or observations can differ – some networks carry out 100% file checking of all business, others will vary it, depending on the experience of the adviser or the type of business being carried out (for example, an equity release case is more likely to be checked than a standard remortgage).

Whatever the approach, it is important that you receive proper feedback, so any learning points identified can be understood and addressed. It’s also vital that your network communicates any changes to regulations, policies or internal processes in a timely fashion.

 

5 – Systems

Another common cause of frustration for advisers are the sales systems that are used. Speak to any adviser, and you’ll hear horror stories of clunky, out-dated systems, where you have to input the same data multiple times.

As a busy adviser, you’ll want your systems to be efficient and intuitive, so you can provide a smooth customer journey for your clients and work through your pipeline effectively. You should look for a network that’s making the best use of technology when it comes to their sales systems, especially in today’s technologically fast-moving environment.

 

To find out more, get in touch

I hope this has given you some useful tips about how to choose a mortgage and protection network. As mentioned above, there are a lot of things to think about. If you’ve found this useful, then take a look at what the Dragon Network has to offer.

If you like what you see, or if you’re ready to join a supportive, engaging network that wants you to succeed, then I’d love to hear from you. Complete this form and let’s have a chat about joining the Dragon family.

 

 


Dominic McDonnell