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Do you expect to see less or more second charge mortgage lenders in 2018?


By Paul Woodworth, managing director of Gateway2Finance |

 Like most people, I have a mortgage.

Last week I came to that time when my existing product is coming to an end and I should look for an alternative before having to suffer the extra cost of going on to the lender’s standard variable rate.

In the past, this has been a fairly straightforward process. After all, I have been in the industry for over 30 years (yes, I know I don’t look that old!).

Usually I would go on to the lenders website, find a product, ring the contact centre, get an offer and away we go with the new product.

Not this time, however. Now I have to see a mortgage adviser at the branch. So, having waited two weeks for an appointment at a local branch (not the nearest!) and taken a couple of hours off work, in I went expecting to be met by an adviser who probably wasn’t even born when I was first dealing in mortgages. As expected, we went through the usual compliance process, including fact finds, which took an hour or so, before we eventually got down to discussing my requirements.

The adviser turned out to be in his forties, was very professional and provided a mortgage solution that was a slight improvement on the one I had in mind at the beginning of the discussion. I thanked him for his advice and as I was leaving he said: “You’ll probably be advised by a robot next time you need to discuss your mortgage.” 

Although this was a flippant comment, it was further underlined by various articles in the trade press about robo-advice and how many brokers see this as a threat to their business.

I’m all in favour of technology and anything that can improve the advice process or make it easier for the customer has to be a good thing. However, I do believe that there is far more to the advisory process than finding the most appropriate product for the customer.

Robo-advice, as you will probably be aware, was first developed in the United States and was, and still is, predominantly used by Wealthfront (founded in 2011) to provide high-net-worth clients with an easy way to manage investments. 
The success of the robo-advice model resulted in many other investment companies employing similar functionality. It’s transactional and was introduced to support those customers who wanted to move investment funds quickly.

Now it appears that robo-advice is the financial services solution for those at the other end of the scale – those who cannot afford advice. 

Robo-advice can do many things and can hold some very complex algorithms, however, there is so much it can’t do within the mortgage and loans sector and brokers should embrace the technology not see it as competition. 

The technology should be used to speed up the process and sense check the advice provided. Those customers who can’t afford advice are often the ones who most need to have things explained in detail so that they can ask questions and understand the commitments they are about to undertake.

The value of an adviser is in being able to reassure customers; work with lenders, solicitors, valuers, estate agents and anyone else who may be involved in a mortgage or loan transaction to ensure that the most vulnerable are protected.

So, to those who feel threatened, don’t be. Advisers are the cement between the bricks and their role should not be understated. Anyway, if things go wrong, who do you sue? 

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