IFAs and mortgage advisers - two sides of the same coin

Bob Hunt

12 August 2020

There is often a perceived disconnect between IFAs and mortgage/protection advisers and, despite them being essentially two sides of the same coin, you often have certain parts of the market treating them entirely separately as if they don't actually exist within the same universe.

As part of a business which caters for all financial advisers, I think it's possible to say that we know - better than most - that there is very little difference in terms of the environment advisers work within, the concerns they have, their commitment to servicing clients, and especially at this time, the means by which they are trying to remain successful and profitable.

Take, for instance, a recent survey from AKG and Charles Stanley which, ostensibly, covered off IFA views but the results of which will undoubtedly chime with all types of financial advisers.

Advisers were asked about their ongoing concerns, what they are, how they might recognise growth areas, client demand and what they can do in order to tap into them.

19% of respondents said they were concerned about an ageing client base, while 12% said they were concerned about marketing costs and attracting new clients. Sound familiar?

The research also asked what tends to act as triggers for clients seeking out financial advice - 35% said 'life events' such as buying a house or retirement. While it was also clear that COVID-19 is also acting as a similar trigger - 52% of advisers said they believed the pandemic will increase demand for advice from existing customers while 48% said the same of demand from new customers.

As mentioned, transfer this across to mortgage/protection advisers and I suspect you would get the same sort of feedback. Interestingly, this particular research and paper suggests advisers need to focus specifically on the 'retirement life stages of baby boomers' and look at broaching the subject of 'intergenerational wealth transfers' with clients.

This mirrors the debate and opportunity that exists within the mortgage space, not just in terms of utilising the home for retirement provision but increasingly in terms of older family members helping those younger generations to get on the housing ladder.

The later life demographic appears to be one which is worth pursuing for advisers of all hues, especially in an environment where individuals are more likely to be taking mortgage debt into retirement, where pension provision for many will not be enough, and where (as mentioned) more homeowners might look to use their stored-up equity to provide 'living inheritances' and support.

What is interesting is that 'life event' triggers are essentially the same for IFAs or mortgage/protection advisers, and it's how firms put themselves in the shop window for these customers, so that they are able to deliver the advice needs they have at this point in their lives.

Of course, once achieved, it's then up to firms to ensure they can continue to service that client throughout the rest of their lives, benefiting from the recommendations and referrals you would hope to gain from a happy customer base.

Overall, perhaps mortgage/protection advisers are not so worried about an ageing client base as IFAs, but they could certainly tap into the growing borrowing needs of older customers to help create a far better foundation of new business in the future.

Whether that older borrower need is their own or to help out friends and family, it seems clear that later life lending could provide a real growth opportunity for many advisory firms.

With the additional trigger of the pandemic/lockdown, firms who can martial their marketing messages around product solutions and financial savings might have the most to gain in both the short- and long-term. In that sense, neither advisers nor clients are really very different at all.