Increasing Sales via Intermediary Distribution

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Increasing Sales via Intermediary Distribution

• Chris Downham
• BulgarianHomeLoans.Com

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Agenda

• Introduction
• The UK market over last 15 years
• The evolution of mortgage brokers in the UK
• The role of the mortgage broker
• How lenders should support mortgage brokers
• Benefits to the lender and client of a mortgage
  broker
• Glossary

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Who are Bulgarian Home Loans

• Part of the SimpliGroup Property Finance
  Simplified
• Established early 2005
• Created first mortgage for foreigners from a BG
  bank
• To provide brokerage service for mostly UK people
  buying in Bulgaria
• Now provide solutions from 12 banks
• Have over 300 introducers
• Had over 7,000 enquiries
• Submitted nearly 1,500 applications
• Offices in UK and Bulgaria
• However it has not been easy!

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The UK Mortgage Market

• The UK mortgage industry is the most dynamic,
  innovative, efficient and regulated mortgage
  market in the world!

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Evolution of brokers in UK

• 60 plus of all mortgage business in UK
• and US is originated by brokers, this is
• increasing every year.

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Lending by s Category
Source www.cml.org.uk (council of mortgage
lenders website)
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Lending by Actual number of mortgages
Source www.cml.org.uk (council of mortgage
lenders website)
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How the broker market developed
WHEN
WHO
WHY
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Who is the broker?

• Works between the client and the product provider
  / lender.
• Working on behalf of the client not the lender.
• An independent expert with specialist knowledge.
• Can be paid by either party or both.
• Takes responsibility for their advice either
  personally or via association / network.
• Can be small or large operations.

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A typical broker office
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What do they do?

• Get leads in a variety of ways
• Typically provide advice and recommendation
• Fact find Design Solution Presentation
• Key Facts Illustration (KFI), Reason for
  Recommendation. (see examples provided)

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What do they do?

• Get leads in a variety of ways
• Typically provide advice and recommendation
• Fact find Design Solution Presentation
• Key Facts Illustration (KFI), Reason for
  Recommendation. (see examples provided)
• Regulatory responsibility.
• On going relationship with client ownership

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How lenders should support mortgage brokers

• Relationship managers aka BDMs
• Extract from Creator Trader A Vision for
  Growth in UK mortgage market
• Recruit salesmen with a good personality, who
  communicate clearly, who have a will to succeed
  and who will be remembered by intermediaries
  after they have left their office
• Positive feedback is not a closed sales always
  ask for the business and focus subsequently on
  the physical application you get as a result of a
  sales visit
• Do not send a salesman out on the road without
  proper preparation and training, which must
  include understanding fully the point of sale
  technology
• Have a disciplined approach to the sales cycle
  from appointment-making through preparation,
  objective-setting, the initial greeting, the
  closing and the follow up
• Ensure that all salesmen are up to date with the
  workings of, and sell against points related
  to, competitor products
• Always follow up the sales call with a telephone
  call, email or letter
• Get your salesmen to learn in each sales call
  what business is being given to competitors and
  on what products, and maintain an efficient way
  of getting that information to a central database
  to be analysed by the product development team in
  marketing so that the trends can be discerned,
  adjustments made to your own product range or
  competitor terms challenged
• Manage individual salesmen using the statistics
  that relate business calls to the business
  generated, strike rates and repeat usage,
  benchmarking these against expected norms
• Continually focus your sales team on the 80/20
  list which always applies (this near universal
  rule says 80 of your business will come from 20
  of your contacts)
• Selling can be a lonely job make your salesmen
  feel important, give them support, a nice car,
  and continually catch them doing something right
• Sales managers should be continually in the
  field, keeping in touch with the customers poor
  decisions will be made by desk bound sales bosses
• Make sure your salesmen have scripts and sales
  angels that the intermediaries can use to promote
  particular products to their best effect
• Strike up a relationship with your competitors in
  the field, be friendly and help them where you
  can aggressive rivalry is wasteful, inelegant
  and unpopular with intermediaries
• Salesmen should care a lot about their
  intermediary customers problems if an issue
  does arise, they should go out of their way to
  resolve it, as their customers will remember that
  and respond to it
• An organisation that can have fun, and not take
  itself too serioulsy all the time, will present a
  confident and attractive image that will be
  remembered.

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How lenders should support mortgage brokers cont.

• SERVICE - MORE IMPORTANT THAN PRODUCT
• Exclusive intermediary products not available
  directly from lender
• Excellent point of sale software / solutions
• Competitive and timely payment of commissions
• Sales training, literature and angels
• Out of hours contact centres
• Recognition and reward
• Online case tracking
• Respect towards client ownership NO CROSS
  SELLING

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Pros and Cons for the Bank of Intermediary
Distribution
Cons
Pros

• Pay only for completed business
• Packaged applications
• Wide geographic access to market
• Professional advisers
• Transfer of advice risk
• Close to 100 application acceptance
• Sale of ancillary products that need to be sold!

• Client Ownership
• Leading to reduced cross sale opportunities
• Poorly packaged cases
• Product stickiness
• Dealing with brokers

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Pros and Cons for the Consumer of Intermediary
Distribution
Cons
Pros

• Increased understanding both technicalities and
  language
• Choice of provider and duty to provide best
  advice
• Face to face advice to help choose
• Convenience, outside banking hours, home visits
  etc.
• Independent provision of ancillary products
• Life time service re mortgaging
• Single person having full understanding of
  financial position

• Can encourage irresponsible lending
• Can be motivated by commission rather than best
  advice

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Cons
Pros

• Pay only for completed business
• Packaged applications
• Wide geographic access to market
• Professional advisers
• Transfer of advice risk
• Close to 100 application acceptance
• Sale of ancillary products that need to be sold!
• Increased understanding both technicalities and
  language
• Choice of provider and duty to provide best
  advice
• Face to face advise to help choose
• Convenience, outside banking hours, home visits
  etc.
• Independent provision of ancillary products
• Life time service re mortgaging
• Single person having full understanding of
  financial position

• Client Ownership
• Leading to reduced cross sale opportunities
• Poorly packaged cases
• Product stickiness
• Dealing with brokers
• Can encourage irresponsible lending
• Can be motivated by commission rather than best
  advice

CUSTOMER BANK
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Pros and Cons of the Networks
Cons
Pros

• Pays commission to network for them to distribute
• Banks can negotiate product directly with network
• Brokers get larger commissions due to networks
  buying power
• Responsibility of advice is with network
• Networks provide compliance managers
• Network can ensure professional distribution
• Network trains brokers
• Network can provide brokers with access to
  sourcing software
• Networks cheaper PI insurance
• Networks can negotiate exclusive deals
• Networks source panel of ancillary products

• Remove some of independence from distributor
• Add another middleman to the chain

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What are our next steps?

• Build equivalent of BHL for other Eastern and
  Central European countries, would you like to be
  one of our lenders? Romania Turkey are now
  under development. This is us acting as a broker!

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Contact Information

• Chris Downham Managing Director
• 0044 (0) 114 250 6161
• 0044 (0) 781 0880 493
• Chris_at_SimpliGroup.Com
• www.SimpliGroup.Com
• Thank you for listening

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Glossary

• Adverse Credit mortgage A mortgage that is
  designed for people with credit problems, from
  minor to severe.
• Business Development Manager (BDM) works for
  the lender and is instructed to get business from
  intermediaries and support them at all stages.
• BHL Bulgarian Home Loans the finest broker of
  mortgages for foreigners buying in Bulgaria.
• Broker An independent person or company who
  distributes products on behalf of the bank or
  product provider.
• Buy to Let mortgage A mortgage that is used
  purely to property to let out.
• Current Account Mortgage A mortgage that is in
  effect like a large personal overdraft, your
  income and general expenditure goes through your
  mortgage account to save interest
• Equity release mortgage A mortgage that is used
  to release equity from a property. This property
  might not currently have a mortgage secured
  against it.
• FSA Financial Services Authority (the UK
  regulator)
• Life Time mortgage A mortgage that is in situ
  for the life of the borrower and is paid off by
  their estate on death

• Redemption penalties A charge imposed by the
  bank upon the customer when mortgage is
  surrendered
• Re-mortgage A mortgage used to replace an
  existing mortgage, this can include an element of
  equity release to consolidate other debts.
• Self Cert mortgage A mortgage usually at a
  lower LTV that allows customers to declare their
  own income without requiring evidence
• Offset mortgage A mortgage that is linked to a
  current account so that any money in the current
  account can off set mortgage debt thus reducing
  interest payments. Both offset and current
  account mortgage are also known as flexible
  mortgages.