Brokers – how can you prove your services are worth it?

“You can’t please all of the people all of the time,” it’s often said, and mortgage broker Amar Dhanota (pictured left) saw this in practice when she recently dealt with two clients on the same day who had contrasting perspectives on broker fees. 

Taking up the story, Dhanota shared: “One client confidently affirmed, ‘You charge more than I have been quoted by other brokers, but I want to work with you, your skill and expertise warrant the fee you are charging’. Such a commendation highlights the value of professional acumen and reassures the worth of investing in quality service. On the same day, a complex income client commented, ‘I'm not paying a broker fee, you just have to complete some forms and I have spoken to a broker who will not charge, and I can get the mortgage from my bank as well.’ This starkly opposing view underscores the challenge of conveying the comprehensive scope and significance of the services provided.”

A co-founder of brokerage London-FS, and a specialist mortgager adviser, Dhanota concluded: “Navigating these varied client perceptions is essential in illustrating the integral role of a broker, beyond merely completing forms, and advocating for the expertise that justifies the fee.” Her experience is a compelling example of the schism in clients’ thinking around charging for mortgage advice. It raises a key question about how brokers not only handle customers’ expectations of fees, but, importantly, how they show their worth too.

Broker Eric Miller (pictured centre), from Affinity Group, believes it is an issue that has, to some extent, emanated from the adviser community. “The difficulty with managing a client's expectation around fees is partly fuelled by misinformation spread by brokers themselves,” Miller told Mortgage Introducer. “I have heard a number of statements from people in the industry suggesting that the larger the fee the better the advisor, implying those that do not charge fees are less capable.  I have even heard similar comments to suggest that fee-free brokers will favour lenders that pay a larger proc fee.  On the other side, I know some people say that you should not pay for a mortgage broker as they get paid by the bank. The reality is that a firm’s decision to charge a fee is driven by a number of different factors and, fortunately, Consumer Duty is protecting our customers.” He added: “I would say your customers having an understanding of how they benefit from using your business and a clear outline explaining if and when fees are due is the key to handling their expectations around fees. Mortgages are essentially the largest financial commitment that most of us will ever make - it is important to ensure you are getting clear, concise advice.”

Read more: Are young mortgage professionals too entitled?

The importance of setting out your fees upfront

Affinity Mortgages has chosen to be fee-free on residential applications, with a caveat surrounding applications hampered by adverse credit. “Regardless of whether we are looking at a residential application, buy-to-let, bridging or development finance, we will outline to cost of our services as part of the initial conversation,” said Miller.  “If the application requires a fee, then customers are asked to sign a fee agreement to confirm they understand how much the fee would be and when it would be due, to avoid an misunderstanding.”

Kim Balasubramaniam (pictured right), co-founder of brokerage Versed, acknowledges that fees can sometimes be quite a tricky topic, and there are many differing opinions on why brokers should or shouldn’t charge. “We do charge a broker fee and firmly believe that our service is worth it,” she said. “We rarely get pushback from clients around this, and if we do, ultimately they are not going to be the right clients for us - and that’s fine, you’re not going to please everyone, nor should you try to. Different clients have different needs and ours require a certain level of service for which they are more than happy to pay.”

Ultimately, clients are able to go directly to lenders or source a mortgage deal themselves, Balasubramaniam emphasises. “If they want to do that, then they are not the type of clients who will realistically want to work with a broker and appreciate the expertise and value that they add,” she said. “We want to work with clients who really value our service and advice, and we feel that our broker fee reflects both the work that we put in before, during and after application, and also the relationship and trust that we build with them over the years.”