The idea of shopping around should extend further than the client, writes Richard Adams, managing director of Stonebridge Group
The notion of ‘shopping around’ is so heavily ingrained within financial services that there are entire industries set up in order to facilitate it. Indeed, mortgage advisers exist because they, for want of a better phrase, shop around for the client. Of course there is much more to being a professional mortgage adviser than tapping in a few details and getting the ‘best deal’. If it were that simple, you would not need qualifications to do the job and the job would probably be unnecessary because we already have the comparison site technology that could deliver the results anyway.
However, it is the whole belief in ‘shopping around’ that brings the client to the mortgage adviser’s door anyway they recognise there is value in searching the market for the most appropriate deal but know only too well that the market is wide and not all deals are accessible directly by them anyway. Plus, why shouldn’t they get the views of a professional and ensure they are protecting themselves at the same time? It makes sense and is certainly a much more appropriate way to spend one’s time rather than attempting to trawl round every individual lender in the marketplace.
It’s therefore fair to say that the ‘shopping around’ message has been successful and has hit home with the vast majority of consumers. Or has it? Think of yourself and think of the financial products you have also think of the accounts you have with, for example, utility companies, broadband providers, mobile phone operators, and the like. Are you completely confident that you have the most appropriate deal and are paying the lowest cost for that package? You may well have done when you first took out the deal, or signed up for the service, but when was that? Six months ago? 12 months ago? Longer than that?
Unless you are some kind of machine, or have inordinate amounts of time on your hands, then the chances are that you have products or services for which you are overpaying. Indeed, you may have left things so long, and your circumstances may have changed so much, that what you have now is completely inappropriate for you. We all have this knowledge but what do we do about it? Do we get off our collective backsides and shop around or do we continue to please the service and product providers by continuing to exhibit a distinct lack of activity?
I would suggest the vast majority of us continue to act in the former manner and this is great news for those who supply those products and services. The reason being that it is customer inertia (on a grand scale) which allows them to market aggressively to new customers offering discounts and market-leading offers, safe in the knowledge that your/my regular direct debits each month can fund this particular business model. Somewhere the ‘shopping around’ message has got lost and/or ignored even those like myself who talk about the importance of casting a wide net, are not practicing what we preach.
Of course it’s not just the consumer who is being taken advantage of in such a way. We regularly speak to appointed representative (AR) firms who exhibit the same levels of inertia when it comes to their network Principal. They freely admit that their needs are not being serviced as they should, that the cost is high in comparison to other networks compared with what is available to new network members, and that they really should get round to moving however need to have the time and information to be able to do so.
I often make the comparison with the mobile phone operators – thousands of tariffs offered with various add-ons and extras and it is almost impossible to compare like-for-like and get a true comparison for which network you should be with. Similarly, many ARs stick with the status quo because the effort required, and the research and investigative skills needed, to gain a true insight into what is on offer, at what price, appear too difficult to uncover. This is not a great state of affairs to be in and, we recognise as a network, that all we can do is be as transparent and simple with our pricing structure as possible and clearly outline the services we can offer. It is up to the individual firm then to determine whether our competitors are doing the same, or are merely clouding the water, whilst hiding some of their true costs.
In the network marketplace, shopping around is difficult. There are ‘network comparison businesses’ however their service has yet to be established and they have similar difficulties making that true comparison as well. Therefore, many AR firms are choosing to sit tight and, unfortunately, are getting the thin end of the wedge for their trouble. Shopping around therefore has to become something more than a mantra that is merely thrown into the marketplace and aimed simply at consumers. It has to be something that is also actively embraced by AR firm owners. We are all guilty in this regard but how can we expect our clients to embrace the concept, using our services to ensure they cover off as much as the market as possible, if we are not willing (or able) to do the same?