It’s a million-dollar question that a lot of people, both inside and outside the mortgage industry, have been asking: is a mortgage broker the same as a mortgage adviser, or are they two different professionals?
For many in the industry the titles are used interchangeably to identify the same role. But clients find that difficult to understand. A simple Google search reveals that people have turned to the search engine for help with this subject. Tons of websites try to explain the differences and similarities of the two titles.
One entry says: “A mortgage adviser is a qualified professional who specialises in finding the most suitable mortgage deal for your circumstances. Often, they will be called a mortgage broker, but there is no real difference between an adviser and a broker.”
Whether in the industry or among clients and the public, we’re all guilty of flipping between ‘adviser’ and ‘broker’
However, there is a growing demand for clarity on the broker/adviser label. Opinions differ but some in the industry suggest that the term ‘broker’ is outdated and should be banned.
One leading voice calling for such a ban is Quilter Financial Planning. The firm says it no longer uses the term ‘mortgage broker’. It prefers to call these professionals ‘mortgage advisers’ and ‘protection advisers’.
I recently had the privilege to interview Quilter’s proposition and distribution director, Charlotte Nixon. She is very passionate about this subject and subsequently wrote a must-read piece for Mortgage Strategy in which she explains her clarion call for change (see Insurance Watch).
“The term ‘broker’ has long been synonymous with transactional processes and financial arrangements,” says Nixon. “In fact, the definition of a broker is a person who buys and sells goods or assets for others.
“This does not speak in any way to the value that mortgage and protection advisers provide for their clients outside simply the product.
I believe that, especially with the Consumer Duty, the advising element of our role has been highlighted and given the importance it deserves
“As the industry evolves, there is a growing recognition that this term fails to capture the comprehensive and client-focused services provided by mortgage and protection advisers. It’s high time we re-evaluate this terminology to better reflect the true value these professionals bring to their clients.”
I found Nixon’s pitch compelling but I wanted to check with others in the industry to see if they agreed with her call to ban the term ‘broker’. The reaction has been mixed; some support a ban while others say it’s a moot point.
Access Financial Services chief executive Karl Wilkinson prefers the term ‘adviser’.
“It’s clearer to the customer that you are operating in an advisory capacity with their best interests at heart,” he says.
“‘Broker’, to me, sounds like you are simply buying or selling assets. Traditionally, a broker was the middleman between what the customer wanted and what the lender was selling. There was little, if any, expectation of advice.
I think clients are savvy, so is a title really that important? I use both titles, to be honest, but prefer ‘broker’
“In today’s Consumer Duty environment, ‘adviser’ suggests that you are actually giving advice on the best product for clients and not just brokering a deal.”
For Just Mortgages national director Carl Parker, it is a matter of semantics.
He says: “Whether it’s within the industry or among clients and the public, we’re all guilty of flipping between ‘adviser’ and ‘broker’. Some may see the words as interchangeable and may just go by what the client uses. Others will focus on the semantics: a broker is a transactional role focused on completing a mortgage application, while an adviser provides that expert insight and guidance to inform a client’s decision.
“In reality, the latter is a far better fit for the role we play and the value we offer to our clients.”
Positive Lending chief executive Paul McGonigle agrees.
“I think it depends on the scenario. If you are arranging the finance on behalf of a client and providing advice, then yes, you are an adviser. But if you are facilitating a referral, surely you are not an adviser but using the role of a broker to introduce.
“The confusing scenario is your title if you are advising on one product yet refer on another. In that scenario the safest option is the title of adviser,” says McGonigle.
‘Broker’, to me, sounds like you are simply buying or selling assets
RH Dixon mortgage adviser Rachel Dixon thinks a professional title is not that important.
“I don’t have a strong view either way. I would say that I view an adviser [as someone] who works for, say, the Halifax, whereas a broker, straight away you would know they have a more overall view of the market because they can broker a mortgage deal.
“Either way, we’re all giving the advice. I think clients are savvy anyway, so is a title really that important? I use both titles, to be honest, but prefer ‘broker’.”
The Mortgage Mum business manager and senior mortgage broker Sally Mitchell thinks knowledge is key, regardless of which title is used to describe the role.
“It is not enough to be a good broker working with lenders’ criteria and FCA regulations. Even a working knowledge of the current geopolitical situation is necessary if you want to give your clients the very best advice. That’s what it comes down to, I think.
It’s high time we re-evaluate this terminology to better reflect the true value these professionals bring to their clients
“I wouldn’t insist either title should be banned. It is up to the personality, business philosophy and skillset of the individual to decide which camp they sit in. I believe that, especially with the Consumer Duty, the advising element of our role has been highlighted and given the importance it deserves.
“The advising comes first, and the broking comes at the end of this essential process. They go together — but you can advise successfully without broking. You can’t do it the other way around.”
It seems the broker/adviser debate will continue as the sector seeks to find common ground. For Nixon, however, banning the word ‘broker’ represents a “paradigm shift in how we perceive and value our profession”.
This article featured in the February 2024 edition of MS.
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