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February 12, 2004 at 07:00 PM
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Next time youre working with clients who are considering the purchase of a new home, where will you, their financial advisor, refer them for their mortgage?
Some advisors arent referring them anywhere; instead they are offering mortgages as part of their list of client services. And with commissions ranging from one to several thousand dollars, some feel its a good addition to their business.
In fact, with the recent refinance boom, Dennis Cobb estimates his mortgage business over the last 2 years has made up about 40% of his revenue. Cobb, a financial planner with Waddell and Reed in Dudley, Mass., offers comprehensive financial planning services to his clients; often that includes originating a mortgage, home equity loan or reverse mortgage.
Making these types of loan products available to their clients is a natural fit for financial advisors, says David Peskin, chief executive officer of Vertical Lend, Melville, N.Y.
“Their existing customer base is looking for them to offer additional services,” he says. Since most consumers have a trusting relationship with their financial advisor, they naturally feel more comfortable working with them for their mortgage needs, he explains.
This was the case for Ralph Fields, an independent insurance agent from Rochester, N.Y. Many timesbefore he offered mortgages as part of his servicesFields clients would ask him for his advice when it came to their mortgage. They would ask for his opinion on their interest rate, the terms of the loan and how much they might qualify for. In some instances, he says, before his clients signed any loan agreement with their bank or mortgage company, they would run all the terms by Fields to see what he thought.
Now that Fields has been offering mortgages for the last 6 years, he estimates it to make up about 10% of his revenue. Fields clients “have responded favorably. They dont have to go someplace else, and theres no hesitation when it comes to their personal information because I already have it,” he says.
Peskin adds, “Rather then going to a local mortgage broker or even a local bank that doesnt have much knowledge of the customer, clients feel a lot more comfortable going to someone they trust.”
Since 1998, Peskins company, Vertical Lend, has been in the business of making these services available to insurance agents, financial planners and tax professionals. He estimates about 2,000 financial advisors across 25 states have signed up with him to sell mortgagesincluding Cobb and Fields.
And while adding mortgage brokering to an advisors already lengthy list of tasks may seem a bit daunting, Peskin explains that its actually very little extra work for the advisor.
