In theory cross-selling makes a lot of sense. Life and income protection rank high on the list of insurance essentials for homeowners and every loan needs a transactional account. An easy pitch for any broker surely?
In practice it’s a different story.
The hard truth is that not everyone is a born salesman – and cross-selling can be a tricky pitch. Simply mastering the sales and presentations skills to effectively sell mortgages is a challenge for many.
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It’s also worth remembering that by and large, the banks have failed dismally to cross-sell their own products at a branch level. If bank employees can’t come to grips with cross-selling, why should brokers fare any better?
Fear is of course a strong motivator. Right now there are few brokers that aren’t at least losing a little sleep over the state of the property market and its medium-term prospects.
Not that mortgage lending is likely to dry up anytime soon. Plenty of pundits are still talking the market up and chronic property undersupply is sure to keep sales ticking over.
But if 15,000 odd brokers think they can survive by selling mortgages alone over the next couple of years there are going to be a lot of casualties.
And then there’s the small matter of commission cuts. Every bank has now conceded that commissions will be cut – it’s only a matter of time before their non-bank cousins follow suit. Brokers will have to find other options to make up the shortfall.
Diversification has already played a significant role in shaping the mortgage broking industry over the last few years and it will be a significant driving force moving forward.
There are numerous products outside residential mortgages that brokers have successfully turned their hand to and so cross-selling is a logical step. The opportunity to make multiple sales to one client rather than having to cast a wider net also makes sound commercial sense.
Cross-selling may not be an appealing proposition for many right now. But it might just be the opportunity brokers need to build their businesses in uncertain times.
Alex Whitlock
