Can I Sell my Mortgage Broking Business When I Retire and is it Worth it?gary
An interesting question that often crops up in the industry is “can I sell my mortgage broking business when I retire” or more to the point “Is it worth trying to sell my mortgage broking business when I retire”
I suppose the answer to this partially depends on how the business is setup, how established it is and the size of your client bank. Having said that though I think we need to clarify exactly what most possible buyers would class as a client bank. We aren’t talking about a sales ledger here, Mrs Smith who took a mortgage out through me in 2005, hasn’t been contacted since, may be dead, alive or living in Tasmania may have once been a client but certainly isn’t one now. Conversely, Mrs Jones who bought a mortgage through me in 2005 along with protection, moved in 2008 at which time she took out another mortgage with associated protection and B&C insurance, re-mortgaged in 2012 to raise capital to add a conservatory to the house, recommended me to her sister who wanted a mortgage in 2013 and took out a secured loan in 2015 to help her daughter to buy her own place would definitely be classed as a valuable client.
The great thing here of course is that happily this shouldn’t really take any extra effort if you are already running your business in a proactive manner? If on the other hand in spite of literally hundreds of articles advising you to keep in regular contact with clients and sell them everything you can to keep the competition away from their front door you still aren’t doing it well now you have yet another reason.
If you’re feeling jaded and unloved, even if you have been in Financial Services for 20 years, have seen everything and know deep down in your bones that this new-fangled “the customer is my friend” rubbish doesn’t work for you because your customers are unique and aren’t like those young people in London, old people in Newcastle or middle aged people in Scunthorpe. You can now do it anyhow because of the increase it can produce in the resale value of your business which will in turn allow you to get out of the boring, tedious and unfair industry where fate has thrown you sooner and with more money in your pocket so you can retire to that small pub in Dorset. Hmm, I think maybe I’ve gone a bit far with that last illustration but I just wanted to get the point over to everyone and let’s face it, it’s not the “yep of course I realise that and I’ve done it from day one” brigade that needs the advice?
Flipping back to the past now and looking at my personal circumstances, when I got out of mortgages I actually split the business, sold the client bank and some protection which I had on the drip to one broker and transferred all the GI stuff to a friend on a split commission basis which whether by good luck or design I think has probably worked better than just selling the GI book as more than 12 years later some of the policies amazingly are still going.
In terms of the core business resale value brand or rather brand recognition is probably one of the core factors. So if you’ve got an eye to the future then maybe calling your firm Ted Jones Mortgages just makes things a little more awkward, although possibly not so much if it’s Ted Jones Mortgages Ltd. It’s just a case of getting the brand away from being centred on a single individual to a business entity. This of course is less of an issue if you have a number of advisers rather than being a one man band.
Now in discussions on this subject in the past cold calling regulation has been mentioned in the context that unless clients have specifically opted in for future sales material it’s against cold calling regulations to contact them. An interesting point and on hearing it I immediately thought that if Which Network didn’t exist and I were still a mortgage broker I would definitely look at including some statement in the initial client paperwork along the lines of “As a Gary’s Mortgages client you are entitled to receive the offers and updates which we will send you from time to time, however you can also stop this at any time by using the unsubscribe link which can be found at the bottom of all our update communications.”
From past experience possibly this isn’t a huge problem, for example when Santander bought out Abbey National I’m pretty sure they didn’t dump all the client files. On a personal level I’d had an Abbey unsecured loan following on from which they had sent me advertising stuff trying to persuade me that I really needed another for a couple of years before the takeover and after the takeover this marketing stuff just kept coming with the Santander brand on it.
I think maybe if a business has regular contact with a client as part of the service they offer and that business is then bought out I can’t see the DP agency complaining if the new owners carried on with the same model?
I suppose, to sum up the situation, as strange as it seems you really should add the selling of the business to your list of considerations as soon as the business is profitable and stable. Think of it as a future asset not just a means to put bread and jam on the table.