The number of staff advising on mortgages has fallen by around 15% from 2019 to 2023 to 24,422, Mortgage Solutions can reveal.
According to a Freedom of Information (FOI) request sent by Mortgage Solutions to the Financial Conduct Authority (FCA), the number of staff advising on mortgages stood at around 28,616 in 2019 and has been steadily decreasing since then.
The total number of adviser staff fell in 2020 and 2021. It rebounded slightly to 25,045 in 2022, before falling to the 2023 figure of 24,422.
Sources speaking to this publication have attributed the fall to fluctuating mortgage approval volumes, an ageing broker population, struggles with recruitment and increased levels of stress.
Adviser numbers in 2023 were around 47% lower than the pre-financial crisis peak of 46,234 in 2007, which many figures in the industry said was unsustainable.
However, the number of staff advising on mortgages has remained stubbornly below 29,000 since 2008, when there was a cull of advisers from the sector after the financial crisis, tumbling by 47% to 24,396 in that year.
The last time adviser numbers neared pre-financial crash levels was in 2019, when this totalled 28,616.
The figures are based on the Retail Mediation Activities Return submitted by firms offering intermediary services. It covers all mortgage advisers, including those who are self-employed or sole traders.
Pandemic caused disruption and changed working patterns for advisers
Andrew Montlake, managing director of Coreco, said it was “not a surprise” that mortgage broker numbers have been falling since the pandemic, especially due to changes in working patterns.
“We still find that one of the very first questions new brokers ask us in interview stages is: ‘How much do I need to come into the office?’
“There is a whole new breed of workforce who do not see the benefit of coming into an office, which causes not just training and knowledge issues, but also important social skills and, more importantly, mental health issues,” he noted.
Montlake said that the job of a mortgage broker has “become much more challenging”, as it takes an “emotional toll” and can be “very stressful”.
Rate changes, the stricter regulatory regime and a “litigious climate” means the “pressures can be immense”.
“I know of some new to the industry brokers leaving the industry altogether post-Truss, as the difficulty of writing consistent business levels against these pressures became too much.
“With many brokers also receiving less income for doing more work than ever, propagated by inadequate remuneration on product transfers, all these elements have seen brokers leave the industry,” he explained.
Ben Thompson, deputy CEO at Mortgage Advice Bureau (MAB), agreed that the pandemic put a lot of pressure on advisers and the sector, and it was clear that some took the opportunity to leave.
He noted that, anecdotally, advisers who had left were due to retire or very new to the industry.
“Those that remain have proved to be incredibly resilient and stand to gain as the market recovers, with a smaller adviser pool, and a greater percentage of new mortgages needing to be intermediated today than compared with before the pandemic,” he noted.
Mortgage activity and adviser numbers ‘directly correlated’
Karl Wilkinson, CEO of Access Financial Services, said that there was a “direct correlation” between mortgage approval volumes and adviser numbers, pointing to the dip between 2020 and 2021 along with 2022 and 2023.
He noted that technology means larger firms can “work more efficiently” as they can process more mortgages per adviser but don’t need as many.
Wilkinson added that the regulations from the FCA in 2022 made it “more challenging for small, one-[person] appointed representatives (ARs) to operate”.
Sebastian Murphy, group director of JLM Mortgage Network, agreed that there were “barriers to entry” to being an adviser as there was a “significant set-up cost”, especially for those that are directly appointed, along with compliance risk, increased due diligence and heighted regulation.
He said that networks could ease the burden and recruit new blood into the industry, but an issue was the amount of work necessary not being matched by income.
Murphy concluded that being a broker was a “difficult job” and it was often hard to “get a good work/life balance”, which could lead to more stress and eventual exit from the market.
Recruitment is ‘number-one challenge’
Ben Allkins, head of mortgages and protection at Just Mortgages, said that recruitment was the “number-one challenge”, especially attracting “new adviser blood”.
He said the post-Covid climate may have dissuaded entry to the market and lowered the appetite of some networks and brokers to “invest time and resources into unproven candidates”.
Allkins said the sector needs to examine why brokers are leaving the market and ways to improve retention, along with more academy programmes and ongoing learning and development opportunities.
Wilkinson said that it could be “tempting” for firms to incentivise recruitment by offering brokers more money, and while it was “well-meaning”, it reduces support firms can offer advisers, and training was vital to new recruits and retaining talent.
“In terms of retention, advisers care deeply about service, support and a positive, collaborative working environment where they feel comfortable and happy. All of these factors help with staff retention. People want to be looked after, not treated like a number,” Wilkinson noted.
Thompson agreed it was key to bring new talent into the market, especially given that there was an expected upswing in purchase activity predicted.
He explained that, previously, insurers used to bring in and train new talent, but that was not the case now, so broker firms had to “do their own thing”.
“We have had approaching 1,000 advisers come via our Academy to date, but I would give anything to see hundreds more sign up to start a career in this great industry now,” he said.
Montlake said he hoped there were “better times ahead” and brokers who “learned to dig in during the hard times will reap the rewards over the coming years as rates fall and the market returns to some semblance of normality”.
He added that the sector needed to do a “better job of setting new recruits’ expectations” as many firms were “overpromising in order to get much needed talent over other companies”.
Montlake said that the industry needed to look at a more diverse range of pools for talent, concluding that the “mortgage industry can be a fantastic place, but we all need to work together and do a better job of looking after those within it”.
Adviser numbers will continue to fall
Thompson said that he expected to see another drop in 2024, as “some have found the post mini-Budget period very difficult indeed” due to refinancing leading to smaller case sizes and more work for the same income.
He said the Mortgage Charter had “put too much responsibility and work at an adviser’s door” due to constantly reviewing clients’ deals in a “fluctuating rate environment”.
Thompson said that for many larger lenders, the procuration fees for refinance could be “disproportionately low”, adding that brokers “don’t feel right charging clients fees to refinance”, so advisers have left due to “difficult and/or reducing markets”.
Murphy also pointed to low product transfer proc fees, which he said meant that brokers were “effectively having to do more work for less money and more risk”.
“Unless lenders improve the product transfer position, they will force many others to consider leaving the industry or potentially for brokers to always recommend a remortgage away to a new provider,” he added.
Murphy said that the ageing adviser workforce means the declining trend could continue and it was crucial to tackle barriers to entry.
Wilkinson agreed that although there was an expected rise in mortgage lending in the second half of the year and into next year, technology advancements means that overall adviser numbers may not grow.
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
