The importance of ongoing broker BDM relationships
I often feel that financial services is a sector which suffers from an overuse of abbreviations and acronyms more than most. For example, I’ve already used three TLAs (three-letter acronyms) this morning – LTV, OMV, ICR – and it’s not even 9am.
There is a view that, in using such acronyms, people are creating codes in order mystify - to make their ‘club’ harder to penetrate, or seem more sophisticated than it really is. I disagree, I just think people like TLAs as they make frequently repeated phrases (‘loan to value’, ‘open market value’, etc.) slip off the tongue more easily.
Now, I think the king of TLA in the intermediary sector is BDM and with very good reason. A decent business development manager is an invaluable asset to both a lender and the broker. Unlike many TLAs, the BDM actually demystifies, providing clarity to the broker and their client. They can help the broker negotiate the lender’s product range and be the main point of contact throughout the application process.
I’d argue that in 2023 the BDM is even more important than ever. We have all read the predictions that this year is going to be harder to successfully conduct business in than in recent years and that issues such as funding, affordability and a less certain property market will combine to make business harder to come by. For these reasons, it’s vital that the relationship between broker and BDM is a strong one.
To get a deal over the line, the broker needs to fully engage with their BDM in advance of submitting the application. The client will not take to kindly to undertaking an application process, only to find out that the lender would never have said yes to it, and that if the broker had been doing their job, they could have established that fact at the outset from talking to their BDM.
Not only that, but the BDM can make the broker’s life easier; they can liaise with the underwriting department in order to find out whether more information will be needed and so keep the application process ticking over instead of stalling.
That said, it’s important to realise that the broker-BDM relationship shouldn’t end once the funding has been secured. In fact, I’d argue that, more than ever, the relationship should extend throughout the whole term of a loan.
I’ve been banging the drum over the past nine months for brokers to ensure that their clients have multiple exit strategies for their bridging loan cases. The worsening economic environment and slowing property market have meant that ‘plan A’ has not always materialised; that’s why having a ‘plan B’ and even ‘plan C’ is very much recommended. Bridging lenders want to understand that brokers’ clients are fully aware of market realities and have visibly planned ahead with regards to their exit options. Borrowers are more likely to get the application accepted if they can demonstrate that they are aware of market conditions and have made contingencies. At London Credit, for instance, we nowadays almost always require a contingency plan in case the preferred exit strategy doesn’t come to fruition.
There may be some clients who still have a bridging loan that was accepted when the market was more buoyant and didn’t feel the need to have a plan B. However, if the development is nearing fruition, it’s important that the broker establishes with the client on the likelihood of the exit strategy still being viable. They also need to be communicating this with their BDM in order to help identify any potential problems with their exit strategy early on and put them in a better place to identify a solution.
Similarly, with any more recent cases, where there were multiple planned exits, the BDM should still be kept in the loop as to the progress the client is making with each route.
Maintaining a dialogue with the BDM throughout the process will benefit clients and it will also help brokers to build stronger, longer-lasting relationships. It’s about ensuring the relationship has some regular TLC.
Chris Stylianides is Head of Business Development at London Credit.