The Realistic Role for Mortgage Advisory Services -- November 22, 2006 (Also appearing in the MBA NewsLink)

“Advisory Services” is a term that has been used within the mortgage industry for decades.  Often associated with the role of a “trusted advisor,” it has been a high visibility consulting niche that was associated with recognized leaders, pundits, and authorities.  Nowadays that mystique is being removed due to the widespread availability of benchmarks, measurement processes, industry research, and a concentration on actionable advice – not just recommendations contained within PowerPoint presentations. 

Historically, our industry advisors came from larger vendor, origination, and servicing segments bringing with them decades of individual experiential data and lessons learned contained within a vertical organizational division.  Today’s advisor represents a different knowledge composition due to rapidly emerging global operations, a desire to quickly implement solutions, and management recognition that the mortgage industry is ready for best-in-class transformations.  Vertical depth has been extensively augmented with breadth requirements dealing with business process compartmentalization, blended sourcing solutions covering both internal and external suppliers, and a need for rapid reaction to operational mandates tempered by cross-industry lessons learned.

So what is the new profile and role of the mortgage advisor?  What are the challenges posed to mortgage lenders as they search for qualified advisors during these times of pressured change?  In truth, it has become harder to unravel the extended relationships and alliances between suppliers, the advisory group, and your organization creating hidden conflicts of interest that could have a material impact on decisions, initiatives, and costs.  Independence and objectivity has become harder to discern resulting in a complex web of trusted sources that often times conflict with each other. 

Based on several decades of case studies and experience, it is clear that advisory justification and selection must minimally start with:

1. Independence:  An advisor, who has extensive alliances, can inadvertently steer the solutions and organizational actions to “understood” or “preferred” relationships.  Make sure your organization conducts due diligence on prior and existing relationships including a legally binding disclosure.
2. Pragmatism:  Advisors are not islands nor can they ignore the organizational readiness when suggesting strategy, actions, or advice.  The challenge for selecting an advisor is one who recognizes the opportunities and limitations that can temper the sustainability of recommended changes (i.e., “out-distancing the organization with solutions too radical, expensive, or impossible to reach within the stated timeframes).  Ask for prior examples, work products, and intellectual capital.
3. Cross-Domain:  Best-practices can only be claimed if they incorporate the experiential data and results from outside our vertical silos.  Remember, it’s not just about best-in-class; it is about best-practice.
4. Facilitation / Promote Interaction:  Education, consensus building, and facilitation are now core competencies of the effective organizational advisor.  It’s not about just gathering facts and opinions and then stating a “To-Be” foundation that must be followed to the letter.  Our businesses move too fast and as a result, our entities require interaction and stepwise improvement that can be only accomplished by advisors who practice iterative delivery.
5. Experiential Results: Also expressed as “been there, done that.”  While often thought of as useless effort (i.e., why would anyone give us a poor reference?”), there is much that can be gained from an examination of prior advisory roles and results.  Don’t delegate this to less experienced staff.

Noted editor and prior presidential contender Steve Forbes recently said during an investor presentation in Cleveland, Ohio that, “…you make more by selling advice than following it.” History has proven his comment correct and we can all site examples.  However, within today’s mortgage environment, we need to find those advisors who have a joint interest and risk sharing in achieving a successful implementation (i.e., “the end goal”) - not just a deliverable. 

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