The benefits of education are being debated as the MFAA raises the minimum bar. Are there real benefits for brokers? We asked the educators for their take.
When it comes to formal education, many brokers are cynical. Coming from an industry where practical experience has in the past been the most important consideration, the value of completing a Diploma – or even a potential university degree – is questioned.
So is there real value to mortgage broking formal qualifications? We asked the National Finance Institute’s Peter Heinrich, Jeff Mazzini from AAMC Training Group and Byron Gray from Intellitrain for their take on the value of further education.
What are the benefits of education?
Peter Heinrich: For many years now the mortgage/finance broking industry has been striving to be recognised as a profession. Many or most of the brokers I have canvassed the issue with say to me that the industry needs to be recognised as financial planning or accountancy is. The inescapable truth is that the other 'professions' currently demand a much higher standard of education to gain a qualification and thus recognition as a profession. If we attain the same level of training they do then we can indeed claim a profession.
But are their real, practical benefits?
Peter Heinrich: The inescapable truth is that clients value qualifications. They would never visit a lawyer or accountant who didn't have formal qualifications. They are becoming increasingly demanding that their brokers not only have good industry knowledge but also a formal qualification. The ability of a broker to be able to advertise a higher qualification is going to certainly mean more work. The broker with qualifications and other strings to their bow are going to be more in demand and will be able to maximise returns from a client.
What’s your view on a university qualification?
Jeff Mazzini: The education system of the past has not equipped us all for the new world and the only way to come into that space is to continually upgrade your knowledge and skills via education. Universities are adapting and now designing more relevant courses to meet the ever changing environment in which we all operate and hence without further education pathways being offered people will get left behind in attempting to achieve their dreams.
Peter Heinrich: I don't think existing brokers will rush to get a degree even if it is mandated. I think it is a stretch too far for existing brokers and if we use the financial planner analogy they have not gone down that path although many are obtaining an Advanced Diploma as a logical step. What is happening though is that many degreed people are entering the industry by choice because they are seeing it more and more as a profession to be in.
Byron Gray: The days of doing a course once and then not doing any further study for the rest of your career are well and truly passed. As for a degree it's possible down the track degrees will be developed that encompass a full range of professional financial and credit advice. So future graduates have a greater scope of services they can provide. A degree will never replace good old real world experience but provides a good foundation.
Is education or practical experience more important?
Byron Gray: Neither is more important. They both support each other. In my own experience, formal studies helped me understand what I should be doing in my business. I was able to study and learn from the successes (best practice) and failures of other businesses. Real world experience helps to inform your decision making just as much as formal training.
Peter Heinrich: The two are totally interdependent. No trainee from any university or training college can finish a course and go out and write loans. An experienced loan writer can no longer go out without qualifications and legally write loans. The newly qualified student needs a guiding hand to gain experience. The experienced loan writer needs a qualification to write loans - there has to be synergy there. Either way ASIC won't allow it, the lenders won't allow it, the MFAA won't allow it and the public won't accept it. It is the new paradigm - grasp it, get used to it, this is the future and it is good for the market.
How is the Diploma different?
Jeff Mazzini: The Certificate IV was a great course to teach people the basics of the industry and the products being sold, along with how to complete applications, selling and regulatory issues, in what was a splintered national regulation before NCCP. Basically, this course was an entry level to the industry, but did not equip you for the new regulatory requirements. The Diploma is clearly a step-up from the Cert IV qualifications and it actually addresses vital information and skills that a finance broker needs when acting as the trusted advisor. The Diploma will offer some of but not limited to the following:
The ability to understand corporate and trust structures;
Understanding risk assessments from a borrower and lender point of view;
Being able to read financials effectively and being in a strong position when discussing issues with clients and their accountants or other professional advisors;
Being able to place a loan submission before the lender with all required data and information presented in a format that the lender understands.
To summarise, the Diploma actually gives you the required professional skills whilst at the same time placing you on the same level as the client’s accountant and other trusted advisors.