One of my strongest beliefs is that education and the development of knowledge are the greatest drivers of success - whatever you determine success to be.
The definition of education is the delivery of knowledge, skills and information from a teacher to a student. However, it is my view that this does not adequately capture what is really important about being educated. To my mind, the proper definition of education is the process of becoming an educated person. That means being able to perceive accurately, think clearly and act effectively to achieve your goals and aspirations.
The higher your educational attainment is, the better your chances of creating opportunities for yourself. And the better your opportunities are, the better your quality of life is. Nowhere is education more important than in the finance industry, and that applies to industry professionals and customers alike.
Education and financial services
Of course, people have always been responsible for managing their own finances, whether it be paying off a mortgage, planning for retirement, funding the kids’ education or even just planning a holiday, but recent developments have made financial education and awareness increasingly important for financial well-being.
People need to be educated on financial matters in order to achieve their goals. For example, the growing sophistication of our industry means that consumers are not just choosing between interest rates on two different loans or savings plans, but are being offered a variety of complex financial products for borrowing and saving, with a large range of options.
So what does this mean for the finance industry and what is the role of mortgage brokers in financial education?
Education and business
Firstly, it is vital that brokers themselves recognise that as financial services professionals, they have an obligation to achieve and maintain a high level of financial education themselves, and ensure that their education is ongoing, evolving with the industry.
For example, I fully support the introduction of a degree in banking and finance. Such a qualification would deepen the financial literacy of those taking it, covering a range of topics including investments, mortgages, insurance, retirement savings and more.
I believe this would open brokers’ eyes to the broad spectrum of opportunities available from SMSF property investment lending, commercial mortgages, asset finance to debtor finance. Diversification has been such a hot topic over the last year that no one can fail to recognise that it is the future for brokers if they are to survive. And that means they need to understand a broader array of the financial services market.
Higher minimum qualifications would also create greater barriers to entry into financial services, which would result in lenders and consumers holding the profession in higher regard.
Education and clients
It is also important that brokers recognise their obligations to educate their customers, to fully inform them of the options that are available to them, whatever financial product or solution they are seeking. Embracing education will enable brokers to provide customers with more value than a simple product comparison. Customers cannot be expected to weigh the risks and make responsible choices in an increasingly sophisticated market without being confident that the professional advice they are being given is accurate and trustworthy.
If brokers sufficiently elevate themselves through education, they can become more to their customers than the person who compares a few home loans – they can become informed, trusted advisers. And as that trust builds, so will their business.
John Mohnacheff is national sales manager at Liberty Financial