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Top brokers slam fee-for-service

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Australian Broker | 20 May 2011, 06:00 AM Agree 0
Four of Sydney's top brokers have indicated an industry-wide fee-for-service model is unlikely to take off, at Australian BrokerNewsTV's first multimedia broker panel session
  • Theo | 20 May 2011, 11:40 AM Agree 0
    It shocks me to hear that some brokers don't give any value to their time and experience. If all they are doing is selling a loan I would understand the above arguement, but I would like to think that most provide a different service proposition to that of a bank. Does a bank make them aware of the other products available in the market place? does a bank worry about the tax implications of lending to a certain entity? does a bank follow up a clients Accountant, Conveyancer, Real Estate agent for the information that may be required? I would never compare the service that I provide to my clients with that of a bank.
  • kenbee | 20 May 2011, 01:41 PM Agree 0
    I agree with David Brell and Leanne Scott wholeheartedly, while still havimg a great deal of empathey for Theos position. Yes what we do is more than a bank can or even would do, BUT as yet we still haven't got the majority of the market to lodge with us even though we're still a free service.
    If that were to change there is nothing that prevent our market share shrinking and the banks suggesting that if we charge the client we shouldn't get their penny as well. They couldn't help themselves - think of the frog and scorpion!
  • Xavier Quenon | 20 May 2011, 02:24 PM Agree 0
    As a TOP 100 Broker I concur with my fellow brokers. Furthermore I question the benefit to the consumer of a fee-for-service model. At present the consumer does not pay more by using a broker rather than going 'direct' to the bank. the introduction of a fee-for-service is thus unlikely to make mortgages cheaper.. and so again I question the benefit of this fee model.
    also, it is important to note that the current fee structure is a great motivation for client retention. a fee-for-service model would only encourage chruning which in turn is more likely to cost the consumer by being enticed in refinancing unnecessarily.
  • osbroker | 20 May 2011, 02:34 PM Agree 0
    How ridiculous! We've been in business 10 yrs + and have been charging a fee for 3.5 of them. Only one client ever baulked at paying us and it turned out to be a blessing as she was so painful, we requested she find another broker. We've also had clawback refund provisions in our contracts for several years and, whilst we've only had to enforce them twice, in both cases the clients paid happily as it was their decision to change lenders without consulting us.
    We do a lot more work, and a lot more professionally, than a bank ever will. We also connect our clients with other service providers such as conveyancers, accountants, property advocates and risk insurance professionals. And we give them a choice at every stage. Why wouldn't they pay us a fee? Most actually say 'is that all you charge for all of that?'.
    Who wants to be completely at the mercy of banks when it comes to your income?
  • Ozboy | 23 May 2011, 08:25 AM Agree 0
    If I thought this "debate" was getting ridiculous last week it's off in it's own world now, how do you get from fee for service to "would encourage churn" oh and "it would be too hard for the consumer to comprehend". Please give us all some of what you are on!! If you want to charge then this is for you and your clients if you don't then you will have a point of difference from the one's who do. That does not mean your service is any better or worse than your's just different. It is up to the consumer to make the decision that suits them and (believe it or not) not what suits you or the banks or the associations or even ASIC. Fee for service is not illegal, will not cause cancer, will not split the industry, will not resurrect Bin Laden or any one of the other many and varied disasters that it is linked too! Ah the things people say to get their name in print.
  • BrokingPlanningTogether | 23 May 2011, 11:49 AM Agree 0
    Totally agree with osbroker, we're a professional business offering a suite of professional services and we can well and truly justify a value proposition for charging of fees. We're very much considering going down the fee for service model.

    We offer so much more than the banks ever will and we go in hard for our clients and they know it. We also don't put the client down, because things simply get a little tough, we go the extra miles. Our retention of our client base can match it with the best and it's for a reason. Our clients get looked after, not just to secure their lending, financial planning, risk insurance etc., they know we're available for them if needed and they'll get quality advice, every time. Try and tell me any bank that can offer that?

    I'd also like to suggest a different tack, consumers these days are somewhat more savvy than what some would have us believe and the old maxim of you get what you pay for holds true. The banks don't charge fees, they don't offer choice, tailored to the client's individual needs and they certainly don't do it with any thought to the financial growth of the client. The clients, for their part don't stay for long, they keep shopping for the next best current deal, that they may have only limited understanding of. In short the client may have been taken off the market by a bank (this time), but the client remains dissatisfied. So what does THAT tell you?

    Implementation of a fee for service model "may" see a small percentage of our clients decide to go elsewhere and I'm OK with that. A lot of our new clients come in via referral and that's now occurring right across the nation, I don't believe that's likely to change, considering the delivery of service we offer.
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