Brokers must diversify to survive, say lenders

by AB12 Mar 2014
Brokers will have to become full suite advisers giving debt, planning, wealth and insurance advice over the next five years to keep up with the market, believe a group of lender and aggregate heads.

Increasingly consumers want cross-channel integration across their financial advice and successful brokers will be those that diversify away from offering solely mortgage advice, concluded 15 mortgage and financial industry key players taking part in a recent Deloitte roundtable discussion.

NAB Broker general manager Steve Kane said brokers have the capability to offer advice across a range of areas.

“We’ve moved enormously with NCCP over the last little while… We have moved away from the order takers in the market that simply filled in an application, and sent it to the bank that they thought would give them the highest commission, or the easiest approval.

“Now brokers are conducting proper investigations with the customer, identifying their needs – and it should naturally follow that they will seek to meet all those needs.”

But brokers have not yet taken advantage of the opportunity, ING Direct distribution executive director Lisa Claes said.

“Brokers are there the first time a customer seriously starts thinking about finances, when they buy a home, which usually happens before they insure, invest or retire. It’s a great opportunity to put in the groundwork for further and fuller financial advice throughout the customer’s entire financial life cycle.”

Matt Lawler, CEO of Yellow Brick Road – which already offers holistic financial advice including mortgages – said when customers come in asking for a mortgage they often do not realise they need financial advice as well.

“But when someone suggests it to them or advises them on it and gives them good reasons that they should do it they say, ‘yeah you’re right, I have never thought about that’.”

The best way to capture the market is offer packages which include products like insurance as well, Lawler suggested.

Other trends the group identified as likely to happen over the next three to five years included brokers becoming institutionally owned by major banks and moving to a fee-for-service model.


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  • by Steve Lake - IDFG 12/03/2014 8:38:37 AM

    The last paragraph is a concern. Hope that isn't the agenda here. However the intention to service your clients needs is honorable and if done properly well worthwhile for all parties. Doing it for "Wallet share" or other opportunistic reasons is just plain wrong and dangerous. Identify the problem(s) and offer the solutions. That's all diversification is.

  • by SA Broker 12/03/2014 9:12:28 AM

    I wonder how many actually Brokers, who deal with clients where included in the "15 key industry players"
    To say clients want something but they didn't actually know it is garbage.
    I have recently had an large Accountancy firm start referring me business because we don't do anything other than what we are good at. We can also build relationships with other experts in their field.
    This is all about the bottom line for the key stakeholders and hasn't got anything to do with what the client wants.
    I'm also concerned that if our industry becomes institutionalized, it will be just like working for a Bank again. Something to look forward to !!

  • by Old Joe 12/03/2014 9:31:06 AM

    This whole one stop broker model is good in theory but will blow you out the park with new expenses. I think the wallet share approach is better. In the UK the financial advisers have used the mortgage as a loss leader to get into the financial plan but they have made no money in the mortgage once costs of landing the client have been taken into account. I made the mistake of chasing SMSF loans and not concentrated on the Refi market and have still clients in the pre approval bin for over 18 months. No Income. Stick to the knitting your time and also your wallet will thank you for it in years to come. I have also have accreditation in fin planning and it taught me to stay away from fin planners.