Disloyalty threatens to devalue trail books, says analyst

by Caroline Dann11 Sep 2012

The rise in borrowers switching lenders to refinance their mortgage could devalue trail books, says a leading analyst.

Max Franchitto, management advisor and business analyst at MGF Consulting Group told Australian Broker Online it would be increasingly difficult to sell books for two to three times their value.
“Theoretically, [if] I buy a book from another broker, I’m not assured that I’m going to retain those clients,” he said.
“You can’t get that for a financial planning book, unless it’s in great condition. You’re not going to get that for a mortgage book.”
He said the abolishment of exit fees earlier this year contributed to borrowers treating mortgages like any other “commodity.”
“With the new world of no real barriers to switching, you can’t do anything [to] stop the client from getting their money for a mortgage elsewhere.”
Brokers were also on the receiving end of consumer switching, he said, due to increased advertising of broker services.
“There’s no real loyalty ties to a particular product, nor - and this is a contentious point - is there anything that ties loyalty to the broker. 
“Because, at the end of the day ….there’s a multitude of offerings out there,” he said.


  • by Keith Bridges 11/09/2012 10:22:06 AM

    Yes we can thank Mr Swan and his Labour cohorts for slowly destoying a viable industry. Throw in the clawback provisions and is there any wonder this industry is not attracting new recruits

  • by Coast Broker 11/09/2012 10:22:08 AM

    Having been in the Finance for over 30 years and brokering now in excess of 7 years I could count on one hand the number of clients I have lost. I notice that Mr Franchitto has a lot of initials after his name but does not appear to have much in his bio that tells me he knows a lot about the Mortgage Broker Industry.

  • by ozboy 11/09/2012 10:22:44 AM

    How are the machinations of a FP book stronger than a MB book?Both face the same client interaction, it's up to the business to keep the client not the other way round. It is easier to switch FP's than it is lenders. This just sounds like a guy trying to buy books by pushing down the price using unjustifiable comments.