Diversification could mean taking 'eye off the ball'

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A NSW broker has urged fellow brokers not to "take our eye off the ball" in the scramble for diversification.

Rob Horner, founder of Jack Horner Financial Solutions in Baulkham Hills, has told fellow Connective brokers should be wary of trying to expand beyond their expertise. Horner urged brokers to "stick to what we do best" rather than eyeing the one-stop shop model of broking.

"A few years ago I was persuaded that because of the natural synergy between what a broker does and what a financial advisor does, that should mean that I should become a financial advisor as well, which I did. Not so long ago, I threw in the towel and stopped being an advisor, because I think trying to be all things to all people is just too hard," he said.

Horner commented that the rigours of NCCP compliance mean that it has become more difficult for brokers to diversify outside of their main business.

"It's hard enough to be a broker these days with the compliance requirements and the knowledge requirements, so when you have the added layer of compliance and knowledge you need to be a financial advisor, I thought I was going to have a nervous breakdown. So I think the importance of sticking to what we do best is very important, and I think the benefits in my business have shown that to be true," he said.

Rather than adopting a full financial services model, Horner advised focusing on referral relationships.

"Of course I didn't just leave my clients in the lurch as far as risk goes, but putting in place sensible partnerships to outsource that function I think is important," he said.

"We're all told diversification is the future, but I think the more we try to be all things to all people, the more we take our eye off the ball of what we're really good at," Horner added.

  • SteveOz on 18/11/2012 10:13:11 AM

    Wise words from Rob for sure. Diversify absolutely, but as a referer / Introducer. Maximise your additional revenue and create a genuine FLOW of business at the same time. 7 Simple steps.

  • steve reid on 18/11/2012 8:45:42 AM

    Hi Guys
    Asic should look at the amount of Brokers
    Selling SMSF loans and talking about SUPER along the way like they know it all

    Its a bomb waiting to go off

  • Andrew Tan - Masters Broker Group on 16/11/2012 2:45:19 PM

    Agree with Rob Horner. Be the best mortgage broker you can be. Diversification can work - but it is a whole different business plan. Building a better value proposition on what you are good at is easier than starting a whole new business.

  • Coast Broker on 16/11/2012 12:50:36 PM

    Agree with Rob. I know of two Mortgage Brokers who completed their qualifications for Financial Planning only to realize that you cannot specialize in both. Also know a Financial Planner who is also trying to be a Mortgage Broker and the ongoing training requirements for both are hindering the actual running of the business.

  • Incognito on 16/11/2012 11:43:19 AM

    I absolutely agree.

    Diversification is a fine theory for aggregators - but a recipe for sleepless nights for brokers.

    Even diversification into SMSF loans has been a stretch.

  • Scott Beattie on 16/11/2012 10:48:35 AM

    Diversification doesn't mean that you have to do everything - it might mean that you need to establish a relationship and in my opinion, ideally in your own office and or brand, where a client can meet with a planner / risk adviser, property person, personal loan and or leasing, commercial insurance etc etc

    If you are solely relying on 1 form of income, you will probably be OK....for the moment.

    Creating multiple streams of income is longer a luxury, it's a necessity.

    2011 Mortgage Broker of the Year - Diversification

  • Country Broker on 16/11/2012 10:41:37 AM

    I really must agree here, we are trained in being Mortgage and Finance brokers, it is what we do and hopefully in the eyes of my clients do well.

    If I wanted to be a financial adviser I would have done that.

    I can still diversify BUT into areas I am well trained in and I have PI cover for.

  • Positive Broker on 16/11/2012 10:36:38 AM

    Couldn't agree more with Rob. Definitely have referral relationships in place so you can cater for your client's needs but don't be a jack of all trades master of none. You wouldn't let your tyre fitter service your car. Broking is no different.

  • MortgageBroker.com.au on 16/11/2012 10:26:55 AM

    We are called mortgage brokers for a reason. The general public in Australia expect mortgage brokers to write home loans and associated products.

    We are pushing to be recognised as 'Professionals in our field' and I think that thought is now gathering momentum, we are being represented in a much better light than a few years ago.

    We can use professionals in other businesses to compliment ours. Lets work together and not blur the lines.

    Just an opinion.

    David

  • Broker on 16/11/2012 10:25:26 AM

    Focusing on being an outstanding Broker can also delivers great rewards, I don't see Hairdressers becoming Butchers on the side!!

  • John Black on 16/11/2012 10:11:34 AM

    My blog posted on the 24th October ddresses this very issue. Refer to link

    http://jb0731.wordpress.com/2012/10/24/diversify-or-die-first-analyse-strategise-then-diversify-or-supercharge-your-specialise-with-relationalise/

  • 1martym1 on 16/11/2012 9:46:41 AM

    wise words, we have been sold a con business 101 = specialise

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