Brokers should take another look at convergence and charging fee for service as a way to boost business and expand client relationships, says ING
Direct’s Mark Woolnough.
The conversation around fee for service has slipped off the radar in recent times, says Woolnough, but it presents a strong opportunity for brokers who choose to go down this path.
“The notion of it has died down in the last couple of years,” said Woolnough.
“We saw when we explored the fee for service model through our planner network some brokers dipped a toe into the water, but ultimately fee for service is linked to whether or not the consumer sees value in the product and the service provided.
“If consumers become greater educated and we move towards convergence and integration of financial services the fee for service model may start to come back in.”
The financial services sector has seen a shortage of skills in recent years, which presents opportunities for brokers, says Woolnough.
“I think the conversation of convergence will continue in 2014. What’s been quite interesting is to sit back and watch the last two or three quarters there’s been a greater level of activity, engagement, willingness and desire to want to have a conversation around convergence.
“I think it’s an area where potentially there has been some resistance from the specialist broker but has generally been embraced by the general broker who wanted to provide a number of options for different customers and to look at diversified business models.
Top broker Colin Lamb runs brokerage Mortgage Solutions Australia under a diversified model, and says he will charge a fee to clients when service goes above and beyond general loan writing.
“If you’re adding value to the transaction and assisting a client and providing them with additional information then by all means a lot of fees are payable,” says Lamb.
“If clients are mucking around back and forth and you’re spending two or three interviews with clients by all means the question would be raised, and I’ve raised it numerous times with clients and it’s just a matter of saying ‘Listen, We’ve done three or four of these interviews, the next interview is going to cost you $500, say’. And that’s more actually to sort out if the client is going to be doing something or if they’re just time-wasting.”
The introduction of a schedule of fees would aid a number of brokers who are looking at charging a fee-for-service, and ensure consistency within the industry, says Lamb.
“The industry needs to have a schedule of fees so that it can be monitored and so that there’s no rogues in the system where they are flippantly charging fees,” he says.
Until more brokers start taking up the fee-for-service model or seeing it as an issue, a schedule is unlikely to go ahead, says Lamb.