Product 'myopia' affliction cured by diversification

by Adam Smith13 Apr 2012

Yellow Brick Road chief Matt Lawler has weighed into the debate on diversification, saying that avoiding a “do you want fries with that mentality” comes down to not being “product myopic”.

Debt Rescue operations manager Rachael Witton recently warned that over-diversification could dilute broker skills. But Lawler has argued that diversification is not just a way to increase revenue, but a necessity to serve client interests.

“I see a lot of debate on diversification and the ‘do you want fries with that’ mentality, and whether that’s the right thing for mortgage brokers. If you take the client and their needs as your primary interest, there’s no way you can serve that without at least the understanding or capability to do more than just a mortgage,” he said.

The idea that diversifying the advice offered to clients dilutes brokers’ focus, Lawler said, is putting too much emphasis on the product and not enough on the client relationship.

“All that debate is really about being product myopic as compared to being client focused,” he said.
Lawler conceded that a move into offering more holistic financial services could be difficult for many brokers.

“There’s no doubt that it’s very difficult to jump into it, and I’ve seen a lot of people try to go from being a mortgage broker to a fully-fledged financial planner,” he said.

Instead of a sudden, full-scale move into planning, Lawler urged a staged approach. He said brokers could add to their expertise over time while developing relationships with specialists in different areas of advice.

“Our model is designed as a staged process to take on little bits of advice at each stage. They become comfortable taking on that first step and then add on bits of advice,” he said.

Lawler tipped insurance as a starting point for brokers looking to diversify their offerings to clients, and said this could serve as a stepping stone to gaining expertise in broader financial advice.

“There are arrangements out there that allow people to give simple advice on insurance, and those are perfectly viable. It gives people that first step into it. Insurance is such an important component in helping people pay down their mortgage, but if you’re just focused on moving a product or – dare I say – flogging a product, that will be your primary focus and anything else will be seen as a distraction,” he said.

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'Do you want fries with that' mentality diluting broker skills


  • by ozboy 13/04/2012 9:02:01 AM

    Really?! Mr Lawler was the one who came out when at HomeSide saying brokers needed more education and now he is advocating less education spread amongst more diversified products. I believe that my clients are served best by experts in their chosen field so I refer to quality people who concentrate on their particular area of expertise not someone who has been taught to sell a particular product from a limited range supplied by my business partner. Different jobs and different mindsets shows that some people only parrot what they are told and can't follow what they believe.

  • by QLD Broker 13/04/2012 10:19:17 AM

    Mr Lawler is from a financial planning background when he worked at MLC before the NAB take over. NAB then made him move across to NAB Broker. He has little understanding of the brokeing space, but he does spin a good yarn. Don't be fooled by his comments but continue to build that picket fence for your clients and include all the services they might need and let the experts help them. I ensure that I am one of those pickets and help them with their finace needs and then when it comes to planning or insurance, I refer them on. Clients will look at you as a generalist rather than the professional you are if you follow Mr Lawlers thoughts.

  • by Paul Davies 13/04/2012 10:48:47 AM

    I think all these comments are viable. It does depend on the individual though. Not all clients like to be referred, or simply 'given' a product in house. It always comes down to the individual and how you can engage them in a non-threatening way (flogging a product) and meeting that need.
    As a shameless plug, Mortgage Shield offers both options. It comes down to the preference as some prefer a very simple solution (as many clients are well educated in this space), but others may want, and need a broader solution where referring the advice is appropriate.