TV: Even elite brokers will have to change

by Adam Smith13 Mar 2012

Advantedge head Steve Weston has advised brokers that even the industry's elite will have to find new ways to make their business viable.

On this week's Australian BrokerNews TV, we speak to Weston, the company's general manager of broker platforms, to get his advise for the industry as he departs Australia for his new position at Barclays UK. Weston said brokers must readjust their business models to suit a changing environment, and that even top business writers won't be spared from the industry shake-up.

"Brokers will need to change their business models as a generalisation. Even if they're one of the elite brokers who luckily are able to write as much volume now as they did in 2008, today they're going to be earning 30% less for their efforts," he said.

Weston indicated that "more than half the brokers in Australia" were writing less than two deals a month, and said this was not viable. With the need for brokers to "be paid like professionals", Weston said the industry would have to find new ways to generate revenue.

"People will need more support from their aggregators in the future than ever before to help them build a viable business, to help them look at ways to diversify their income, to be more productive and efficient, to look at charging fee-for-advice; things that haven't been done in the past," he said.

Regardless of the industry's evolution, Weston said it is inevitable that broker numbers will continue to fall.

"It's simply the economics playing out. If you can earn more money doing something else, ultimately unless you can increase your income, you'll go and do that," he said.

Watch the latest Australian BrokerNews TV video for more of Steve Weston's parting advice to the mortgage broking industry.

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  • by Guru 12/03/2012 10:48:31 AM

    Brokers writing two deals or less per month should not be in the industry and the cost to be in it should be prohibitive. On the other hand, if aggregators were not owned by banks, maybe they would be a bit more agressive in battling for the brokers. Not only has the revenue fallen by 30% but the workload has doubled with compliance on the one hand and lenders' ineptitude on the other

  • by Broker 12/03/2012 12:09:12 PM

    Any Broker with half a brain surely would have restructured their business model and overheads back in July 2008 when the commissions were slashed. No business can have their top line cut by 30%, not react to that and stay in business. Math 101, I would’ve thought.

    Yep, we are doing all the lenders work for them, for 30% less, and their service standards have probably slipped about 30% over the last 3.5 years, yet we still have the likes of CBA saying that brokers are making too many mistakes etc, and the broker channel is not profitable, if that’s the case perhaps they should exit the broker space altogether, or have a serious look at what’s happening and what’s being charged where internally.

    Please remind me why lenders thought or think that outsourcing to Brokers was more profitable in the first place, was it because it is, and still is?

  • by Michael 13/03/2012 1:18:28 PM

    I agree that brokers need to change, if for no other reason than banks et al continue to "shift the goalposts", making business as hard for their brokers as possible. Surely, if the banks were serious and genuine, the same standards would apply to their own institutions.

    Brokers, for the most part, represent value to their clients and offer them choice. The level of choice is declining along with the service provided by most banks (sorry, that's their brokers' fault too).

    No way will brokers ever win - banks are too big