'You wouldn't ask your dentist to check your prostate'

by Julia Corderoy26 Feb 2015
Mortgage Choice CEO Michael Russell has said diversification is critical as the broking industry has shifted into a mature market phase. However, there is a right and wrong way when it comes to tackling diversification for your business.

According to Russell, the franchise has experienced record growth since it diversified into financial planning in October 2012. The franchise’s half year results to December 2014 released yesterday revealed a net cash profit of $9 million. This is the strongest interim profit on record.

In the six months to December 2014, financial planning accounted for 2.7% of the franchise’s gross revenue. This has more than doubled the 1.2% recorded in the same period in 2013. 

However, while Russell says diversification makes for a better business model, he maintains that broking and financial planning should remain as separate job functions in brokers' businesses.

“The Mortgage Choice model [of diversification] is one of specialist advice. When we developed the model, we wanted to make sure that we knew that our clients were both demanding and deserving of specialist advice, not ‘GP advice’,” he said, addressing the Australian Mortgage Summit last week.

“When you’re seeing your GP and they are looking down your throat, you probably wouldn’t ask if they’ve got a minute to see if you’ve got any cavities and if you’re in the dentist chair, you wouldn’t ask your dentist to check your prostate. So whether it’s their health or their financial health, they [consumers] are deserving of specialist advice.”

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  • by peter 26/02/2015 8:50:13 AM

    Well said Mike. Consumers trust experts.

  • by rex 26/02/2015 10:02:13 AM

    Perhaps what Mr Russell should have said instead of "diversified into financial planning' was "diversified into selling insurance".

    Whilst it may prove to be a profitable revenue stream for the business, what is the actual realisable benefit to clients of topping up insurance to cover their debt?

    There should be a far greater emphasis on the overall 'health' of the client than a new loan and perhaps "some new insurance with that?".

    If insurance is appropriate then make it as substantive as it needs to be, don't be constrained by the size of the loan. Then what about cashflow, super estate planning, etc... Or is that a bit too difficult?

  • by CharlieX 3/03/2015 1:09:35 AM

    the whole of wealth consulting is the way to go.

    then perhaps Yellow Brick Road is ahead of the crowd?