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The Big Story: Cross-selling the 'holy grail'

Cross-selling has been branded the 'holy grail' of mortgage lending in 2012 - so how can brokers tap into it?

Video transcript below:

Donna Sawyer, Australian Broker News TV
Donna Sawyer:
 Hi, I am Donna Sawyer and you are watching the Big Story on Australian Broker News TV.

Cross selling has been branded the holy grail of mortgage lending in 2012 and brokers could be doing more to tap into it.  That’s the message from the latest Deloitte Australian Mortgage report which argues low growth and heavy discounting next year will force lenders to turn their attention to cross selling wealth and insurance products.  Deloitte partner, James Hickey says while brokers haven’t traditionally had to venture into the world of cross selling, it’s something they should be focusing on now.
James Hickey, Deloitte
James Hickey:  When the markets are growing strongly, brokers and lenders simply decide to maintain market share in such a high growth market and their incomes would have flowed.  What we are seeing now, there is a lot of groups trying to say, well we have tried cross selling in the past albeit in a [ratherly] amateur way, we have actually got to get a bit more professional about the way we do cross sell.  We have got to understand a lot more about the needs of the customers. Particularly brokers are now finding with NCCP that’s raised the bar in terms of level of advice based discussions that brokers are having with clients.  I think brokers are realising, “hey I can do more in this than mortgage.  I can sell an insurance product, a wealth product or other products to the consumer, because I am spending this extra time with them.”
Donna Sawyer: So how can mortgage brokers make the most of cross selling opportunities? Mortgage House, CEO, Ken Sayer says it’s all about offering a full service to clients.
Ken Sayer, Mortgage House
Ken Sayer: All they have to do is start with customer outcomes or customer desirable outcomes and the rest is easy, because they don’t, there seems to be a, there seems to be a limiting component to conducting business i.e. if there is no financial gain there is no incentive to [divide or supply] a product.  So whether GIO or NRME pay me for constructing an insurance policy or not, I still do that for my clients.  So it’s all about the complete total value proposition.
Donna Sawyer:  Julio Labraga from Capital Fusion says brokers need to understand what their clients needs are and to choose appropriate timing before attempting to market other products.
Julio Labraga, Capital Fusion
Julio Labraga:  Earning the customer’s trust before cross selling a product or service is key.  Trust is something which is personal and not institutional so it’s not transferable.  The focus is mainly specially by the lenders as product based as opposed to need based and sometimes the actual timing of when that is introduced isn’t sometimes appropriate and many of the actual lenders are limited to provide products which they own as opposed to what is best for the actual customer.
Donna Sawyer:  James Hickey from Deloitte says the report highlights the types of products brokers have the best chance of cross selling and it isn’t necessarily the obvious home and contents insurance.
James Hickey:  Interesting we looked at the propensity for general insurance or life insurance or wealth management products to be cross sold by brokers.  So whilst brokers may think that general insurance is the most obvious link to the mortgage, that’s the house and contents insurance, in fact many found that was the hardest, reason being that consumers can go home, do a google search and get half a dozen quotes from home and contents insurance within 5 minutes.  So there is a natural reticence about buying general insurance directly from the broker if there was only one product that was offered.  Where we found there was more attraction was around life insurance, simply because that’s a needs based discussion.  Consumers don’t often have the chance to just go and google and get instant prices on life insurance, it’s more of a, very much a needs based discussion, where you have got to sit down with the customer, understand how much insurance cover they need, really make them understand why they need it and based upon that, that emotive and that needs based discussion then brokers are getting greater cross sell with life insurance.
Donna Sawyer:  He says brokers need to select the right model for their business when it comes to cross selling.
James Hickey:  We have actually researched quite a bit in this sector about what can brokers do to really get this cross sell.  I think it’s the case of not one model as being the sole model that would work for everyone.  I think different broker groups are certainly trying model for different approaches. There has always been what we would call the tick and flick model which is where the broker simply says, yes this customer wants to know more about a potential cross sell and that’s passed on to an outbound call centre to contact the customer.  There is other models which are no advice models and we are seeing certain providers offer that product and train brokers up in a minimum level of no advice offering and then we are seeing some brokers and broker groups encouraging their  brokers to move towards more of a financial advice model and actually getting a general advice or a full advice license, they can actually go into more deep dive about the customer’s needs.
Donna Sawyer: Mortgage House CEO, Ken Sayer says by looking at the big picture brokers have the opportunity to help clients achieve long term goals.
Ken Sayer: When we meet a client we talk about everything except their mortgage.  We refer to occupation, age, retirement, what nest egg they look like building, where do they see themselves in retirement and you will find that we are all different.  Retirement to every second person is something entirely I am going to call it fresh or separate as far as expectations are concerned.  So that’s where I start with my clients, it’s all about where do they think they want to be.
Donna Sawyer:  For more on cross selling and other mortgage industry issues, click around the Australian Broker News website.  I am Donna Sawyer and I will see you again next week with the Big Story.