A mortgage broker's role in improving financial literacy

Broker explains role as an educator

A mortgage broker's role in improving financial literacy


By Ryan Johnson

With less than one in five Australian adults displaying high levels of financial literacy, mortgage broker Alex Veljancevski has made it a personal mission to help educate each client he works with.

However, being just one man, he realised that he needed to talk to the industry in order to make his impact more widespread.

In an interview with Australian Broker, Veljancevski (pictured above), director of Eventus Financial in Sydney, explained why all brokers should play a role in building the financial literacy of clients and lists five strategies to help brokers achieve this. 

How bad is financial literacy in Australia?

Higher interest rates and the soaring cost of living have made having a good grasp of financial concepts more important than ever.

But unfortunately, survey after survey paints a concerning picture of financial literacy in Australia, revealing many consumers increasingly struggle with the basics. Concerningly, this is even more pronounced among women and younger generations.

For instance, a recent Allianz study surveyed over 1,000 Australians, finding that 26% lacked an understanding of financial information, such as interest rates, inflation, and investment risks and returns. This lack of knowledge was estimated to cost them as much as $7,381 every year.

While 58% of those surveyed had average financial literacy, only 17% displayed high literacy levels. Moreover, twice as many Australian women as men demonstrated low financial literacy – 34% of women compared to 16% of men.

The 2022 Household, Income and Labour Dynamics in Australia (HILDA) survey echoed these findings, with women typically having lower financial literacy levels than men. There was also a growing age divide, with millennials and Gen Z trailing behind their older counterparts. 

Finally, an AMP study found that 36% of Australian adults were financially illiterate, a figure higher than in many other developed countries.

“As mortgage brokers, we are uniquely positioned to address this issue head-on as we guide our clients through the mortgage process,” Veljancevski said. “Our job is not just about helping clients get loans. It's also about educating them.”

By embracing our educational role, Veljancevski said brokers can leave clients better equipped to understand the implications of interest rates, the importance of credit scores and the long-term impact of their decisions – paving the way for a better financial future.

“Ultimately, this approach benefits the client while helping strengthen the broker-client relationship.”

The broker's role as an educator

With these statistics in mind, Veljancevski explained how brokers can play a crucial role in improving financial literacy:

Make finance simple

Jargon can be a significant barrier to understanding. By breaking down complex terms and processes into simple, easy-to-understand language, brokers can help clients grasp the essentials of their mortgage agreements as well as the broader financial implications.

Provide educational materials

Offering clients straightforward guides on topics like interest rates, how credit scores work, and the basics of saving and investing can go a long way. These resources can help them understand how their financial decisions affect their ability to borrow and manage a mortgage.

Encourage questions

Creating an environment where clients feel comfortable asking questions, no matter how basic, is crucial. Answering their questions can clear up confusion and help them feel more confident about their financial decisions.

Leverage technology

Recommending apps and online tools for financial planning can encourage clients to take an active role in managing their finances. These tools can make learning about finance more interactive and engaging.

Embrace social media

By creating and sharing engaging content such as short video tutorials and interactive posts on topics, mortgage brokers can harness the power of social media platforms to reach and educate a broader audience.

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