Forging partnerships

“We have released an education program for brokers to ensure they understand what they can and can’t do with respect to SMSFs, and it specifically enables them to be advising SMSF trustees in obtaining finance for acquiring property,” he says.

“We are aware this is a very sensitive area and there is the danger consumers will be misled into getting into an SMSF for the wrong reasons, or borrowing in an SMSF for the wrong reasons, so we developed the program to make sure our members are fully informed.”

Mr Naylor says the course is in no way designed to assist brokers to give SMSF advice – only lending advice. He says he believes the complexities of SMSFs mean it is an area in which brokers should work alongside other professionals, such as  financial advisers, to provide clients with the best overall service.

“The way SMSFs are structured makes them very complex, and while individuals can do them themselves, most people are relying on expert advice,” he says. “In setting up an SMSF, people really need  financial planning advice to identify the rationale as to why they are setting up the fund, and then they will also need an accountantor legal advice to help with the actual set up.

"Then, if they are going to borrow money through the SMSF to invest in property, they are going to need expert credit advice too – and that is where our members as brokers come in.”

A broker's opinion

Angela Del Marco, director of Asset Financial Services, is a mortgage broker who has developed close working relationships with both accountants and financial planners to ensure her clients receive the very best SMSF service possible.

Ms Del Marco says the referral model is the best model in which to provide SMSF services. She says the area is just too complex and too far removed from mortgage broking for one professional to be across all aspects with sufficient competency to provide high-class service.

“Asset Financial Services spotted this arena as a huge opportunity for us to provide a more encompassing service to our clients,” she says.

“We believe each financial area is a discipline and we prefer to be experts in our arena and rely on those who are experts in their arena.”

Ms Del Marco is actually qualified to provide SMSF advice but still prefers to outsource SMSF queries to her referral partners.

“I have the qualifications of a financial adviser, but at the first appointment many clients want a quick response and don’t understand the length and time research into options can take. It is for this reason we make a referral to a related business, so that the lending transaction is quite unrelated to the financial advice,” says Ms Del Marco.

Under this model, Ms Del Marco refers her clients to a financial planner as soon as an SMSF is brought up.

“We refer to a planner when we spot that there may be an opportunity for the customer to explore their superannuation and risk position,” she says.

Apart from providing clients with the best advice, Ms Del Marco says many lenders actually require proof the client has received financial advice before processing a loan anyway.

“We have seen clients become ‘orphaned’ as lenders want the signed statement of financial advice, and some accountants are not qualified to state they have provided said advice, or are uncomfortable providing the signed statement,” she says.

Ms Del Marco’s referral relationship with her financial planner is structured to include payments for all successful referrals.

“We are paid a ‘spotter’s fee’ should the matter proceed to a statement of position,”
she explains.

Ms Del Marco uses an accountant to finalise the SMSF process and offer additional advice that neither she nor the  financial planner are able to provide.

“We refer to accountants after  settlement and placement of a tenant in order to complete a taxation variation. This is a non-monetary arrangement in that we don’t profit through it – our clients get a new relationship with an accountant, and hopefully through their service they can then secure a long-term client relationship,” she says.

This, according to Ms Del Marco, can also help her win additional business.

“We hope to eventually gain more new business from our customers through knowledge of the outcome of their new taxation position, and their knowledge that we have followed this matter through to a good outcome for them,” she says.

Ms Del Marco has built extremely strong referral partnerships with her financial planner and her accountant around this model. She says it is a model that is mutually beneficial and one she is sure will continue to be successful.

“Earlier this year, we moved into shared premises with the accountant we refer to, and the planning arm we also refer to is located in the same premises,” she adds.

“With three complimentary businesses sharing space and easily referring clients, the clients don’t have to repeat the same information to three different companies.”

A planner’s perspective

Referral partnerships are a two-way street. These partnerships, particularly when based around SMSF transactions, can help brokers to better serve their clients.

John Lister, a certified financial planner at Finwest, says he enjoys very rewarding partnerships with several mortgage brokers.

“Obviously, more referrals allow me to grow my business,” he says.

Mr Lister says he has carefully chosen his broker partners to make sure they align well with his own business.

“These relationships were formed as both businesses were seeking like-minded professionals to provide services to clients. It was important that both businesses were able to have confidence in the process and that referrals would receive service that would strengthen the client relationship,” he says.

It is not only important to align with those who place the same importance on customer service.

Mr Lister says it is just as important to identify partners who fit in with what you offer. With financial planners operating in such a broad industry, brokers should ensure they refer SMSF queries onto a planner with the appropriate expertise in the specific field.

“It’s important for me to receive the right type of referrals that complement the services I offer my clients. In this way, the brokers I do business with are matched to the services I provide and the areas of advice I would like to position myself,” he says.

These referral relationships are reciprocal, with Mr Lister referring clients back to these brokers when his clients are in need of finance. They are structured around a fee-based model in which each partner is paid a fee for successful referrals.

“The relationship is structured with a referral fee being paid to the broker from the commission/fees received,” says Mr Lister.

“The brokers do receive return referrals, and a referral fee is paid to myself for providing the referral. This was decided as the easiest way to structure the relationship, as it lessens the potential for conflict from one party receiving more referrals than the other.”

Mr Lister says these relationships are vital to both his business and his broker partners’ businesses, as they allow each to provide a better service for their customers.

“The brokers are able to have the confidence that when they refer a client, the client is going to receive a quality service. The whole experience is going to strengthen the client experience and ensure that client is looked after,” he says.

“When dealing in the SMSF field it is important the broker has confidence the client is going to receive the right advice given their situation.

“This will ensure clients are educated and informed about the risks, responsibilities and benefits of setting up an SMSF. Making sure the clients are properly informed ensures future problems are minimised and long-term client relationships are established,” concludes Mr Lister.