SPONSORED EDITORIAL -- A holistic approach

Despite the popularity of diversification, many brokers struggle to sell more than just the humble home loan to their clients. AW Money's Adam King shows it's not what you sell, but how you sell it that matters.

The GFC has changed the mortgage broking landscape forever. Savvy brokers understand they need to offer more than just home loans in order to build their bottom line and, in some cases, make ends meet.

AW Money managing director Adam King is one such savvy broker.

A long standing advocate of diversification, King has spent his entire working life involved in the financial services industry.

Having started his working career with one of the majors, King saw firsthand how important it was to offer a range of services.

"When I first started with one of the majors, not all of the bank's branches offered debt protection on their home loan products. One of the bank's customers died and legal action was taken against the branch for not offering insurance and letting the client know how important it is to have," King says.

After several years working for the major, King decided to start up his own broking company in Victoria.

Two years after establishing his Victorian based mortgage company, King craved a sea-change and moved to Queensland's Sunshine Coast in 2003.

With no family or friends in the region, King was literally forced to build his business from scratch.

While his business was ultimately very successful, King is the first to admit that the whole process "wasn't easy".

"It was a lot of hard work," he says.

"You cannot build a business up over- night, especially a mortgage business - because it is a very competitive industry. I just had to take it one day at a time, gradually building both personal and professional relationships."

DIVERSIFY OR DIE

King attributes the majority of his business success to diversification. When lenders first cut commissions back in February 2008, King saw his revenue drop.

Determined to correct the situation, King looked overseas for inspiration. He looked to the UK broking model, where only 30 per cent of a broker's income is made from mortgage sales.

"I found that the majority of English brokers receive their income by diversifying into other areas," he says.

And having learnt the importance of offering insurance early on his career, King decided to build debt protection into his service proposition.

"Offering insurance, or at least discussing insurance with a borrower is part of a broker's duty of care. However, for the first few years of my career as a broker I had only ever referred my clients on to insurance providers that I had professional relationships with," King says.

"But with commission cuts and increased market competition, I decided it was time to start offering insurance myself."

THE BEGINNING

Working with NAB Broker and MLC, King took the necessary steps towards integrating protection and advice into his value proposition.

"NAB was great. They supported me every step of the way. They tailored the education process to suit my lifestyle," King says.

Without any formal classes to attend, King was able to become an accredited insurance provider within a very short time frame. However, the insurance King was legally allowed to provide was very basic.

King held a Letter of Authority, which enabled him to offer limited protection advice to his clients. The insurance was offered as an "add on" or additional product. Before too long, King realised his "do you want fries with that" approach to insurance wasn't enough - he wanted and needed to incorporate insurance into his core offering.

"When I was offering protection insurance as an add-on, the conversion rate was, understandably, not high," King says.

When insurance is offered as an "additional" product, borrowers are more likely to turn the optional extra down. They see it as an unnecessary expense and hence forego it.

Mr King says most borrowers don't understand how vital insurance is - which is why Australia suffers from a chronic underinsurance problem.

He says brokers that want to offer insurance need to include it in their core offering - whereby they discuss the various insurance options with their clients from day dot. Not only are they more likely to accept how important insurance is, but if it is included in their general mortgage repayments, they will not even see it as an extra monetary burden.

Mr King sees insurance as the cream in a sponge cake - without it, you don't have a sponge cake.

REVAMPING THE PROCESS

Determined to make insurance the cream in his cake, King decided to totally revamp his loan application process to include a detailed fact find.

This ultimately changed the way he dealt with his customer - King understood that he needed to meet his customers' needs as opposed to their wants.

Today, the advice component of his business flows naturally for both King's staff and his customers which has led to a much higher conversion rate, improved the customer experience and improved staff motivation to sell insurance.

"As soon as I built insurance into my fact-find procedure and in turn core offering, my conversion rate climbed to 80 or 90 per cent," he says.

King credits NAB with giving his company a new direction and ultimately making the insurance side of his business a success.

"NAB Broker helped me integrate the insurance into my core offering in less than one year. They supported me through every decision and made the education process incredibly easy," King says.

"More than their support however, I also value NAB's stance on insurance."

King originally opted to partner with NAB because of their holistic approach to insurance.

According to King, NAB is committed to helping brokers' integrate insurance into their core offering, which helps builds their bottom line and foster deeper client relationships.

"There are a lot of lenders out there that say: ‘we will insure the client for you and give you a commission'. But as soon as you go down that road, the client is no longer yours," he says.

In contrast, NAB Broker is committed to helping brokers create a ‘client for life'.

"As a broker it is important for me to know that the customer is mine and no bank is going to steal them away from me," he says.

"NAB Broker offers me this."