Yellow Brick Road has revealed plans to offer wealth services through its newly acquired third-party channel businesses.
Last year, the group acquired mortgage aggregator Vow Financial and mortgage manager Resi, adding significant scale to its distribution capabilities.
Vow Financial chief executive Tim Brown told The Adviser that YBR’s key focus in the six months to 31 December has been acquiring more distribution points out in the market and selling more products through those channels.
However, while this strategy has been mortgage-focused over the last year, Mr Brown said moving forward the goal is to integrate the group's wealth component into mortgage broking.
“We have just completed a broker survey where 20 per cent of our brokers said they would like to have some sort of wealth offering at their disposal,” he said.
“So for us now it is about building the systems and processes so that they can offer that to their clients.”
Mr Brown warned brokers that while the good times are good in the mortgage industry, diversifying into new areas will help brokers 'recession-proof' their business during the bad times.
He added that mortgage businesses with multiple revenue streams are also more valuable.
In a trading update this week, YBR highlighted that over the six months to December 31 it had become a “major player in the mortgage broker channel” as well as the owner of a growing franchise network.
According to the group, this additional exposure to the booming mortgage market delivered normalised growth in settlements of 52 per cent, versus market growth of 14 per cent.
“Seizing the opportunity to take share in this growing mortgage market somewhat constrained wealth revenues, albeit wealth grew by 16 per cent over the period,” YBR said.
While the company noted that the continued low interest rate environment and its impact on property markets and credit growth offer significant tailwinds, the fact that intermediaries are focused on a “booming property market” is a headwind to YBR’s wealth management business.
As a result, the group concluded that execution of the wealth strategy will require “constant reinforcement”.
Mr Brown said YBR will build a back-office support system for its brokers that will either take the shape of a centralised planning model or, alternatively, place financial planners in the brokers’ offices.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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