The CEO of Aussie has outlined his belief that aggregators will need to evolve in the near future to provide more holistic services to brokers.
Speaking to The Adviser, Aussie CEO James Symond said that he believes aggregators would have to change and become business partners to brokers as the industry as a whole evolves.
Mr Symond said: “I think that, moving forward, there are absolutely going to be changes in the role of aggregators.
“In the past, many wholesale aggregators were just there to supply software and a commission systems portal that could provide as much commission to the broker as possible. I think those days have gone.”
Noting the increasing focus on regulation and compliance across the financial services industry, Mr Symond continued: “Moving forward and looking ahead, wholesale aggregators will need to provide more. They will need to provide more in terms of risk and compliance advice, they will need to provide more in terms of business advice, they will need to provide more in terms of providing security and safety — not only for the broker but also to make sure that the end customer is also dealing with the right broker which is within their group or system.”
He added that Aussie has been working on this premise for several years, but that he believes aggregators would likewise update their offering, too.
“I think that, moving forward, aggregators will become not just a supplier to the broker but a business partner to the broker, providing solutions to help them build their business.
“I think that is happening right now. Any high-quality aggregator right now is sitting in hot backrooms working on their business model to make sure that they can be better at risk and compliance, better at business advice, better at security and better at safety and making sure they are creating a much more sustainable business and opportunity for the brokers.”
The heads of several leading aggregators and brokerages have voiced a similar sentiment in recent months.
Outsource Financial chief executive Tanya Sale recently told The Adviser that the company’s compliance team has almost tripled in recent months in response to increased scrutiny, while Vow Financial revealed that it is ramping up its compliance processes by monitoring granular data of loan applications to identify poor behaviour and manage potential risks within its ranks.
The groups have also been playing a major role in the Combined Industry Forum’s recommendation to introduce an improved governance framework that “monitors for and identifies risks”, and work has been ongoing to create a new industry code of conduct as well as provide ongoing education and business support.
Likewise, some brokerages are now looking to more closely align themselves with the aggregator offering.
Mortgage Choice CEO Susan Mitchell acknowledged earlier this month that its system, which was introduced 25 years ago when the group was established by multimillionaire brothers Peter and Rodney Higgins, was in need of an update.
The Mortgage Choice CEO said: “Our business was started as a full-service model. All the services that were need to help a broker start their own business, providing brand, marketing, IT, compliance, training and all those sorts of things.
“Over the years, since the introduction of the Mortgage Choice model, there have been other models that have been introduced — aggregator models — that pay out a higher proportion of income but don’t offer the same level of service. So, what’s happened is, I believe, our balance between remuneration and provision of service has gotten out of kilter, so we just need to address that balance between remuneration and service provision.”
As such, the group has said that it will be undertaking a review of its franchisee remuneration structure, with a view of implementing a “more competitive” model by August 2018.
The Adviser will be taking a more in-depth look at the evolving proposition of the aggregation and broker groups in an upcoming edition of The Adviser magazine, which will include the main findings of the inaugural Aggregator Sentiment Survey, run in partnership with Momentum Intelligence.