Recent years have seen the mortgage broking industry take strong steps towards legitimising its qualifications and standardising models of service, but there is an element of self-preservation many brokers have overlooked.
A push from the MFAA to install a diploma as a pre-requisite to membership has seen 95 per cent of its members undertake the qualification.
This has given customers, and would-be customers, some peace of mind that the broker they are relying on for frank recommendations about their home loan is actually certified to be providing that advice.
It has given detractors room to claim it’s the fox in charge of the hen house. But, essentially, the broker space is more educated than it has ever been.
Where brokers are letting themselves down, though, is failing to be informed. This is different from being educated – being informed is what allows them to diversify their business and own their customer. It is their key to a sustainable future.
Not being informed means failing to be conversant with lenders’ product suites, both current and in the pipeline. This omission gives other institutions avenues to reach their customer and let the customer down by not meeting all their needs.
Consider this scenario: the broker researches the customer’s financial position and their requirements and identifies the best home mortgage product for them. Let’s say it’s with one of the big four. The application is completed, lodged, and approved, and the customer goes off to the bank branch to sign on the dotted line.
While they are there, the friendly staff will upsell them several types of insurance, investments, maybe some superannuation, credit cards, debit cards, and lets them keep the pen.
The broker can say goodbye to the customer. They are now the bank’s customer. And they have more than likely just signed on for a host of topped-up products that may not be the perfect fit for their needs.
Where the broker can offer the most value to the customer is to diversify the range of products they can supply, and to do that they must align themselves with a qualified financial planner and understand there are a range of viable alternatives to the big four.
The broker knows their customer; they have already done the groundwork to understand that customer’s personal circumstance and financial goals. That relationship is what their business model is built on. It is the reason customers choose the broker model in the first place.
If the customer wanted to be sold generic products by a bank, they’d go to a bank and be just another number.
Brokers can keep their customers close by working shoulder to shoulder with professional planners who are qualified to provide an extended product suite and take care of all of the customer’s financial requirements. In this way, brokers can guarantee their customers’ needs are adequately met and the relationship investment on their part, and that of their customer, has been time well spent.
The growing level of broker education is commendable; it needs to be complemented by staying informed.
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Kim Cannon is the founder and managing director of Firstmac Limited. He has been in the Australian finance industry for the past 30 years, and has owned a number of different companies and brands in that time. He was there at the start of the non-bank lending industry in Australia, and was one of the leaders that challenged the banking industry at the time and made home loans more competitive for everyday consumers.
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