Brokers sing virtues of rejecting clients

“We rely on referrers, so there is always third-party intervention and there’s a third party who’s looked at the client and who’s dealing with that client,” he told The Adviser in a video interview.

“When someone calls us out of the blue and says they’ve found us out of the Yellow Pages or the White Pages, we’re a bit more circumspect in looking at that client’s circumstances, because that sounds like they’re shopping it around town.”

Connective director Mark Haron said some clients might be more trouble than they’re worth if they don’t fit into a broker’s area of expertise.

He said that Connective brokers will sometimes refer those clients in-house so the brokers don’t get bogged down with inappropriate work and the clients still feel looked after.

Coral Horizon Group principal Anne Cavenagh said her firm has learned to turn away clients who can’t produce documents and who are evasive about why they need the money.

“Typically, they might be self-employed in an industry where they take half their wages in cash. They don’t have a good credit history. You can pick them at a mile,” she said.

Ms Cavenagh said Coral politely advises those clients to go to a bank, because those clients have a tendency to blame the broker when their loan gets rejected.

FrontRunner Consulting Group director Doug Mathlin said new brokers are especially vulnerable to accepting inappropriate clients because they are so eager to build a client base.

Mr Mathlin wrote in a blog for The Adviser that brokers should learn to reject clients for the sake of their bottom line – and their sanity.

“Time is precious and we should aim to enjoy working in our business as much as possible, so if you have the choice, you should exercise your right to work with the people you want to work with,” he said.

Mr Mathlin advised brokers to maintain their professionalism when rejecting a client and to remember that there would probably be fallout.

“Any client you reject is unlikely to praise you or your business. You will never write ‘that loan’ and will most likely not create an advocate in that prospect. But on the upside, you now have time to focus on the prospects you really do want,” he said.

[Related: Should you ever reject a client?]