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Broker-planner JVs on the rise, says aggregator

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3 minute read

New business structures are being formed between mortgage brokerages and financial planning firms in place of traditional referral deals.

Kevin Frost, general manager of aggregator Centrepoint Lending Solutions (CLS), said the method of business partnerships between the two sectors is undergoing a shift.

Historically financial advice and accounting practices would approach CLS to provide lending referrals to a broker outside their practice. Now, they are adopting new structures more akin to joint ventures, Mr Frost said.

“Many advice practices are now setting up new business structures and either employing brokers on salaries or both parties are taking a financial stake in a joint venture or partnership,” he said.

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"This approach means that internal referral processes can be properly integrated, and office and administration costs can be shared. Most importantly, it means the mortgage broker becomes an integral part of the business.”

This change in business structure could see an increase in the volume of loans written.

“It also means the mortgage broker can properly leverage their client base by referring them for financial advice,” Mr Frost said.

A Brisbane financial planning group recently approached CLS to source an existing mortgage broker who would join their firm on a salary plus profit-share basis, with the group willing to buy out the broker's current trail book, he said.

"This approach isn't for all mortgage brokers, advice or accounting practices. There are still many practices who are content to simply refer each other business, and this often makes sense in terms of their size and focus.”

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[Related: Get personal if you want more referrals]

Broker-planner JVs on the rise, says aggregator
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