An award-winning broker has found that charging a fee for service has increased business loyalty and improved his bottom line.
Robert Trewin of Robert Trewin Mortgage Broking in Bairnsdale, Victoria introduced a fee-for-service model in 2009.
At first he wasn’t sure how clients would react as none of his competitors were charging a fee for service. However, he believed it would improve the profitability of his business.
On average the business earns an additional $60,000 a year by charging a fee for his services.
“Clients now more than ever are more loyal, and they feel they have paid for my service and expertise therefore placing more value on that advice and effort,” Mr Trewin said.
“It all comes down to communication and integrity. If you communicate well with your clients, with the lenders and you’re always coming from a place of integrity then the rest of it takes care of itself.”
Mr Trewin, who was named Regional Broker of the Year at this year’s Australian Broking Awards, said his clients are all aware of the fee upfront. “It forms part of the discussion and is documented in the credit quote before we do any work for the client,” he said, adding that the fee is only charged when loans get approved.
While most brokers don’t charge a fee for service, many consumers believe it is commonplace.
A recent report from NAB Broker and Genworth has found that almost half of consumers likely to use a mortgage broker expect to pay a fee.
Released last month, the report entitled, Engaging consumers and empowering brokers: Essential Knowledge on today’s lending market, surveyed 1,000 consumers across two categories – those who intended to get a home loan in the next two years (either via a broker or direct), and those who had taken out a loan through a broker in the past two years.
One of the key findings in the report was that 47 per cent of those likely to use a broker expected to pay a fee.
“There are brokers who charge fees, no doubt about it, but to think that half of the respondents thought that they would have to pay a fee if they go to a broker once again goes to show that the actual customer value proposition of brokers to the wider market is not clear,” NAB Broker general manager Steve Kane said.
“I think the industry needs to work on how we do that,” Mr Kane continued. “In the industry press it is so well covered, but I don’t think we do a great job of talking to the rest of the market. I think that is what is clearly coming through here.”
Mr Kane said that customers can be quite surprised when they discover that they don’t need to pay a fee for a broker’s service.
“In a perverse way, it devalues the proposition,” he said. “But I think the broker value proposition is credible enough to not have to charge a fee.
“I’m not advocating that brokers should charge fees, but I think it will evolve that way over time anyway.”
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