Sixty-three per cent of small- to medium-sized businesses would pay a fee-for-service for a finance broker, a new survey has revealed.
A My Business SME Insight survey asked SMEs whether they would expect to pay for a finance broker, to which more than half (55 per cent) said that they would.
Further, 63 per cent said that they would be willing to pay a fee-for-service for a finance broker.
The findings are particularly pertinent given ASIC’s investigation into remuneration and ownership structures in the Australian mortgage industry, and concerns that the review could potentially result in the removal of upfront and/or trail commissions for brokers, and see fee-for-services instated, which could ‘kill’ the industry.
Speaking to The Adviser, Stuart Donaldson, founder and owner of financial education business Banyan Co, commented: “According to the survey the market is not hesitant about paying fees.
“More than 55 per cent of SMEs said they would be willing to pay, the strong inference behind this response is the assumption they are receiving value.”
Cash flow most important part of SME business
As well as highlighting that SMEs would largely be willing to pay for the service of a broker, the survey also revealed that there is a ‘huge opportunity’ for brokers to tap into commercial lending, as just a fifth of SMEs use a finance broker.
According to the survey, of the respondents from SMEs across Australia, over half (55 per cent) said that they accessed finance from their bank, with 24 per cent using ‘other’ means (such as their own funds) and just a fifth (20 per cent) saying they used a finance broker.
However, the survey also revealed that the majority of small- to medium-sized business (78 per cent) think cash flow was the most important part of their business and that this was also one of the biggest challenges facing their businesses.
Mr Donaldson stated that this represented an “opportunity” for brokers. He said: “The survey highlighted how important cash flow is for SMEs and is the number one concern by a considerable margin — as 78 per cent of respondents said cash flow was the most important area of finance for their business.
“This is a very clear signal to brokers as to where their focus should be and making sure they have the capability to identify the need, and execute a solution. This alone will provide real value to SMEs and place the broker at the forefront of ‘who’ they need to be engaging with.”
However, Peter White from the Finance Brokers Association of Australia (FBAA) has warned that “it’s key that brokers ensure they are properly skilled before they go into the deep end of that pool [of commercial lending]”.
Bootcamp to help brokers target SMEs
Brokers will be given exclusive insight into the finance needs of Australian small business owners at The Adviser’s Boot Camp – New Revenue Streams 2016.
Including an impressive nine sessions to help mortgage brokers break into the burgeoning SME lending space.
Early bird tickets have now sold out but there is still time to secure a seat at this important industry event, which continues in Brisbane on Thursday, 6 October, Sydney on Wednesday, 12 October and in Melbourne on Friday, 14 October.
Find out more about The Adviser’s Boot Camp – New Revenue Streams 2016.
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