Part-time brokers and those writing small volumes simply “won’t cut it” in the coming years as competitive pressures and increasing requirements create natural attrition in the third-party channel, according to a Deloitte partner.
Mortgage broking has evolved significantly over the last 10 years, particularly after the introduction of the NCCP and an increased focus on professional development and education.
However, a Deloitte partner has warned that not all brokers will be able to survive as the industry continues to evolve.
“There are a lot of brokers in the marketplace,” Deloitte financial services partner James Hickey told The Adviser. “It is becoming an increasingly well-educated profession with increasing levels of compliance and regulation. There are more requirements for brokers than there were 10 years ago around skills criteria, ongoing professional development and compliance,” Mr Hickey said.
“That really lifts the game, which is the best outcome for the industry and consumers, but it lifts the game on the quality needed to become a broker and to be an ongoing broker,” he said.
“You will find a lot of pressure on those brokers that don’t write a lot of business. There will be a lot of pressure on aggregators and dealer groups to effectively manage or manage out the underperforming brokers who are not committed to the industry or are not getting that customer cut through.”
Mr Hickey explained that those brokers who are still simply “order takers” for the banks “won’t cut it going forward”.
The broker of tomorrow, he said, will need to cultivate a range of skills including financial literacy, the ability to form professional relationships and be of personable nature. Brokers will also need to become digitally savvy to meet the changing demands of their customers, he added.
“The shape of the broker has changed, and will continue to change in the future towards far more of those softer relationship, business building skills as much as the technical compliance skills they need to have.
“You may well find that there is some pressure put on those smaller brokers who don’t write a lot of business, whether they can cut it and make a living out of it when you add the minimum compliance criteria.”
Whether this means the successful brokers who remain will see an increase in market share remains to be seen, Mr Hickey said.
“But I do think the shape of the broker and what skills brokers need going forward will change. That may have some degree of rationalisation of the smaller broker who might have been doing this part time or as a business on the side. I don’t think that is a model that can be supported going forward. There will be higher criteria to survive.”
[Related: Major bank CEO has 'no issue' with brokers]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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