Cross selling may meet resistance from the broking industry despite commission reductions.
Brokers are now under pressure from banks to cross sell products such as transactional accounts, insurance and credit cards to ensure maximum commissions are paid.
However only 56 per cent of respondents to a recent Mortgage Business straw poll believed brokers’ futures’ lay in cross selling.
According to Alex Moulieris, general manager of broker platforms at Challenger Mortgage Management, some brokers will find it hard to adapt to cross selling.
“Brokers approach a mortgage with a lot of certainty because if they get asked questions they can answer them – they live and breathe mortgages,” he said. “When it comes to secondary products, some will find it more difficult to make a recommendation to a client.”
While cross selling has some merits, Mr Moulieris said the channel should look to transactional products to support their offering, rather than full advice style products like life insurance.
“I think we need to at all times maintain our specialist role. We are mortgage specialists; we can open up a transactional account because it links in with our core offering, but with other products we need to be careful,” he said.
NAB, St George and CBA are among the first banks to emphasise the importance of cross selling as broker commissions are restructured.
Matt Lawler, regional general manager of NAB Broker, said brokers that don’t adapt to current changing market conditions face the prospect of lower revenue or increased workload.
“In an environment where margins have come down 20-25 per cent it would immediately follow that you have to work 20-25 per cent harder to get the same revenue,” he said.
“If you think about brokers as business people in an environment where margins are compressed, they have three choices: the first is they can work harder… the second is to accept revenue will be lower, and the third is to actually look for opportunity in their client base,” said Mr Lawler.
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