One of the country’s top brokers has said that he believes brokers should be responsible for 100 per cent of the market share of loans, and the fact that they aren’t could mean “there’s something broken” in broker-clientele communication.
Sydney-based broker Joel Wyld, who entered the Elite Business Writers ranking this year at number 38 after having written in excess of $100 million in loan volumes, recently told The Adviser that he believed the third-party channel would be responsible for writing all loans if consumers fully understood what brokers offered.
Mr Wyld said, “I still feel like I have to explain to people that we [brokers] don’t charge anything, we’re free, we do all this … I just think, why the heck would you not want to use a broker?
“If everyone knew what we did, then of course everyone would use a broker,” he said.
The Peasy director added that part of the problem is that there is “a common misconception about the differences in commissions paid between lenders”.
He explained, “The differences are very small, and most brokers don’t pick a lender based on how much commission they get paid…
“[Clients] think that you do all this charging. ‘You get something somewhere’ [they think], and we do, but it’s no extra charge to [them]. [They] get choice and service … and brokers [are] tending on using lenders that are best for their clients.”
Mr Wyld added that he had seen banks “stitch up” clients and suggested that the major banks were able to do this “because of the lack of knowledge” on the consumer’s side.
He said, “Whether it’s us not doing a good enough job of educating, or clients [not] fully understand[ing] – that’s back on us.”
However, Mr Wyld suggested that the “big thing” that was pulling customers to the proprietary channel was that banks were “getting in there early”.
“[T]hey say to clients: ‘We can offer you this’, and everything in the media is about interest rates, interest rates, interest rates. It’s never: ‘Just so you know, you probably can’t get this rate because of X, Y and Z’. So, educating [consumers] on the importance of having a good strategic partner is important,” he said.
According to Mr Wyld, broking can be “very inspiring”, particularly when brokers are able to help customers who thought they were past financial aid.
“When a client comes to me and they give me a pile of rocks, I say: ‘We can turn these into diamonds’. I'm looking for all the positive aspects of a loan, and then trying to convey that to the banks,” he said.
He continued that he is therefore trying to educate his clients on what brokers do, but also on finance in general.
Mr Wyld concluded that as education improves, he hoped brokers would further dominate the mortgage writing market.
“It’s a big dream of mine that brokers should be doing 100 per cent of loans,” he said.