Mortgage brokers are being urged to “prepare for the day” that commissions could change by looking beyond mortgages and diversifying their businesses.
The Independent Finance Brokers Forum (IFBF), an organisation of more than 40 members that meets once a month in Sydney, has been ramping up its diversification message following the release of the ASIC and Sedgwick reports earlier in the year.
“If you look at some of the topics and speakers we have had at our last few meetings, we are trying to get brokers to understand that they are going to have to change,” IFBF co-chairman PJ Patterson told The Adviser. “There is a lot of pressure coming from the ASIC and Sedgwick reviews, from government, and our message is to go out and diversify your business.”
The IFBF was established almost 10 years ago by a group of brokers in western Sydney. It has evolved over time to focus on best practice and professionalism.
“Our main focus every meeting is on three key things: education, diversification and compliance,” Mr Patterson said. “We are always trying to educate our members about being professional, learning how to enhance their businesses through diversification and ensuring we all remain compliant.”
The diversification piece has become far more prevalent in recent months, however, particularly after the IFBF learned about overseas broking markets.
“We need to prepare for the day when we may have to see a reduction in our upfront and trail commissions,” Mr Patterson said, adding that while he doesn’t necessarily believe this will happen, he was enlightened after learning about the UK broker market.
Former Iden Group chief executive Barrie Gaubert spoke at an IFBF meeting after attending The Adviser’s UK Study Tour last year, where delegates learned that British brokers were paid no trail but supplemented their mortgage earnings with insurance sales.
“That was a major learning curve for me, and I’m sure for other members and brokers at our meeting,” Mr Patterson said. “You realise that you can still survive if you diversify your business into things like insurance.”
The IFBF meets on the last Friday of each month at the Rosehill Bowling Club in Sydney. The next meeting will take place tomorrow at 10:30am, where Connective’s Mark Haron will discuss the new ASIC funding model and increasing incidences of loan fraud.
Spectrum Wealth CEO Mark Schroeder will also speak about how brokers can diversify into insurance.