The increasing number of people breaking into the broking profession is making the case for diversification increasingly critical, according to a leading educator, speaker and business coach.
Stuart Donaldson, founder and owner of Banyan Co, told The Adviser that recent statistics from the MFAA show that there is an increasing number of people entering the profession.
The MFAA’s new Industry Intelligence Service (IIS) report has revealed that the population of Australian brokers has increased to 16,009, with more than 500 brokers recruited within the six-month period between October 2016 and March 2017.
The CEO of the association body, Mike Felton, warned that while the improved broker coverage is positive for consumers, these statistics should be seen as grounds for caution and needed to be closely monitored.
“It is not a sustainable trend to have broker numbers continually rising faster than the value of new business written and could be part of the reason why the report shows the average income for brokers is down [by] 6 per cent nationally,” Mr Felton said at the time.
As such, Mr Donaldson advised that it is therefore critical that brokers “stand out from the crowd”.
He told The Adviser: “I think brokers absolutely do need to stand out from the crowd and probably more so than any other time. I guess I’d substantiate that with some of the statistics that came out of the MFAA Industry Intelligence Service report that basically said what we’re seeing is that broker numbers continue to grow, and grow strongly… yet there has been a bit of a stabilising of the lending books. So, what you are seeing there on a very macro level is that the size of the pie isn’t growing, but there is a whole lot more people eating the pie.
“If you want to succeed and you want to increase market share, then you need something more than your competition. You really do need to stand out from the crowd and that’s a challenge for all brokers, no matter where they are in their cycle. It’s a challenge they need to confront.”
Mr Donaldson will delve into the details of standing out from the crowd in his talk at The Adviser’s Better Business Summit 2018. He said that the “one thing that is fundamental to everyone (irrespective if you are a one- or two-person operation or an established business with 15 loan writers) is your personal behaviouristics, your passion, your consistency and belief”.
“If you can look yourself in the mirror and if you can tick each of those boxes, then you have a fighting chance of succeeding,” the founder said, “but if you are a little bit on the complacent side or it’s a part-time job or it’s an interest, it’s really going to be difficult to face those growth challenges.”
He continued: “Assuming that people do have passion, persistence and belief, then it gets into: ‘How do I go about it?’ And I’m a very strong advocate for diversification and I’m a big believer that you need to look at expanding your revenue streams.
“While I acknowledge that the starting point is mortgage broking, you really do have to have an eye to the long game — where you want to be in five years, the ability to expand revenue sources and a plan for how you are going to go about it.”
Mr Donaldson conceded that while brokers cannot become a specialist “overnight” — nor have the capability to offer equipment finance/commercial loans/insurance/cash flow loans — they should either look at upskilling if they do not have those skills or forming “alliances” with those that do.
“You have to stop looking at your business as writing mortgages,” the Banyan Co founder and owner said, “and you have to start looking at your business through the lens of meeting customer needs.
“If you are only able to satisfy one very narrow part that others need, being mortgages, then you are really going to see a lot of leakage in your business. In my view, to stop the bucket from leaking, you have to take that pathway to diversification.”
Better Business Summit 2018
Stuart Donaldson will host a full session on how brokers can fast-track growth at the Better Business Summit 2018, partnered by NAB.
Visiting Brisbane (15 February), Adelaide (22 February), Melbourne (1 March), Sydney (8 March) and Perth (15 March), the award-winning event provides brokers with straight-talking, practical advice to help drive and grow business.
Mr Donaldson’s practical, workshop-style session will teach brokers how to stand out from the crowd, build scale to their business and enjoy consistently higher profits.
Find out more about the agenda for the Better Business Summit or visit the Better Business Summit and Better Business Awards for more details.
[Related: Broker market share reaches ‘record’ high]