Brokers would be prudent to diversify their offering into SME and asset finance following the royal commission, the CEO and co-founder of an asset finance platform has said.
In the 1,000-page final report for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which was released last month, Commissioner Kenneth Hayne recommended a change to mortgage broker remuneration so that “the borrower, not the lender, should pay the mortgage broker a fee for acting in connection with home lending”.
While both the government response and Labor response have stepped away from adopting the recommendations in full (instead calling for a ban on trail commissions for new loans from next year and a ‘review’ of the model in three years’ time), several non-banks have been suggesting that it would be prudent for mortgage brokers to look to diversify their offering to not only provide greater services to their clients, but also bring in new revenue streams.
Speaking to The Adviser, the CEO and co-founder of asset finance platform Nodifi, Tom Caesar, also suggested that brokers consider diversifying now, adding: “I think it’s obviously a tough time for everyone to comprehend what could happen without knowing what the future holds. But, I think it is really important at the moment that every broker has a diversification strategy and looks to offer as many products as they can so they can create better customer outcomes and create customers for life.”
Nodifi, an asset finance quoting tool that enables brokers to identify finance options from 20 different lenders, submits the application and workshop scenarios with the processing team, works on a 60/40 commission split (with Nodifi taking a minimum of $365 plus GST per consumer loan and $495 plus GST for commercial loans).
According to Mr Caesar, interest in asset finance has grown over the past few weeks since the royal commission report was released, with both brokers and aggregators expressing interest in adopting tools that enable them to diversify further.
“Not only are we giving them the opportunity to write the finance, we’re also working closely with some brokers to create marketing materials that they can use, we’re helping them with their strategy through the process,” he said.
“We have broking groups who write $1 billion a year in mortgages and we’re actually helping them strategise where it fits in into their business and how that works.”
The Nodifi CEO advised brokers looking to move into asset finance for the first time may want to “consider what they do best and outsource the rest”, but added that “once you understand the difference between a commercial asset finance deal, a consumer car loan and a personal loan – which are all similar processes – you can pretty much be across them all”.