A leading Queensland-based broker has become a licensed wealth adviser and launched a financial planning service to his brokerage, advising that all brokers should “look into” wealth advice as a means of offering a more holistic offering.
Madd Loans founder and broker George Samios has launched a wealth advisory service to his Brisbane-based brokerage after becoming licensed to offer financial planning.
Speaking to The Adviser about the new offering, Madd Life, the Madd Loans broker said he wished he had taken up wealth advice sooner – and suggested that more brokers do the same.
Mr Samios commented: “For years, I would refer out wealth advice to other people. But then your customer has to go have a meeting with someone you don’t really know even after they have already given you all this information for the mortgage broking side of it, and they trust you.
“I’m a long-term thinker when it comes to business, and I just think this is where the industry is going. I think the customers feel like maybe we should be doing this. We are a trusted adviser as a mortgage broker, so I think there is no real surprise or barrier when you’re asking about wealth planning because you are already asking about all the finances. You don’t have to do the fact-find from scratch.
“And really, everyone needs these insurances, everyone needs this advice. So, if I’m confident and have the ability to do the work, why should they go somewhere else? They already trusted us with their loan, so it is an easy step to trust us with the rest of their journey. And as a first home buyer, most people haven’t got anyone yet.
“So putting it all under one umbrella, and offering a holistic service, really just makes it easier for the client. Plus, they know that they will get the same good experience with the additional service. And that is the reason why I did it.”
Mr Samios said he and his colleagues Kris Sewel and Matthew Prentice all qualified to offer wealth advice to customers after having completed their diplomas last year (before the education reforms for financial planning, which now require new planners to hold a relevant degree, came into effect) and teaming up with AMAFA (Australian Mortgage and Financial Advisers), who is Madd’s licensee.
The broker said he was surprised at how receptive his mortgage clients were to taking up financial advice, particularly given that only around 15 per cent of Australians seek financial advice from a financial adviser (according to State Custodians) and that the majority of his clients are first home buyers in their mid-20s and mid-30s.
“We have thousands of customers, many of them young people, and most of my customers don’t know what their retirement looks like, they don’t know if they are putting enough superannuation in their super account, they don’t know if their superannuation is even a good one for them, or what their charges are, they just don’t know how they’re tracking...
“It’s really cool because we go through not only if their mortgage is working for them (and if it isn’t, we will reprice their loan or look at other lenders, as we normally do) but we can also look at how their super is performing. And if there are new additions to the family, we can review the insurance and make sure that it is enough, or we might increase it. There is just a lot more products that you can look at and provide to your clients, so it has been a really good thing we have added on to the business.”
He added: “I’ve been shocked by the take-up. We’ll be doing a loan and then booking another meeting about their wealth needs – whether it be budget, insurance, super – and I’d say between 50-60 per cent of people who come in for a mortgage then follow up with wealth advice.
“I wish I’d done it earlier. But, like anything in life, with something new or different, you hesitate. But the reality is I think all brokers should really look into it. Because to be able to talk to your client more deeply and really work out what they want in life and be able to help them make that happen means that you can have much more personal conversations and the customers love it.”
While there is a fee attached to the Madd Life part of the business, the mortgage broking services offered through Madd Loans will remain free to the consumer, Mr Samios said.
He concluded: “It’s pretty cool to be able to connect with your clients and know that you aren’t just helping them get into their first home but all the way to helping them plan for a better retirement and protect them with insurances – whether it be life insurance, trauma insurance, income protection or TPD insurance. We are making sure that our Madd Loans clients have secured a mortgage, that they are protected, they have a good budget to work towards and are going to have a nice, fruitful retirement.
“I enjoy helping people, and it’s a beautiful, pure thing to know that you will be there for your customer’s whole journey of life. So it’s not just the home loan anymore, you are there for the rest of their journey, through the good times and bad times.”
Brokers becoming more closely aligned with planners
The discussion around the relation between mortgage broking and financial planning has been brought back into focus since the banking royal commission.
In his final report, released in February, commissioner Kenneth Hayne recommended that brokers become more closely aligned to the rules and regulations that surround financial planning.
Commissioner Hayne recommended: “The advice the consumer seeks is about what ordinary parlance would see as a financial product – a secured home loan. And the transaction about which the consumer seeks advice is very important to the consumer. For many, it will be the most important and the most expensive capital acquisition they make. Why not regulate mortgage brokers in precisely the same way as any other person who is to provide personal advice to a retail client? Why not treat mortgage brokers as financial advisers?
“I know that doing this would bring with it the requirement to provide written statements of advice. I know that it would bring with it the educational requirements expected of other financial advisers. But what reasonable answer can be given to the observation that the special and distinct treatment of mortgage brokers is no more than yet another carve-out from, or exception to, generally applicable rules stated in the law because they are seen as necessary to the proper conduct of provision of financial services in Australia? None is evident to me.
“I consider that, after a sufficient period of transition, mortgage brokers should be subject to and regulated by the law that applies to entities providing financial product advice to retail clients,” he said.