Business outcomes - Stacking the numbers

But brokers are an adaptable bunch – and many are using the new environment as an opportunity to re-shape their businesses and expand their service offering.

Deen Sanders, deputy CEO and head of professionalism at the Financial Planning Association (FPA), says the events of the past year have had a significant impact on the way brokers view themselves and their value proposition.

“We are seeing a lot more brokers wanting to step up their business, improve their depth of knowledge and gain a greater understanding of their client by delivering them a range of financial services,” he says.

These services include financial planning, which many brokers are starting to explore.

So what exactly does it take to become a financial planner?

Mr Sanders says there are some preliminary (and compulsory) educational requirements including two ‘tier’ courses, the equivalent to a diploma qualification under the Australian Qualifications Framework.

The financial services regulator ASIC also requires potential financial advisers to be able to demonstrate nine core skills including the ability to identify their objectives, needs and financial situation and develop and present appropriate strategies and solutions, as well as the ability to negotiate a financial plan.

Mr Sanders says the FPA prides itself on requiring a higher level of education and training to be an accredited financial planner than other industry bodies that offer financial planning “crash courses”.

“Our educational standards are well above industry standard and while we do not expect all financial planners to have obtained a university degree, we do believe it is a good idea because it immediately puts them ahead of their competition,” says Mr Sanders, who is critical of some of the courses on offer by other institutions – despite the fact they may meet ASIC’s minimum standards.

“It is abhorrent that courses such as these even exist – all they serve to do is destroy any semblance of professionalism in the industry,” he says.

Mortgage brokers have long struggled to shake off the perception they lack professionalism by striving to provide excellent customer service and quality advice. In recent times, the financial planning industry has also come under attack as the result of rogue behaviour of certain players (think Storm Financial).

Mr Sanders says the two industries share much in common, but are also fundamentally different. And he says brokers looking to combine mortgage broking and financial planning services need to do so with care.

“Mortgage brokers tend to deal with a niche area in a client’s life such as their current financial arrangements,” he says.

“We anticipate more brokers will look to diversify their offering to include financial planning and I agree that it is feasible to do both. That said, I believe it is incredibly challenging for brokers to be successful in both areas.”

But while Mr Sanders says caution is called for, he says there is merit in brokers offering both services.

“One stop shops are the way of the future,” he says.

CASE IN POINT

Required Financial Services is one company that has successfully managed to combine financial planning and mortgage broking services.

The independent, family-operated business decided to offer both services under the one roof with a view to becoming a ‘one stop shop’ for their customers.

Director Anthony D’Alessandro is the company’s only employee accredited in both broking and financial planning, and says he has been able to successfully combine both skills.

“Financial planning operates under significant regulation and licensing requirements and mortgage broking has started to head in the same direction. With licencing regimes fast approaching, it is a good time for brokers to get their accreditation as a financial planner,” he says.

Managing director Frank D’Alessandro says mortgage brokers are in an ideal position to provide financial advice to their clients because they are already across their financial history.

“Mortgage brokers operate by the philosophy ‘know thy client’, which is why they have the ability to service their clients’ other financial needs and present them with professional, trustworthy advice,” he says.

But he concedes that doubling as a broker and financial planner is not for everybody.

“Given the current lending constraints, brokers are realising they can add to their back pockets by diversifying their service offering. However, there is a danger of becoming the ‘jack of all trades and master of none’,” he says.

Required Financial Services recently implemented a ‘fee for service’ model alongside its traditional commission-based model, which Frank D’Alessandro says provides clients with transparency.

“Some customers still prefer to pay in commission [but] personally, we believe the ‘fee for service’ model is the way of the future,” he says, adding: “As long as you are constantly checking back in with the customer and continue to give them support and advice, they will know they are getting value for money.”