Diversify with non-banks

MKM Capital’s credit and compliance manager, Mary McGowan, says non-conforming  finance is a challenging but potentially lucrative sector for brokers to consider.

“With commissions on standard residential loans lean and competition fierce, diversification into non-conforming loans represents a way for brokers to earn higher commissions, charge the customer a mandate for brokerage and earn a repeat commission when the loan is later refinanced to a mainstream lender,” she says.

Ms McGowan stresses that non-conforming finance isn’t for everyone and demands a new skill set. However, that just makes it an even greater point of difference for those brokers who are willing to give it a go.

BMC Mortgage Company’s national sales manager, Rob Maloney, is also a believer in diversification, which he says can help brokers manage the “fierce competition” in the home loan space.

“Being able to offer all types of insurance, commercial lending and leasing all assist with being a one-stop shop for clients and builds an increased income stream for a broker,” he says.

Deeper customer relationships

Liberty Financial was founded on the basis of offering a diverse range of products especially designed for brokers, explains national sales manager John Mohnacheff.

“We pioneered the custom home loan market in Australia and extended this innovation to motor vehicle finance, SMSF lending and commercial mortgages,” he says.

“We ensure our accredited brokers have access to the best range of products and our experienced BDM team is available 24/7.

“Further, direct access to underwriters across our diversified range of businesses means greater convenience and support for our business partners.”

Mr Mohnacheff says Liberty can help brokers move outside their comfort zones.

“No matter what experience a broker may have, Liberty has the ground support to successfully assist our business partners offer new solutions to grow and deepen customer relationships,” he says.

Why is diversification so important? Ray Hair, general manager of sales at Homeloans, says diversification gives clients greater reason to return to their broker.

“I’m a big believer that no one owns the customer other than the customer, but everybody understands the marketing rule that the more products you provide the customer, the stickier they are and the better the relationship you have,” he says.

Mr Hair notes there are two ways to grow any business: win new clients or sell more products to existing clients. The latter is the cheaper option, he adds.

Brokers are more likely to retain their clients if they offer them relevant add-ons like insurance and car loans, he says.

Mr Hair also says that brokers who limit themselves to residential finance are confining themselves to “the most crowded space” in the market.

Selling multiple products positions the broker as a “trusted adviser” to whom clients are more likely to turn when they have major  financial decisions to make.

In his experience, the more successful the broker, the more likely they are to have diversified business models.

“If you don’t look after your customer, someone else will,” Mr Hair says, referring to bank branches and other brokers.

However, he adds that this doesn’t mean smart brokers try to become all things to all people.

“They will act as the gatekeeper and they will look to provide that customer with a solution, and that may well be through a relationship with someone else who is qualified in that area,” he says.

Go commercial

Brokers who diversify are also better protected against market changes, according to Sintex’s general manager, Cathy Dimarchos.

One way Sintex helps brokers to broaden their income sources is through wholesale commercial loans, which are 20-year terms with a ‘set and forget’ product, she says.

“Our staff are accessible directly for any assistance at all times and will assist with training needs and packaging-up deals,” she says.

Ms Dimarchos says brokers just have to tell their network that they are now offering commercial finance and they will immediately see new enquiries come through.

“It’s a delight to see that brokers are breaking down the barriers and perception of commercial loans being difficult,” she says.

“With the Sintex commercial loan, the process is simple and transparent and the team here is focused on service, which I suspect is the reason why we are seeing anincrease in volumes and accreditations.

“Our niche is small-ticket, non-specialised commercial loans; therefore keeping it simple makes the process for the broker and the consumer easy. We have quick turnaround times and this ensures a positive outcome
all-round.”

Five reasons to diversify