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Planning ahead

Jessica Darnbrough 6 minute read

Despite the different skills required, an increasing number of mortgage brokers are diversifying into financial planning – and with great success

Over the past few months, there has been considerable speculation that financial planners will start to enter the third party distribution channel en masse.

While the skills required of each profession and the legislation and regulations that affect them are different – and are about to change significantly in the case of financial planning – the two industries align very well with one another.

Gadens Lawyers’ Vicki Grey says there are numerous benefits associated with brokers who make the move into planning, and vice versa. 

“The benefit is that you can share information, saving a consumer from giving the same info to a planner and a broker,” Ms Grey says. “It’s just more convenient and cost-efficient.


“I think it would be a bad thing if the trend towards convergence was thwarted because I think it is difficult to give sound investment advice without the ability to provide an entry into geared arrangements.”

Ms Grey went on to say that she expects the industries to converge and offer a “cross training” program that allows a solo operator to study both disciplines.

“There will be difficulties with this, but they will be worked out,” she says.

“Both planners and brokers have numerical competence and they understand finance, so whether you’re talking about one side of the balance sheet or the other, ultimately it makes sense to be skilled to deal with both.”

While Ms Grey believes the industry is more likely to see groups that offer both services in-house, it is also possible for individuals to be skilled in both areas.

But not everyone agrees.

Liberty Financial’s Brendan O’Donnell says it is next to impossible for individual brokers to provide both planning advice and mortgage services.

“Diversification is necessary,” he says. “On the mortgage broking side, slow credit growth teamed with borrower caution means brokers now have to work twice as hard

in order to generate the same level of income that they earned a few years ago.

“While both industries will continue to grow, brokers and planners still need to think about diversification and other ways they can make additional revenue.

“There is a lot of talk in the industry about the convergence of financial planning. I don’t believe there will ever be a convergence in terms of one individual providing wealth preservation and credit advice.

“Given the complexity of both industries, the products and the legislation, it would be almost impossible for one person to offer both services.”

Of course, “almost impossible” doesn’t mean “absolutely impossible” and Finance Made Easy’s Tony Bice is testament to that.

Mr Bice is a fully-qualified mortgage broker and financial planner and has offered both services to his clients for years.

While he is the first to admit that it is “difficult” to offer both services, he says it is “far from impossible”.

“To me, it makes business sense to offer both financial planning and mortgage advice,” Mr Bice says.

The power of two

“Today, borrowers are savvier than ever,” Mr Bice continues. “They know where to look for information and, with the advent of the internet, they have a lot of content at their fingertips. Also, they are used to asking for a series of quotes for anything they need, so they aren’t afraid to do this with mortgage brokers as well.

“I often find that my clients have approached two or three different mortgage brokers in their search for a home loan. As soon as I tell them that I can not only look after their home loan needs, but also give them a free review of their superannuation fund which will ultimately save them money, they choose me without hesitation.”

According to Mr Bice, diversification is a “no-brainer” – all mortgage brokers should be diversifying their core services.

“For me, adding financial planning to my armoury of services made sense because they align so nicely,” he says – a sentiment Midas Home Loans’ Marion Kilsby agrees with.

Ms Kilsby believes it is important for “every finance professional to have an array

of skills in order to meet their duty of care obligations.

“ASIC and licensees have ensured that financial planners are well positioned to enter the world of credit advice, as the financial planning industry has been working under extreme levels of compliance for much longer than mortgage brokers,” she says.

“I have personally been providing credit advice and financial planning for over a decade now and I insist my consulting staff is either dual-qualified or undertaking education in both areas of financial advice.

“I take my clients’ needs and my business very seriously.

“Education, experience, attention to compliance and sound business and time management is essential. Quite frankly, cross-ownership works.”

Broker beware

While both Mr Bice and Ms Kilsby agree there are many benefits associated with providing both financial planning and credit advice, they also know there are a few pitfalls of which brokers should be wary.

“If you are thinking of adding financial planning to your skill set, you will probably need to think about hiring a para-planner,” Mr Bice says.

“It is really difficult for a broker to offer credit advice, review a client’s super and complete a risk insurance quote all at once, which is why I hired a para-planner to work with me one day a week.”

Mr Bice says that decision proved not only cost-effective but helped him utilise his time more wisely and ultimately write more business.

“Diversification is essential and diversifying into financial planning really is very effective,” he says.

5 minutes with Andrew Russell, general manager, products and distribution at Mortgage Choice

Why is it so important for brokers to diversify their services?

Customers’ needs are constantly evolving so it is important for brokers to regularly review and build on their customer service proposition. Providing value-adding financial services that are complementary to the mortgage broking service, brokers can obtain greater commission revenue per customer, develop a deeper relationship with their customer and make their broking business more valuable for the longer term.

Mortgage Choice recently launched a financial planning arm for the business - how is this going?

We have successfully executed the business build process and soft-launch for Mortgage Choice Financial Planning. Today, the business is operational with four franchises on board and a strong recruitment pipeline.

The feedback from our broker network on the customer and franchise propositions has been very positive. We are now looking forward to our consumer campaign launch early in the new financial year.

What motivated you to diversify into financial planning?

We saw a strong customer-driven need to diversify into financial planning.

The announcement of the change to the Future of Financial Advice [regime] from 1 July 2013 presented Mortgage Choice with an attractive opportunity to be a true customer champion in this space.

Our model is built around leveraging our large distribution network and lead flow to deliver first class, fairly priced, non-conflicted advice to our customers.

Planning ahead
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