Analysis - Let it grow

Brokers concerned about what the future might hold can take comfort in the fact that they operate in a regulated environment that enhances their customer value proposition.

The NCCP has undoubtedly created a more professional environment – and a more professional broker. The ability to get more from each client is far greater in the post-regulation era.

But the increased competition among lenders has also strengthened the broker proposition amid a heightened sense of confusion amongst consumers.

Potential clients are far more likely to approach a broker for advice about the plethora of products on offer, rather than for the products themselves.

“I’m very confident that consumers will continue to use brokers more and more, chiefly with the licensing coming through, and the advice processes that are put in place will only encourage customers to use brokers,” Connective principal Mark Haron says.

As brokers begin offering a more advice-based service their value increases in a client’s eyes.

One of the best things to come out of the new licensing laws has been a re-emphasis of the broker fact find form.

Brokers are now obligated to record and lodge their fact find with ASIC.

This little document has encouraged brokers to not only gain a deeper understanding of the client but also to identify any additional financial needs.

A regulated industry that promotes diversification in this way can only be a good thing for brokers looking to cross sell into new areas.

The client is given a more holistic service offering from their broker – one that puts their financial needs first.

Maintaining this bigger picture approach is the key to the prosperity and longevity of the industry, Vow Financial CEO Tim Brown says.

“I think as long as the broker can maintain the perception – and it is the reality, in the customers’ eyes that they can get a better deal by going to a broker – then I think that market will continue to grow,” he says.

Aggregation groups will continue to play a significant role in the future to ensure brokers build long lasting client relationships.

“Certainly, from an aggregator’s perspective we need to be much more involved in the growth of the business and leading that through recruitment, training and development,” he says.

While there are sound market opportunities for existing brokers the challenge is to continue to bolster numbers with new entrants.

“We are now employing a recruitment group to help us identify those future candidates.

“We are calling this our succession planning.”

A fresh injection of new brokers into the market is surely a sign of good health and there are strong indications that there is a sound understanding of the broker proposition amongst consumers.

Brokers have now become a point of conversation between homeowners at casual events, where talk of who is the best broker to use has become a common discussion, according to Mr Brown.

“Those sorts of discussions are occurring every week,” he says.

“The discussion that I have with people is that the reason they go to a broker is because they know they are going to get a better rate than if they go to their retail bank.”

This awareness is promoting the profession, establishing brokers as part of the mainstream, and consequently having a positive impact on broker share of the mortgage market.

The share of loans originated through the third party channel has recovered significantly from the GFC.

The most recent JP Morgan/Fujitsu Australian Mortgage Industry Report found that broker usage had stabilised through 2009 and 2010 to a 41 per cent share of the market.