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More than a broker

Michael Masterman 4 minute read

In 2013, the mortgage and finance broking industry continued down the path of convergence, with brokers now offering more products than ever before

The broking industry has been moving towards integration for several years now and 2013 saw a clear continuation of that trend.

A recent survey conducted by The Adviser revealed that 70.5 per cent of brokers have integrated additional products or services into their offering in the past 12 months, while 52.9 per cent said they intended to add more products or services in the coming year.

More than 85 per cent of The Adviser’s 2013 Elite Business Writers already offer additional products and services, with 50 per cent having added revenue streams in the past year.

SMSF loans are popular among these top 50 brokers, with 60 per cent now offering SMSF products.  The self-managed sector is the fastest growing area within superannuation in Australia and, not surprisingly, it has as attracted both considerable attention and debate.

In response to the speed at which SMSF loans were being included in brokers’ offerings, the MFAA launched a tailor-made training course offering SMSF lending accreditation. With 130 brokers enrolled in the initial program, MFAA chief executive Phil Naylor says he is pleased to see so many taking the opportunity to expand their expertise and scope for service.

“More than 3,000 SMSFs are being established each month in Australia and, with the proper training, mortgage brokers have the opportunity to deepen their relationships with clients through managing the process of gaining a loan for clients’ SMSFs,” Mr Naylor says.

Mr Naylor has previously expressed concern that some brokers were unclear about exactly what they could and could not advise on when it came to SMSFs and SMSF lending.


“At the end of the program, participants will have a thorough understanding of their role in setting up and managing SMSFs, understanding borrowers’ investment strategies and the risks involved, project management of the process, debt reduction strategies, continuity and liquidity reviews,” he says.

Foray into financial planning

In a significant development in 2013, one of Australia’s leading brokerages made the move into the financial planning space. Mortgage Choice launched a financial planning arm to complement its core mortgage writing business.

Michael Russell, chief executive officer at Mortgage Choice, said there were two main reasons why the brokerage decided to integrate financial planning into its offering:

“Firstly, we believe that all Australians have the right to advice they can trust and understand from experts who will take the time to recommend appropriate choices for their needs.


“We thought it was time to expand our offering to help our customers with other important financial decisions,” he said.

“Secondly, our franchisees told us that a financial planning arm would help them fulfil their duty of care and ensure their customers are correctly insured for the future and protected against any mishaps.

“More importantly, diversifying our core offering to include financial planning really helps us invest for the future,” says Mr Russell.

Brokers' best options

For as long as brokers have been told to diversify their offering, there has been debate about the best way to do so.

According to an industry survey conducted by The Adviser earlier this year, 60 per cent of brokers looking to integrate within the next 12 months will do so through adding additional revenue streams in-house.

Whilst this form of integration has many advantages, such as stronger ‘ownership’ of the client, it has several drawbacks. Undertaking additional training can be costly and time consuming, while many brokers believe taking on too much can create a ‘jack of all trades, master of none’ situation.

According to Mr Russell, Mortgage Choice strongly believes that financial services professionals should remain specialists in their own chosen field.

“We do not believe that a mortgage broker or financial adviser should wear multiple hats. As such, our financial advisers are specialists in providing financial advice and [they] work alongside our mortgage broker,” he says.

According to Mr Russell, this model ensures customers receive specialist advice while retaining the convenience of only having to provide their information once.

“In other words, the customer benefits from the specialist expertise of a broker or an adviser with the added convenience of a one-stop shop,” he says.

For the future

The trend for integrating additional products and services is not likely to stop anytime soon. “We believe diversification is the way of the future,” says Mr Russell.”

Mortgage brokers will continue to expand their suite of services in line with customer demand, he adds.

In recent times, the industry has recognised the need to provide more than just loan writing services as customers expect more from their brokers. Amongst other things, the excess of information available to consumers online has contributed to the changed broker proposition.

Kathy Cummings, former executive general manager, third party and mobile banking at CBA told The Adviser brokers are now expected to provide advice.

“Brokers are increasingly being sought out by consumers as an ‘advice” channel, and they need to leverage this to their advantage,” she says.

Mr Russell says he believes that more than ever, modern consumers rely on experts to provide them with advice on all their financial needs.

“Those who are able to provide that expert advice in-house or refer their clients on to trusted referral partners, will be able to build stronger relationships with their customers, ultimately creating repeat and referred business opportunities,” he says.

More than a broker
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