While white label products share many similarities with products offered by mainstream lenders, as The Adviser discovers, there are also some noteworthy differences
Before a broker sells a white label product to their client, they must first be sure not only that the product is ‘not unsuitable’ but also that it is ‘perfectly matched’ to the client’s financial needs.
The product needs to beat those offered by the competition – and in more ways than one.
The broker should believe that the product suits the client’s needs, is competitively priced and that the lender will provide exceptional service.
Advantedge’s general manager for distribution, Brett Halliwell, says the white label products offered by Fast, Choice and PLAN manage to do just that.
According to Mr Halliwell, the various white label solutions offered by these aggregators, and funded by NAB, can easily and effectively compete with any lender across a range of metrics.
Price is just one area in which these products are highly competitive, Mr Halliwell says.
“Take our two-year fixed rate for example,” he says. “We lowered that to 4.79 per cent at a time when most of the majors were doing cartwheels about offering the same product at 4.99 per cent.
“We understand that many borrowers are driven by rate, so we aim to be market-leading in this area at all times.”
Choice’s chief executive, Stephen Moore, says the aggregator’s decision to keep the products “simple yet flexible” has ultimately helped to keep the price down.
“Our white label solutions are simple. They don’t have things like offset accounts, which means we can produce them at a lower cost – a benefit we ultimately pass on to our borrowers,” he says.
While a ‘no frills’ approach to features allows white label products to be priced competitively, will clients be disadvantaged by not having features, such as an offset account, included in their home loan package?
Mr Halliwell doesn’t think so.
When creating its white label solutions, Advantedge conducted extensive market research to uncover exactly what it is borrowers want from their home loan – and the results were surprising, says Mr Halliwell.
“Our research showed us that borrowers don’t necessarily want an offset account, but they do want a redraw facility,” he says. “We found that many borrowers would be happy to pay down their loan at a faster rate if it meant they could redraw that extra cash any time in the future.
“So, we created a white label solution that allows them to do just that. They can redraw funds from their mortgage online or via a debit card.”
But while a broker can set up a redraw facility for their borrower as part of the home loan, one thing they cannot do is align the mortgage account with their other bank accounts.
“Some borrowers like to have all their accounts in the one place so that they can log in to their internet banking and see everything all at once,” he says.
“Unfortunately, aggregators don’t have a branch presence, so they can’t handle all of a client’s banking needs.”
But while not having a branch presence could be considered a disadvantage in this context, in other situations it could be seen as a positive.
PLAN’s chief executive, Brett Mansfield, explains that not having a branch presence eliminates any type of channel conflict.
“Brokers can rest assured that when they sell a white label product, if their client has a question in the future, they will go straight to their broker rather than the branch,” he says.
“Brokers don’t need to worry about having their clients poached from beneath their nose. They will always own that client relationship – which ultimately leads to stickier clients.”
Better yet, by having no branch, brokers are able to get loans turned around faster and with greater ease.
“Brokers have direct access to the credit assessors – something they don’t have with all the banks,” Mr Mansfield says.
In fact, he adds, brokers can get formal approval for their white label home loan application within a few days. This is achieved through working with a strong team all working under the same aggregator brand.
With fewer conflicts of interest, loans are approved faster and with less hassle – which is a win for both broker and borrower.
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