Broking continues to be a “beacon” for those seeking a career change as well as for accountants and other financial services providers, the founder of an education group has said.
Dr Mark Sinclair, founder and principal of Mentor Education Group, said that while the finance and mortgage broker sector has undergone many structural changes in past years, it has also been the beneficiary of consumer “disenchantment” with the major institutions, especially their lending/client care and service practices.
As such, the principal noted that broking continues to be in strong demand and many people are qualifying to become brokers.
Highlighting recent MFAA figures, Dr Sinclair said: “With respect to home loans, consumers in growing numbers are voting with their feet choosing brokers over the banks as the provider for lending options.
“This upward trend in consumer sentiment can only be good news for the mortgage and finance broker sector and practitioners.”
He added that while robo-advice and fintechs are growing in popularity, consumers are reluctant to entrust large purchases and significant financial undertakings to an app or computer screen, suggesting that they instead demand the reassurance of person-to-person engagement with an industry professional.
Mr Sinclair therefore outlined that broking was a “beacon” for individuals seeking a career change or potential to establish an advisory-based business with growth potential prospects.
Highlighting that Mentor Education launched its Diploma of Finance & Mortgage Broking Management (DFMBM) last year, Dr Sinclair noted that more than 160 people had undertaken the course with “momentum continuing this year”.
Dr Sinclair continued: “We are seeing more and more demand coming through for our Diploma of Finance & Mortgage Broking Management.”
Accountants increasingly looking to offer broking services in-house
According to the head of the education provider, demand for the broking diploma has largely come from five sectors: new entrants to the mortgage broking industry, real estate agents, accountants, small business operators and financial planners.
“It’s a natural extension for many in the finance industry, such as accountants, who wish to be a trusted adviser and move towards a traditional or holistic service provision,” the principal said.
Further, Dr Sinclair said that accountants particularly were looking to broking as they replace their previous SMSF offerings with others offerings.
He said that between than half and three-quarters of accountants want to refer to brokers, while about 25 per cent want to form a joint venture or partnership with brokers.
However, Dr Sinclair told The Adviser that up to one in 20 accountants who were referring to mortgage brokers are now looking to bring that service in-house.
He said: “Accountants see themselves as a trusted adviser and they do want to provide a complete and holistic service. If the client is asking them about self-managed super funds, investing in property, etc an accountant would either want to refer to a trusted colleague or do that in-house.
“But there is the desire and impetus for accountant to be looking outside the traditional tax returns and the traditional areas of service because of this level of industry change, from ATO automation of tax returns to new accounting packages.
“The trend towards investment property is a matter of significance and real estate and property is very popular in Australia at the moment. It’s something you can’t ignore… They want to provide all they can for their customers, they want to be part of that conversation as a trusted adviser.”
Providing a “one-stop shop” for financial advice has been a common trend recently, the Financial Planning Association has backed calls for financial planners to provide credit advice, while some brokers have suggested that the brokers of the future will also offer advice.
However, the financial regulator has recently identified property one-stop shops as an area of “significant concern”, especially when looking at self-managed super funds.
“These models tend to promote the purchase of geared residential property through an SMSF, arranged by groups of related real estate agents, developers, mortgage brokers, accountants and financial advisers,” the regulator explained in a recent report.
The one-stop shop model, according to Report 575: SMSFs: Improving the quality of advice and member experiences, creates inherent conflicts of interest that may affect the advice given to a client to set up an SMSF, make subsequent investments or use specific services.
“These conflicts can arise from direct or indirect commissions, referral payment arrangements, representative remuneration structures or even management pressures.
“In light of the findings from this project, we will continue to conduct surveillance on these property one-stop shop operators and take enforcement action where appropriate.”
ASIC said that it will also work with other regulators, including the ATO and APRA, to develop a holistic approach to addressing problems that it is seeing with property one-stop shops.