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Infinity Group Australia director Graeme Holm explains why he began charging fees for services and started operating an education model.
Mr Holm believes that there has been a “significant tendency” for the mortgage broking industry to sell a product or a service along with a lower rate.
Rather than focusing only on this aspect of broking, Mr Holm decided to provide education and financial literacy services for clients.
“People will make deeper, profound financial decisions if they’re informed and educated as opposed to being sold a product or service or a loan or a package,” Mr Holm told The Adviser’s Elite Broker podcast.
Mr Holm observed that there are brokers with decades of experience in the industry who are providing this education for free to clients “in the hope of selling a product or a service”.
“To me, it doesn’t resonate with me… we should either be able to bill for our time or we should be able to educate a consumer and cover them holistically,” he said.
“I’d love to see the industry shift away from selling a loan product or package or service and actually helping educate the client.”
Infinity Group began operating a financial literacy and education model, where it employs the services of certified financial planners, chartered accountants and a suite of industry professionals to provide clients with financial education across a two-day program.
The attendees pay a fee for the education service that is provided to them.
“They purchase the education, they invest in the education, and then at the end of the two days, if they want to, they can make a decision to work with us ongoing, depending on their individual needs,” Mr Holm said.
These needs could include clients needing assistance with their cash flow, refinance or loan restructures.
Mr Holm said he has been charging a fee for service for 40 per cent of his business in the last six months, including for services such as the restructuring of loans, product switches and variations.
“All these things that brokers would typically do for free, or maybe, say, ‘there’s no commission here, you need to call your bank and do ABC’, I’ve been charging a professional fee, providing a professional service and having people save thousands and thousands of dollars for that fee in return,” he said.
“I think sometimes we downplay our experience and our knowledge. You do an amazing service for the customer, but there is a business model there in providing advice.”
Another service provided by the group for which it charges a fee is keeping track of customers’ cash flow and creating a recreational discretionary spending budget that is separate to their loan redraw.
Mr Holm said they charge these customers either an upfront fee when they join or a monthly fee.
“There are varying scales, depending on how labour-intensive it is for the consumer,” he explained.
Mr Holm emphasised that mortgage broking is a professional service similar to a financial adviser, where brokers provide written credit proposals, analyse cash flows, budgets and expenses, and credit advice.
He said he would favour a change in the minimum education standards required for someone to become a mortgage broker and a professional service.
“I don’t think it would hurt for us all to get a bit of a refresher and change the way we’re educated and the minimum standards,” he said.
“It would change the industry. It would elevate the industry, and it would elevate our value to the customer.”
To listen to the full podcast with Graeme Holm, click here.
[Related: How Infinity Group is innovating its offering to consumers]
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