ANALYSIS With the role of a broker having changed drastically since the Cert IV was first brought in, should the qualifications change to better reflect modern-day broking?
While the job of a mortgage broker may only be 30-plus years old (with the first generation of brokers now retiring), it has been through a huge evolution since that time.
Gone are the days where brokers were merely introducers faxing over client names, with mortgage and finance brokers now offering complete credit advice and having to wear many hats.
As lender offerings expand, client circumstances get more complex, and interest rates rapidly change, brokers need to spend more and more time staying up to date with credit policy and ensuring clients know what’s in their best interests. The complexity of the market is seeing more and more people use a broker, with mortgage brokers writing 74.1 per cent of all home loans in Australia now.
Brokers aren’t just expert credit advisers, though; they also need to be compliance managers, marketing specialists, HR managers, and everything else that is involved in running a small business.
But are brokers being adequately prepared for what it takes to succeed in this industry?
Currently, the minimum requirement to be a broker is a Certificate IV in Finance & Mortgage Broking. It’s been that way since the National Consumer Credit Protection Act (NCCP) came in circa 2009.
While brokers can also opt to do a Diploma in Finance and Mortgage Broking Management and need to be under a mentor for two years, the fundamental content of these programs hasn’t really changed.
But putting together a loan application and identifying client needs now is radically different now to what it was following the global financial crisis.
Back then, there was no pre-assessments or pre-approvals or comprehensive credit reporting – being a broker was seemingly a lot more sales-based and a lot less technical- and process-based.
At The Adviser’s New Broker Academy roadshow, which travelled to Brisbane, Sydney, and Melbourne in June, a common theme that emerged was how surprised new entrants were at the sheer volume – and vast array – of work brokers needed to do.
This begs the question: are the qualifications for becoming a broker adequate?
Speaking to The Adviser for its New Broker podcast, Resolve broker Tayla Phillips said she didn’t think so.
The Western Australian-based broker entered the industry 14 months ago and has undertaken a Cert IV and a diploma. Speaking of her experience, she said: “I just thought: How is this Diploma relevant... it didn’t hold much weight in my day-to-day role as a broker.”
What are broker qualifications missing?
Phillips said: “I would probably put in there more emphasis on scenarios that are actually relevant to today’s world. There wasn’t too much on self-employed trusts or company set-ups – but we see quite a lot of that now because I feel as though out of COVID, so many people have taken that leap into self-employment and the market is just saturated. Especially with first-time buyers, a lot of them are self-employed.
“[But] that space was quite foreign to me when I jumped in. And that’s definitely something I think should have been more inserted in the program.”
She said that she also thought broker qualifications should include modules on reading/understanding payslips, particularly if they include bonus or overtime income.
She said: “Every single payslip is incredibly different. I had a particular scenario where overtime and bonus income was the most prominent income. I hadn’t been exposed to that scenario before [and the lender didn’t accept it]. So, going through that originally was difficult because of that income scenario.”
According to the Western Australian broker, a key part of her success has been the training provided by her brokerage, Resolve Finance.
“Before I joined Resolve, it was very, very apparent that that was the direction I needed to go in. Purely because of the way that they marketed their mentor program… having that support in an industry that is obviously incredibly compliance driven and holds a lot of risk, I needed to ensure that my longevity as a broker was going to be set up really, really well,” she said.
“And for me to do that, I needed a solid mentor program, resources and people around me that could help me. And Resolve, by far, I knew was going to be the place for me and has definitely stood out.”
‘The industry is failing massively on how it brings new people into the industry’
Similarly, Tom Hawley – co-founder of Top 25 Brokerage Azura Financial – told The Adviser he thought how the industry deals with new-to-industry brokers in particular was “a bit of an issue”.
Speaking on the Elite Broker podcast this week he said that being a broker involves mastering a wide array of tasks, from application processing and compliance to understanding diverse bank products.
Additionally, brokers must excel in client management; grasp financial intricacies like interest rates and contracts; and acquire business acumen encompassing team management, tax responsibilities, client acquisition, and referral management, among other aspects.
“The industry, I think, is failing massively on its ability or its program around how they bring new people into the industry,” he said.
“To expect people to go and sit down in a room with someone who’s not a broker and do a [short] course and then they go: ‘Okay, off you go, get accredited, go and write loans’.
‘To put it lightly, I think it’s a bit of a joke, to be honest.”
Instead, he said the diploma should cover 16 subjects, starting with the fundamentals of finance, property transactions, loan processing, and products before going into how you actually set up a brokering business, etc.
Hawley said he believed new-to-industry brokers “should be made to go into teams and be well trained so that they have all the tools and the capabilities needed to actually be professional brokers”.
He said that several of Azura Financial’s top-performing brokers had “come out of working in a high-performing team for a couple of years” and were exposed to “really high deal flow and a wide spread of deals of different complexities” and could learn how to manage a database and how to efficiently manage an application through start to finish.
“It’s like anything, you don’t know what you don’t know. But if someone could just open the windows and show you how it works, and then all you’ve got to do is… figure out how to get clients and manage that business development base,” Hawley said.
“I ask so many questions in [our] office and there’s always an answer out there,” he told the Elite Broker podcast.
“And I just always think to myself: ‘If I was a broker on my own, how would I be able to get as good a result as quickly?’
“The actual job of the broker has changed, but so much of the industry is still left in the past.”
What do you think about the adequacy of broker qualifications? Are they appropriate for what it takes to be a new broker? Let us know in the comments below!
[Related: Should there be a separate accreditation for SMSF loan writing?]
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