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Most aggregators recognised the importance of diversification when the broking boom began seven years or so ago. In the intervening years they have worked hard to provide their members with both the products and support needed to embrace diversification, but have met only limited success.
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Until a couple of years ago most brokers still preferred to focus on their core residential offering rather than dip their toes into other areas. But times have changed.
Of course, there is still some debate over what diversification really means.
For some it is the integration of wealth management and financial planning services into the overall client offering, while for others it may simply mean the capacity to provide insurance.
Whatever your interpretation, one thing is clear – brokers need to adapt to the changing environment, and more importantly to the evolving needs of their clients.
To critically assess just how far diversification in the broking industry has come Mortgage Business recently surveyed PLAN Australia, FAST and Choice Aggregation Services members.
The results reveal that today less than 7 per cent of brokers now focus solely on offering residential mortgage products – highlighting not only the transformation the mortgage broking industry has undergone in recent years but the strength of its diversified offering today.
Some product areas are clear leaders as alternative revenue streams, with insurance and commercial finance ranking the highest. However there is strength across the board – from financial planning to personal finance.
But while there is little doubt that brokers have by and large heeded the diversification call, residential mortgages still account for the lion’s share of their revenues.
Nearly two thirds of the survey’s respondents said revenue from products or services outside of residential mortgages account for less than 10 per cent of their income, although this figure may well change with time.
For many brokers, change has doubtless been a necessity.
Commissions are significantly lower than they were a year ago and while there are pockets of activity, the residential property market is a long way from its boom days of earlier this decade.
These factors, coupled with greater competition as broker numbers exceed the 15,000 mark, have meant fewer dollars on the table.
Diversification heralds a new era in broking – one that I believe reflects the maturing of the industry.
With new legislation just around the corner, now is the time for brokers to truly embrace diversification and take their business potential to a new level.
