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Despite a tumultuous year of regulatory and media scrutiny, the fact remains that customers are still choosing mortgage brokers, an industry executive has said.
Speaking with The Adviser, Michael Trencher, who left his role as head of broker distribution at Heritage Bank to launch Impact Consulting, a business coaching and consultancy practice for the mortgage and finance industry, said the most important thing to remember is that borrowers are still choosing brokers, despite the misinformation that has spread about the industry throughout the year.
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“In my mind, the customer choice always [overshadows] everything else… It all comes down to your customers to believe in mortgage brokers and to trust mortgage brokers – and they’re still using mortgage brokers,” he said.
“The broker channel [is] actually growing in terms of customer sentiment and customer preference, [which] signals to me that it’s a very strong industry.”
Mr Trencher added that it’s often forgotten that customers have the discretion to walk away from their mortgage broker during any stage of the relationship.
“They can pull out of it from the very first phone call or first interview right up until settlement. They have no obligation to stay with that mortgage broker. They can say, ‘thank you, I don’t want to use you anymore’,” he said.
“They can go directly to a bank and they’ve chosen to stay with the broker all the way through. To me, that’s really powerful.”
Reflecting back and looking forward
The Impact Consulting director said that despite the events of the year – such as the the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and, before it, the Productivity Commission’s review of competition in the Australian financial system – brokers have once again demonstrated their resilience to internal and external challenges, steadily growing their business.
As such, he suggested that brokers dedicate some time to reflect on their achievements this year to understand which strategies were (or were not) effective.
“I would suggest brokers look back on their successes this year… and see how those successes lined up against the business plan. Did they meet, exceed, or fall short in terms of their [goals]?” Mr Trencher said.
The next step is considering the impact of the initiatives, processes and strategies that didn’t work well.
“Brokers should be considering: why [certain things] didn’t work well, what went wrong, what the issues were. Was it a system issue? Was it a process issue? Was is a people issue? Was it a financial issue?” Mr Trencher said.
He added that financial outcomes are “obvious” but important to consider, particularly whether the activities that brokers had focused on in 2018 were revenue-generating or had they invested time in activities without capitalising on them.
“Did they focus too much on administration instead of revenue generation? These things can be assessed by simple things like customer surveys,” the director said.
“It’s all about giving customers the right experience so they refer you… word-of-mouth is just so important for [broking businesses].”
Once having identified where there are areas of improvement, Mr Trencher suggested creating an action plan for next year to ensure better success, which could include adopting platforms that promise to improve efficiency, diversifying into other areas of lending or financial services, recruiting staff, or boosting marketing efforts.
[Related: ACCC report highlights need to preserve broker model: AFG]
