WHITE LABELLING: Selling the benefits

Selling white label loans may sound like a challenge but, as The Adviser discovers, it is actually not that difficult

Today’s borrower is financially savvy, and before they even meet with a broker, they are likely to have a good idea about and understand their borrowing options.

They have probably investigated how much they may be able to borrow, the type of loan that will suit their needs and the cheapest rates on the market.

They are comfortable asking their broker questions and pushing back on a loan option if they don’t like it.

But while they have greater knowledge of their options – due primarily to the wealth of information available online – they are sometimes overly confident

Many believe they know all there is to know.

As a result, brokers not only need to know the intricacies of products and lenders, they also need to demonstrate that they know more than the borrower. They have to be able to articulate clearly how and why they add value.

This is where white label products can help the broker as well as the borrower.

While many borrowers will know all about the rates offered by the big four and even the non-majors, few will know as much about white label products.

White labeling gives brokers the opportunity to impress their clients.

As PLAN Australia’s chief executive, Brett Mansfield, explains, white label products are simple, competitively priced and flexible both in functionality and service.

“There are definitely a lot of benefits associated with white label products,” he says.

“These loans are very simplistic – they don’t come with all the bells and whistles that other lender products have. This not only makes them suitable to a larger audience, but cheaper as well.

“Because they don’t have a lot of the features that other [products] have, they can be sold [with] lower interest rates” – something Advantedge’s general manager for distribution, Brett Halliwell, agrees with.

“Advantedge has offered the lowest rates for some time,” Mr Halliwell says. “Take our two-year fixed rate for example: We cut that rate to 4.79 per cent at least two months before the other lenders followed suit.

“In fact, we released our 4.79 per cent two-year fixed rate at a time when other lenders were doing cartwheels about releasing 4.99 per cent fixed rates.

“Advantedge is committed to offering fixed rate products, available exclusively through the broker channel, that are ahead of the pack.

“We’re constantly listening to broker feedback and working hard on improving our offering to give our brokers and their customers the product, price and service offering they deserve.”

Perfecting the pitch 

But while white label products may be simpler and more competitively priced, selling them to clients is sometimes easier said than done.

And with the banks enjoying the advantages of accessibility and visibility, pitching and selling white label products may seem like an intimidating challenge to some brokers.

Choice chief executive Stephen Moore says brokers have to take the time to explain exactly what white labeling is.

So, how do brokers sell a white label solution to their clients?

“It’s all about listening,” Mr Moore says. “If you listen to what your clients’ needs are, you will often find that a white label solution caters perfectly to those needs and then you can explain that to the client.

“You can show them how this product not only matches their needs but will effectively save them money.”

If a borrower can see that a product will save them money, concerns about branding can often take a back seat.

“A lot of borrowers are price-driven,” Mr Moore says. “They want a good rate on their home loan and a white label solution will provide them with just that.”

Nevertheless, borrowers’ concerns about other issues, including branding, should not be overlooked.

“A majority of borrowers will not know what white labeling is,” he says. “As such, they could have some concerns around the future stability of their loan.

“Buying a home is the biggest financial decision a person can make. When a borrower is buying a home, they want to know that their asset is protected. They do not want to align themselves with an unknown lender who could fall by the wayside in the event of another GFC.”

To combat this concern, Fast’s chief executive Brendan Wright says brokers should discuss the product’s funding lines with their client.

“If you can explain to them that the product is backed by one of the big four – in FastLend’s case it is NAB – and then further detail how the white label product delivers the client the flexibility of a smaller lender and the stability that comes from being associated with one of the big four, you should have no trouble in getting the deal over the line,” he says.

White label products, says Mr Wright, offer borrowers the best of both worlds – something that should be highlighted to clients.

“It is important that borrowers know they will receive excellent service, excellent pricing and product flexibility,” he says.

Mr Moore adds that once a borrower understands the benefits associated with white labeling, they are usually more than happy to be put into this type of product – with several associated benefits for the broker.

“White label solutions come with higher commissions and can help create stickier clients,” he says.

“Think about it: If a borrower has a question or concern about their loan in the future, they will not go to the bank branch, they will go directly to the broker.

“White labeling eliminates channel conflict.”