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The prospects that lie in asset and equipment finance depend on how brokers utilise this space, writes Angelo Lauro, chairman of myFNI – the auto and asset finance committee backed by the FBAA.
For all brokers, I would think that it is important to diversify their service offering to clients – a large opportunity if you look just at the client retention benefits.
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There are key factors when looking to value-add for clients, such as the ability to market to the client base, having access to the required products and potentially the experience in processing an asset product, which is different to processing a home loan.
There are multiple benefits, starting with profitability and client retention as the top. I believe diversification is the key to maintaining profitability in a business, which is why particular brokers have succeeded through the GFC and beyond.
It’s also good business to get more out of your existing clients. If you can supply a range of services to your clients, it supports an improved ROI and also improved client retention.
Are there more brokers coming into the asset and equipment finance space? Yes and no. Yes, because there is a basic understanding of serviceability, data collection, sales and client management. No, because the lack of understanding of the asset finance process and product knowledge. Asset lends are not rate-shopped – lenders profile customers based on the submission and rates are set from there, so this can be a huge hurdle for many brokers to get over.
There are a range of support services offered through the FBAA, including toolkits and partners who specialise in asset aggregation, asset insurance, compliance, training, and a large support network of lenders for which you can access.
For those brokers who are considering whether or not to offer asset and equipment finance, here are some tips:
- Research the market and products. Get an understanding of what’s involved. Don’t assume that because you can process a home loan that it’s the same as a car or asset lend.
- Determine your commitment level – how much time do you intend to spend on this?
- Decide whether you will process the asset lend or partner with an aggregator or another broker to process these transactions.
- Prepare a marketing plan and budget.
- Launch your marketing plan and go for gold.
The market is very much about diversification and this topic is spreading. Not only are mortgage brokers looking at asset finance, but you are finding that motor dealers are looking at asset and home loan lending to add to their value-add services.
