The perfect partnership?

Anecdotally, there is evidence of planners and brokers working together for the benefit of their customers and their businesses.

Some people, however, feel the professions are ‘stepping on each other’s toes’ and working to the detriment of each other.

Despite some disparity in people’s approaches, it might be time for brokers to really consider the financial planning proposition. In fact, the two services are intrinsically linked, according to Michael Mobbs, managing director of M2 Financial Services.

“Buying a house is a wealth accumulation strategy – otherwise you’d just carry on renting. So it’s more holistic to offer both services, whether it’s through referral relationships, additional in-house staff or doing it yourself,” he says.

“When someone takes out a home loan, it’s important to then look at debt reduction strategies, which is part and parcel of the financial planning proposition. So it’s not so much a synergy of the two services; instead, I see them as one service, working together.”

CLIENT SOLUTIONS

Ben Herden, principal of Mortgage Choice Gymea, has recently opened a financial planning franchise to work alongside his mortgage business.

“I just see how it works in harmony,” he says. “I think you’d only be stepping on one another’s toes if the broker was doing the wrong thing and trying to give financial advice, or if the planner was trying to do too much and give home loan advice.”

Mr Herden says that even though the financial planning franchise has only been operating for a short time, his clients have largely been opting in and enjoying the benefits.

“The main benefit of this type of situation is that we’re doing the right thing by the client,” he says.

“We’re not just looking after their home loan; we’re making sure that the client is considering more than the all-consuming home purchase, or the re-finance, or whatever it is that may be the biggest thing on their mind.

“It forces them to take a step back and have a look at their position – firstly from a risk perspective, but also just budgeting.

“We are able to help clients reach their financial goals, rather than just laden them with debt and walk away. We’re here to help them out.”

M2 Financial Services’ Michael Mobbs is both a financial planner and a mortgage broker and says the financial planning element of his business helps him to meet his clients’ needs more regularly.

“For example, it’s worthwhile doing regular reviews with your clients. But if you’re doing an annual review with a client who has just taken out a three-year fixed rate, and you only offer mortgage broking services, there isn’t too much you can do,” he says.

“There are many opportunities if you’re a planner though. You can talk to your client about saving for their children’s future, or renewing their insurance, or whatever it may be.”

BENEFITING YOUR BUSINESS

It’s not just clients who can benefit from the marriage of financial planners and mortgage brokers. Your business can also grow and prosper.

“If you have a financial planner on board or a solid referral partnership, you can own all of your customers’ financial decisions,” says Alan Hemmings, general manager of Oxygen. “It’s about tying it up all together so clients can talk about super, lending, investment strategies and things like that.”

Mr Hemmings says all Oxygen brokers mention the company’s financial services business in their discussions with clients and it’s important to get in early.

“Interestingly enough, more and more people have their own financial planners who they have a strong relationship with. The financial planning business is very much a relationship thing,” he says.

According to Mr Mobbs, having financial planning as part of your service offering simply makes sense.

“By offering more services you don’t have to spend as much time prospecting for new clients,” he says.

“You are able to provide more services to the same clients and are giving your clients more opportunities to use you rather than having to try and seek advice from elsewhere.

“To me, it’s just the common sense thing to do. I’d say roughly 70 to 80 per cent of a new broker’s activities are spent prospecting.

“Why spend all that time finding new leads when you have the opportunity to do more with the clients you’ve got?”

ONE-STOP SHOP?

In order for planning and broking to work successfully together, however, brokers need to have a clear strategy, says Mr Mobbs. “They need to have a passion for it,” he says.

“They need to want to do it for the right reasons and that’s not necessarily just for financial reasons. There are quite a lot of examinations to do.

There are a lot of extra CPD points that you’ve got to achieve. There are a lot more products to keep aware of.

“There are more BDMs and there are more product days. If you’re not careful, you can get bogged down in the back office. I would strongly recommend that brokers either go down the path of working alongside a planner or, if they want to do it themselves, then I would strongly recommend they get someone to support them in the back office and help with the research and para-planning and implementation and the following-up of the actual applications.”

Oxygen’s Mr Hemmings, however, says people may prefer the services to be separate.

“They’re two different skill sets and it hasn’t fully played out yet,” he says. “Thinking about it, you want one person doing your home loan and that side of things, but do you want that same person giving you financial advice?

“I’m not sure how comfortable clients would be with that ‘one-stop shop’. Most people would consider them as separate business dealings and there may be a perceived conflict of interest if you’re doing their home loan and then talking to them about the investment side of things as well.”

Mr Mobbs, however, says that in his experience, people have been impressed with his offering.

“There are more opportunities this way, and I think if you provide more of a holistic service, there are more reasons for a client to recommend you,” he says.

“You will have greater credibility and an edge over a majority of brokers and bank branches. It’s like being a financial general practitioner.”

BROKER VS BROKER: SAME APPROACH, DIFFERENT RESULTS

Ben Herden and Michael Mobbs both saw the integration of financial services coming – and took the same approach. They both became financial planners and mortgage brokers, but they have very different stories ...

“I TRIED to become a financial planner myself because I could see this integration coming – but it was an absolute nightmare.

I couldn’t stay on top of everything, so everything suffered. The planning business suffered and the mortgage business definitely suffered.

It’s very difficult to do everything well.

I now think it’s better to leave it to specialists because you can focus on what you do best and the clients get the benefit of dealing with specialists as well.

We have recently opened a Mortgage Choice financial planning franchise, so we’re running that side by side with our Mortgage Choice home loan franchise – and it’s working far better.

We all work in the same office and every single client gets the offer to sit down with our financial planner. The financial planner will look at everyone’s figures and the planner will have a meeting with them. If the client doesn’t like what the planner has to say, they shake hands and walk away – no harm done.

A vast majority so far though have seen that service and have opted in, so it’s great. It can work absolutely 100 per cent in the broker’s favour.”

“WHEN I left university 22 years ago in the United Kingdom, I went straight into financial planning. So financial planning was my first entry into the financial services industry, but I quickly moved into mortgage broking because I found it was a better way of attracting new clients.

People would actively approach me for finance to purchase property, but they were less likely to seek me out to get insurance or to review their retirement strategies.

So it was really a foot in the door. When I arrived in Australia in 2002, I wanted to carry on the same model and be a planner and broker, but it was more difficult to do over here because my qualifications weren’t internationally recognised at the time. 

There wasn’t the same requirement in home loans, so I went straight into mortgage broking here. My business grew quickly and then when I eventually got some time and took on some staff to look after the back office, I re-sat all the qualifications and examinations and got back into financial planning again.

I think it’s more holistic. I’ve always had a passion for both and I see mortgage broking as part of the bigger picture, as part of financial advice.”