Spotlight: Astute

In the early days, the role of the aggregator was to negotiate commission payments with the lenders and provide product training for brokers.

Today, it is more around helping people grow their business offerings and providing support in other business systems like IT, marketing and compliance.

Technology, compliance and regulations have all evolved over the years – keeping our members abreast with the latest changes and guidelines has become a large part of an aggregator’s service.

How is Astute’s business model different from other aggregators?

We operate a fully integrated financial services model. We are not just a mortgage aggregator – we have specialists in all facets of financial services, including mortgages, commercial, equipment finance, insurance and financial planning.

A large number of our members that started on this journey with us were single operators running mortgage businesses, and have now developed into large businesses with numerous members, offering a complete range of products and advice to their clients. Seeing these businesses grow and prosper is very exciting and validates our strategy.

Another key differential for us is that we’re big enough to matter, but small enough to care. We offer our members a very personal service, supporting them around IT, marketing, compliance and sales support.

What has been Astute’s focus the last two years?

Our complete focus over the last two years has been around diversification and helping our members integrate new opportunities into their business. We believe the day of being an individual broker offering a single product is fast disappearing – that’s not to say brokers shouldn’t specialise, because we believe they should.

Being the go-to expert in a particular discipline is very important, but clients are now looking for more than that.
Generally people are time-poor and the world of finance has become complicated, so clients are looking for someone to simplify the complex and help them navigate through all of this.

When we first started on this strategy, 90 per cent of all revenue was generated from mortgage broking activities. Now less than 50 per cent is from mortgages, and the rest comes from our commercial, equipment finance, insurance and planning divisions.

We see a day in the not-too-distant future where mortgages contribute around one-third of our revenue.
Astute purchased a stake in Australian Mortgage Brokers in 2009. Why did you decide to fully acquire the boutique broking franchise group?

When the GFC hit, we were approached by a number of businesses about acquiring or merging, but we don’t believe in acquiring for acquisition’s sake – we make sure that any organisation we partner with has a similar culture and strategy, and is the right fit for our members and customers.

So, when the opportunity to become involved with Australian Mortgage Brokers (AMB) came about, we jumped at it, and we’re happy to announce we recently finalised Astute’s complete acquisition of AMB, which includes a full rebrand of the more than 50 AMB franchises to the Astute name.

Do these types of acquisitions reflect the way the industry is going?

There are definitely not as many opportunities to acquire businesses as there were five or six years ago. What we find is a concentration with some of the banks buying up distribution – for example, the FAST, Choice and PLAN acquisitions by NAB, and the Aussie Home Loans acquisition by CBA. There’s definitely more competition out there for potential targets, but there’s a limited number of those companies as well. However this will change over time, as new businesses enter the industry and innovators change the way business is done.

What benefit do companies such as brokerages get from partnering with Astute and using its name?

It gives their business scale and presence, and allows them to easily establish their core values and strategy. We provide support through the back-of-house operations to free members’ time to concentrate on the important role of looking after their clients.

However, let me just reiterate, while we have branding opportunities for our members, we are primarily a wholesale financial services company. We work closely with all our members, irrespective of the brand they carry. Our role is to help all of our members grow their businesses.

How does the changing regulatory environment impact a group with such diverse offerings?

There is no doubt that it has an impact, especially in headcount and workload. But anything that provides greater transparency and comfort for customers can only be a positive. At Astute, we’re happy to be part of any changes that promote the industry.

We’ve always thought that it is better to have the latest compliance measures in place to make sure that we’re operating in an effective and transparent manner, so it really is a natural part of the process – the fact that Astute’s members were operating in an NCCP environment two years prior to it becoming a requirement is evidence of our philosophy on regulation.

What challenges await aggregators in future?

Digital disruption is definitely one. We’ve also recently seen other industries looking to move into financial advice and lending – notably CPA Australia, as well as supermarket giants Woolworths and Coles.

At the end of the day, I think these challenges are fantastic for aggregators and for the industry, as it’s forcing current market players to ensure that we’re continuing to evolve our product and service offering, and demonstrating value.

Competition is a good thing – it means that the industry is continuing to grow. These changes keep us on our toes and make sure that we’re the obvious choice – and the best choice – for clients to come and talk to about their financial needs.