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By: Belinda Luc
More than two thirds of brokers now offer a diversified product range, recent research conducted by The Adviser has revealed.
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According to The Adviser’s 2010 readership survey, a significant proportion of the 353 respondents said that they offered additional products to residential mortgages.
Commercial lending ranked highest at 66 per cent, insurance 53 per cent, leasing and equipment finance 52 per cent, business finance 45 per cent, personal loans 41 per cent and financial planning at 16 per cent.
According to AFG general manager - sales and operations, Mark Hewitt, brokers have actively diversified their offering because of changing market conditions.
"Changes in the market place including remuneration structures, increased competition, regulatory change and a greater understanding of their responsibilities to their clients," Mr Hewitt told The Adviser.
Bernie Lewis Home Loans managing director Mark Lewis agreed and believes that diversification can have a major impact on a broking business.
Over the years Mr Lewis has built his business into a true one-stop shop for his clients.
“While I don’t advocate that mortgage brokers should try and be all things to clients, our business model is successful because we leverage off a team of experts each qualified within their own field.
“This includes conveyancers, financial planners and mortgage brokers. The effect is that we can offer our clients a streamlined service,” Mr Lewis told The Adviser.
According to Mr Lewis, the company’s clients benefit from a diversified service because they are saved the hassle of having to go to a number of different businesses for advice.
“With a diversified offering, our clients only have to call one phone number."
Property Planning Australia director Will Foster said he was not surprised that many brokers shy away from the area of financial planning because of the educational, regulatory and compliance burden, as well as the cost.
“It’s tough to predict whether more brokers will diversify into financial planning into the future,” Mr Foster told The Adviser.
“With financial planning being such a specialist field, it’s a lot for one person to know if they try and offer financial planning services on top of their mortgage broking services. It can actually marginalise a broker’s offering.”
“And for those who intend to hire a qualified financial planner to bolster their team, it can be quite expensive – financial planners cost around $100K per year.”
You can read The Adviser's 2010 readership survey in full here.
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