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There is always a lot of talk about diversification and the role it plays in the business of mortgage brokers.
Today, 'diversification' is a bit of a buzzword that gets bandied around readily, but little attention is actually paid to what true diversification is.
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Furthermore, not a lot is said about how brokers can actually diversify their businesses to include additional revenue streams and what impact diversification actually has on a broker's bottom line.
Personally, I am a strong advocate of diversification. I believe it not only helps brokers become a one-stop shop for their clients, it also helps them future-proof their business.
By offering more services, we are able to create better, deeper relationships with our customers, which result in more repeat and referral business, not to mention happy customers!
But while I am an avid supporter of diversification, I also know I cannot cater to all my clients' needs on my own. To rectify this, I have created referral relationships with a variety of other finance professionals – professionals I know and trust. This way, my clients appreciate the fact that I am able to help them – in one way or another – with all of their financial needs.
Most recently, I have added financial advice to my suite of services after my aggregator, Mortgage Choice, launched a financial planning arm to complement the broking side of the business.
It is pleasing to see my head group taking action and championing the benefits of diversification. Furthermore, I believe it makes business sense for mortgage brokers and financial planners to work together under the same roof.
As mortgage brokers, we are helping our clients to make their biggest financial commitment and secure a very lucrative asset. Both our clients and their new asset need to be adequately protected in the event that unexpected circumstances arise.
I also believe it is imperative that those taking out a mortgage should think about seeing a financial adviser. According to Mortgage Choice's 2014 Money Survey, 89.4 per cent of Australians do not have a relationship with a financial adviser.
Of those who don't have a relationship with a financial adviser, 16.8 per cent said it was because they "didn't have enough assets to warrant seeking advice".
This attitude suggests a lot of Australians wrongly believe that they have to be income- and asset-rich to warrant using a financial adviser, and this is simply not the case. A financial adviser can work with clients to put in a plan that will help them achieve their financial goals. It is for this reason that Mortgage Choice decided to transition the business to include financial planning services.
As part of that transition, the company has undergone a brand refresh, replaced the 22-year-old logo and created a new advertising campaign.
Moving forward, I wouldn't be surprised to see more businesses diversifying into financial planning. Loan Market and Ray White have recently made the move, and I don't think it will be long before others follow suit.
At the end of the day, it makes sense to diversify our businesses. Not only does it allow us as brokers to future-proof our businesses and wealth, it also allows us to help more customers achieve all of their financial goals.
