Mortgage Brokers Remain Loyal But Demand Diversification
Many mortgage brokers are fearful of their ongoing existence and are calling on broker groups to assist them in broadening the range of services they offer clients, new research shows.
A third (32 per cent) of mortgage brokers are of the opinion the traditional pure mortgage broking model is no longer commercially viable, preliminary results from the annual CoreData Mortgage Broker Affection study reveal.
Many broker businesses in Australia have struggled to adapt to reduced revenue streams, as lenders cut commissions and the global economic crisis reduced residential lending volumes, but many brokers appear willing to now adjust business models.
Almost half (46 per cent) of brokers want assistance to offer a broader range of financial services from their broker group, and they are not looking to jump ship to get it.
An extraordinary 87 per cent of brokers would consider themselves loyal to their current broker group, with 56 per cent feeling valued.
Insurance is the most popular diversified product offering for brokers with 22 per cent planning to offer the product within the next three years, and a fifth intending to offer financial planning over the same time frame.
Only eleven per cent of brokers intend to offer personal lending in the next three years.
A concern to broker groups is that 37 per cent of brokers do not consider their group helps them to develop their business.
Another worry is brokers ranked Better Commissions (31 per cent) as their number one current business need, ahead of More Clients (25 per cent) and Improved Profitability with (12 per cent).
Commission structures are not going to increase, highlighting some brokers are failing to adapt to the new financial environment, not focusing sufficiently enough on the acquisition of new clients, or cost reduction to improve profitability from current volumes.
This leaves the broker groups as not just needing to educate brokers on alternative product offerings, but also about the adaptation of their current operating fixed cost base to the reduced income structure.
Loading ...
Steve July 15, 2009
Soooo based on your story…the broker as we now know it is kaput, finished, ceased to exist, extinct, Rigor mortis has set in? The problem I see with this is that a mortgage broker specializes in mortgages, not insurance or family planning or what ever they would like us to now do in order to keep our incomes up, financial planners tried to do mortgages as well (and some still do)but found it to hard to complete the necessary compliance to maintain their licenses and still earn a living. I’m not sure what the answer is to this conundrum, but I do know this will cause exactly what the banks have been trying to achieve for the past 10 years (backed & pushed by Kathy Cummings CBA & well documented) & that is to regain control of the mortgage market. In this whole debacle, the ACCC have been next to useless, stupid and without a clue, their comments regarding the minimum deals proposed by CBA & NAB shows without a doubt they do not have a clue or understand the mortgage industry, so sad these are the idiots we have to turn to.