Why mortgage brokers get the thumbs up

Late last week I had the pleasure of joining a group of sales leaders from one of our strategic partner groups at their offsite on the Gold Coast. I thought it worth sharing with you one of the questions asked of me during a lender panel session on Thursday afternoon - as the broker channel continues to mature and grow how do you think the expectations of clients of their brokers have changed in recent times and how do you see this evolving over the next one to two years?

Let's start by looking at what brokers do well today. Three of the biggest five deliberate decisions Australians will make during their lifetime involve property, those three decisions are buying a home, refinancing and renovating (the other two are marriage and divorce). So looking after a client is and will always be critically important and mortgage brokers do this exceptionally well. Brokers have earned the 52% + market share they enjoy today by building trust with their clients and consistently demonstrating knowledge and leadership. Specifically, brokers are accredited professionals who communicate well with their clients and are experts at breaking down the important issues into simple to understand messages. Brokers guide and support their clients through what can be a complex process and back up their recommendations with information and evidence. Finally, brokers have demonstrated time and time again that they are independent and objective in how they go about looking after their clients' needs. 

Looking forward clients are expecting their broker to offer them more than just a home loan, and according to Australian Broker, eight in ten consumers would consider getting a non-home loan product or service from a mortgage broker. The next generation of buyers entering the property market (Generation Y) are highly anxious about housing affordability, lifestyle, and the long-term commitment that comes with buying a home and having a home loan, so they are out there looking for guidance. While traditionally Baby Boomers and Generation X are much more likely to use the services of a mortgage broker from the onset, Generation Y clients are far more likely to first go online to research their financial services needs. The implication for mortgage brokers is that they a) must be active in the same online and social media channels as their Generation Y clients, and b) once engaged, the conversation with a Generation Y client must be about their broader financial services needs, not just the home loan. 

Outside of a desire to meet client expectations, particularly those of Generation Y, why should a mortgage broker diversify and expand their offering beyond just a home loan? I will share with you one very interesting observation from our 2015 Mortgage Broking Benchmarking Report. The report was based on a survey of 1,145 mortgage brokers across the country so is a good representation of mortgage brokers in general. Mortgage brokers and mortgage broking businesses with a more diversified product and service offering tend to outperform those who have remained more narrowly focused on home loans as their primary source of revenue. Businesses relying on home loans for less than 50% of their gross revenues typically have higher average gross revenues and higher average profit growth. Furthermore, businesses with a more diversified product and service offering had a larger client base with an average of 884 clients at the time of our survey compared to 298 clients among those firms that hadn't diversified.

To conclude, clients will always expect mortgage brokers to do the simple things well and continue to be that professional, trusted and knowledgeable adviser. Going forward, to meet their clients' expectations brokers must diversify their offering beyond just a home loan and engage with the next generation of home buyers in same online and social media channels that they are active in. By establishing a broader and more varied revenue stream from a larger client base, these same brokers will help protect themselves against future market fluctuations.