A mortgage broker, financial advisor and author has said current changes facing the industry should be seen “as much as an opportunity for brokers as they are a threat”.
Discussing his concerns regarding broker remuneration in the royal commission, Investopoly author Stuart Wemys said the key is moving away from the perception of “self-interest”.
He told Australian Broker, “I think anything that’s on a commission basis is going to have an inherent level of, to some degree, distrust. Commissions can destroy trust because they create a basis of self-interest.
“There are two things I say to clients that make commissions work. The first is, brokers don’t have relationships with a single bank and lender in Australia, but their panel represents probably more than 95% of the mortgage share in the market.
“You’re not missing out on anything and the price you pay is exactly the same as if you walk into a branch. The client’s not missing out on anything and they’re no worse off. From that basis it’s in the best interest for the public to deal with the industry.
“I think another way we can get rid of the self-interest is to take the approach to say, I’m a mortgage broker, I’m here to help you with these specific needs at this stage, but I’m also a financial services industry professional so I might be able to point you in the right direction so you’re being looked after.
“If every single broker took that view from today onwards our market share would go from 55% to 80%.”
Outside of remuneration structures, Wemyss said other changes and uncertainty were something brokers could pick up and “run with”.
In particular he has encouraged brokers to look at all of their client’s financial needs, referring them to trusted sources if necessary so the broker can become a reliable point of contact.
He added, “Look for the opportunity. There’s so much going on at the moment with the royal commission with what Labour’s saying, with changes to property and negative gearing and APRA and lending standards.
“There’s really a big cloud of lots of potential changes and pressures on the industry and it’s easy to get depressed about it all, but I think what brokers have got to do is look for the opportunity.
“The way I see it is the lending standards are kind of good. It’s not an uncommon scenario where someone will walk into a branch and be promised the world and it’s not until application stage they realise they’ve been promised the world and they can’t deliver and these lending standards helps us in that perspective.
“The royal commission is good because it educates the public. What brokers can do is pick that up and run with it.
“So really, all the changes that are happening at the moment are just as much an opportunity for brokers as they are a threat. If brokers are feeling a little bit beaten down this is a way to look at it,” he concluded.
Related stories:
“Imperative” to go beyond mortgages
Non-banks can help mortgage prisoners
