Mortgage Choice CEO Michael Russell has said diversification is critical as the broking industry has shifted into a mature market phase. However, there is a right and wrong way when it comes to tackling diversification for your business.
According to Russell, the franchise has experienced record growth since it diversified into financial planning in October 2012. The franchise’s half year results to December 2014 released yesterday revealed a net cash profit of $9 million. This is the strongest interim profit on record.
In the six months to December 2014, financial planning accounted for 2.7% of the franchise’s gross revenue. This has more than doubled the 1.2% recorded in the same period in 2013.
However, while Russell says diversification makes for a better business model, he maintains that broking and financial planning should remain as separate job functions in brokers' businesses.
“The Mortgage Choice model [of diversification] is one of specialist advice. When we developed the model, we wanted to make sure that we knew that our clients were both demanding and deserving of specialist advice, not ‘GP advice’,” he said, addressing the Australian Mortgage Summit last week.
“When you’re seeing your GP and they are looking down your throat, you probably wouldn’t ask if they’ve got a minute to see if you’ve got any cavities and if you’re in the dentist chair, you wouldn’t ask your dentist to check your prostate. So whether it’s their health or their financial health, they [consumers] are deserving of specialist advice.”
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