Mortgage Brokers Fighting Back
Why Mortgage Brokers Got A Raw Deal at the Banking Royal Commission and How They’re Turning That Into Real Opportunity
The Banking Royal commission in Australia has caused considerable stress in Financial Services business such as Mortgage Broking and Financial Planning.
Mortgage Brokers especially would have to feel hard done by. It’s almost as if they were used as a scapegoat to cover up for the banking industry’s indiscretions and illegal activity. Mortgage Broking as an industry was not asked to appear at the hearings and was not given an opportunity to respond to the claims that were being made against them.
Mortgage Brokers are now in a situation where their futures are in limbo. The recommendations to cut their commissions and to move to a ‘user pays’ model may or may not be adopted by our lawmakers in Parliament and so anyone working in the Mortgage Broking industry faces an uncertain future waiting to see what action the politicians will take.
The fact is that most Mortgage Brokers work hard for their income.
Here is a summary of the typical tasks undertaken in an average week by a mortgage broker:
- Submitting pricing approvals to the banks so that their customers would get a better rate than the standard advertised rates;
- Ordering valuations (fee free) so customers can work out what they want to do with their major asset;
- Worked through financials and incomes so clients can see how much they can borrow in order to make plans for their future or how to change things to reduce their financial stress;
- Talk with new home buyers about the process of getting into their first property. Showing they could pay over 0.5% cheaper for their mortgage by going to a second-tier bank rather than sticking to the majors;
- Submitting approvals in principle so clients feel confident looking for property;
- Submit release requests for house sales, organised settlements and provided paperwork for tax claims and accountants;
- Small loans, change of product & account maintenance;
- Navigate the myriad of Lenders, their products & their policies, on their clients’ behalf to ensure that they can provide the most favourable options available to them depending on their circumstances – this all takes many hours of their time.
Moving to a ‘user pays’ model may well have the effect of driving borrowers back to the banks which will take away the benefits that borrowers currently have in going to a broker. It is highly unlikely that someone looking for a home loan will inadvertently choose the bank with the product that best suits their needs.
This outcome would not be in the consumer’s best interests.
So, what can a Mortgage Broker do, given that they are now going to have to deal with an uncertain future?
More than ever before, there is an opportunity for Mortgage Brokers who have dedicated their lives to improving the welfare of their clients, to step into clear, uncluttered and unregulated space, to add a related service which fits hand in glove with the skills they already have and the existing services they provide.
Given that so many people are currently experiencing financial pain and struggling with their day-to-day finances it should be easy to see there is a business opportunity begging to be pursued by any Mortgage Broker who is prepared to think outside the square.
In the past many Mortgage Brokers have been frustrated by the constant flow of people knocking on their door looking to refinance bad debt and/or to find ways to reduce their mortgage repayments because of financial pressure. These people are hungry for a solution to their debilitating money problems, and reach out to their Mortgage Broker looking for answers.
Many of these people don’t know why they are in the situation they are in, and they don’t have the skills to change things on their own or they would have already done so. They would commonly say “I earn a good income so I just can’t understand why we struggle from pay to pay”.
A recent survey (ASIC) revealed that over 2 million Australians were unable to pay their credit card in full each month and were experiencing money stress.
It’s easy to assume that these people are low income earners, but the surprising thing is that many are earning above average incomes and even though they may be experiencing financial difficulty, they are more than happy and capable of paying to have someone help them take control of their finances, and because they are in a lot of pain, they are actively looking for answers.
This means that someone who has the solution to their problems will find it very easy to build a business model around helping them.
The Spending Planners Institute founded by David Wright (who has a long standing history of developing systems to help people take control of their personal finances), trains Certified Spending Planners and provides them with the tools and skills to create a profitable business based around helping people take control of their day-to-day finances.
There are many reasons why adding a Spending Planning service to an existing Mortgage Broking business would be a perfect fit, especially now the banks are making the loan application process much more onerous than before. Generating a healthy additional income stream is just one of them.
David Wright started a business doing what was then called ‘Budgets’ for people in the mid 1990’s. At the time he was told it would never work as a business model by Financial Planners, Mortgage Brokers and Accountants alike.
At that time the passion he’d developed for helping people to take control of their day to day finances negated any thoughts that he might have had about the need to create a financially viable business model, and as a result, David ignored those who said it would never work.
“I created a simple system that dramatically changed my life at a time when interest rates were sky high. I got so excited at the results I was experiencing, I simply wanted to share what I had discovered with other people!” recalls David.
Starting out long before mobile phones and the Internet existed and long before web-based software existed, the business model David began with was labour-intensive and time-consuming and although it generated some additional income for him, it definitely wasn’t going to make him rich. It was a labour of love.
“That was the beginning of a very interesting, exciting and rewarding life-journey for me that has seen me have a positive impact on the lives of well over 30,000 customers,” he continues.
A lot has changed in the years since David started creating the Spending Planner system.
- Where he previously went out at night to visit clients, the Internet now allows communication without having to leave home.
- Where the software he was using previously only existed on his laptop computer it is now web-based and accessible anywhere there is Internet.
- With almost 25 years experience in dealing with people’s money challenges David has distilled his principles down to a simple 10 step process which can easily be taught to other people.
- Where David once did all the work for his clients, they now do most of it for themselves.
- Given the recent changes to mainstream financial services in the last 12 months, the planets (and stars) have aligned to create the perfect storm for people who recognise the opportunity to create a profitable business model adding something new and rewarding that fits perfectly into a Mortgage Brokers’ current skill set and business model.
With the added enthusiasm of a passionate and growing team of people, a new industry has been created called ‘Spending Planning’.
David recognised that there has been a huge vacant space between Financial Counselling and Financial Planning for a long time. This new industry fills that void.
‘Spending Planning’ provides Mortgage Brokers with an opportunity to enhance their disrupted business model, where their service was paid for by the banks, to one that is keenly sought after by a large percentage of the population who are happy to pay for the benefits they will receive.
In the process of leading a client through the steps to set up their Spending Plan, it is common that this exercise reveals the need to review a client’s mortgages and other loans, which of course then leads to additional Mortgage Broking income.
Spending Planning is the foundation stone that other financial services could have always been based on, but it wasn’t a viable, profitable business model up until now. It is very exciting that the opportunity is now available to make it a profitable, complimentary and attractive business option which could stand alone or be a profitable addition to a current financial services business such as Mortgage Broking.
David’s years of persistence and passion for helping others has created a valid business model. There has never been a better time for Mortgage Brokers and other finance professionals to embrace the benefits of adding a Certified Spending Planner to their team. Here’s why:
- The Banking Royal Commission has turned Mortgage Broking and other financial services businesses on their heads, creating uncertainty and turmoil.
- Compliance and regulations have made traditional financial services businesses less profitable and less attractive
- There are few compliance or regulatory restrictions that apply to Spending Planning
- People are becoming much more conscious of the need to take control of their money
- People are in more financial pain now than they have been for a long time
- Technology automates what was previously tedious and time consuming
- Clients do most of the work so it’s a simple and effective business model
- The Spending Planner service allows you to get paid to deliver what the new legislation is now demanding of financial service providers, rather than having those demands create an additional burden on your business
- You can be up and running in weeks
A Mortgage Broker and other finance professionals would already have in place many of the key requirements for adding a Spending Planning service to their current business, so it would be a really simple and easy journey to add Spending Planning to their existing business model. That might be by either becoming a Spending Planner themselves, having someone train to be an ‘in-house’ Spending Planner or by connecting with an existing Spending Planner and introducing this additional service to their existing client base.
Regardless of which of those options suits individual Financial Service Providers, there are many benefits for everyone concerned.
- Two more reasons why now will always be the perfect time to add Spending Planning or to become a Spending Planner, are more personal. They are:
- The goosebumps you get when your client tells you the difference you have made in their lives – nothing else you could do, could have such a positive impact so quickly
- Your clients will get you more clients. Every client who has their lives changed by a Spending Planner refers more new potential clients than you ever thought possible – meaning more work for your financial services business, making this new profitable income stream via Spending Planner activities, the perfect complimentary revenue stream for you.
As a Mortgage Broker you would have found many times that potential clients were not ready to do business with you. With Spending Planning available in-house, you will have the solution to connect them with where they are at and where they need to be for you to assist them in achieving their goals, whether that be providing them with their first home loan or whatever else it was they were hoping to achieve.
You get to provide two services rather than none, and in the process gain referrals to their friends, family and colleagues as well!
It really is a win-win outcome.
To find out more about how you can add Spending Planning to your existing business, complete a no-obligation application form by clicking the button below.
We live in a time when more people than ever before are experiencing money stress. Anyone who recognises an opportunity when it is staring them in the face would realise there has never been a better time to look seriously at Spending Planning as a great way to not only increase their income but to also help others live a better life.
As a Certified Spending Planner your clients will be delighted with the benefits that having a Spending Plan will bring them and experience shows that they will want all of their friends, family, neighbours and work colleagues to experience the same outcomes you brought to them as well.
It really is a win-win outcome that you need to explore further and embrace. We
would love you to take your interest to the next level and complete a no obligation application form.
For more information about how you can earn more money as a Certified Spending Planner CLICK HERE