Broker Andrew Read tells of the tricks and tools that made diversification work for his business. What can your brokerage learn from him?
Broker Andrew Read tells of the tricks and tools that made diversification work for his business. What can your brokerage learn from him?
Brokers that think they’re ‘too busy’ to diversify are missing the true value of alternative revenue streams, says broker Andrew Read.
Read, owner and director of Dee Why Yellow Brick Road, recently completed a Diploma in Financial Planning through Intellitrain, and says that, while time pressures were a struggle, the benefits well outweigh any difficulties.
“I think, for a broker, if you’re busy writing 15-20 loans a month it’s going to seem unnecessary or too difficult to fit in diversification, and I think that’s when you really need to look at the structure of your business and really understand what the value is in having that additional revenue or side of business.”
Neither Read nor his business partner originally predicted they would get involved in financial planning, but says the revenue the business receives from planning is now up around 40 per cent of total income.
“That’s a huge change. Two years ago if we were lucky it would have been 5 per cent. From a mortgage brokers’ perspective our advice revenue would be like writing an additional $5-6 m in loans, and we’ve halved the amount of clients because we’re getting multiple revenue streams from one client.”
The company started by offering financial planning to its existing client base, but soon saw new clients coming in looking specifically for financial advice.
“I think there’s an expectation in the market now from clients that we should be providing more than just a mortgage broking service. I think clients are more savvy, clients have greater needs and I don’t think that my position is purely to offer somebody a home loan. I think my position is to ensure that they’re getting the right advice and that they’re on the right track to achieving their goals.”
Read studied his diploma via correspondence over a six-month period, and says help from his business partner and family were crucial in being able to deal with the added pressure on his time.
Taking the time to properly educate yourself is an essential part of succesful diversification, says Read, as is ensuring you have the appropriate business structure, technology and support staff to deal with the added processing and systems.
Read brought on extra brokers to assist with advice, as well as hiring a full-time financial planner who works alongside himself and his business partner. The secret to success, says Read, is to be properly prepared and not throw yourself in the deep end.
“Start small; you don’t need to offer everything at once, maybe just start by talking to your clients about risk and protecting their income. By making the first steps you’ll find it isn’t as daunting as you think, and clients will definitely appreciate that you’re looking at their whole situation and how you can help them in other areas.”
As well as increased revenue and a greater volume of leads, Read says diversification has helped to increase the value of his business, as well as improving customer experience and client retention levels.
“In situations where a client may approach you who isn’t quite ready to do a home loan, or maybe their existing home loan is fixed for a period, rather than just being someone who we would contact at a later point we’ve now got a large array of services we can offer them that will one retain them for that period. And I think a client that you’re offering advice to is a client for life; it’s not just based around home loan interest rates and products, you’re selling yourself as a service.”
While diversification was a big investment, Read says it is one that has more than paid off in the case of Dee Why Yellow Brick Road.
“I think a lot of brokers out there might look at it as being all too hard or they don’t want to take on the extra risk, but if you do it properly there’s a great reward, both for you as a business and for the client.”
For more of Andrew’s essential business tips, look out for his profile in MPA magazine issue 13.9, on desks 19th August.
