Coronis Group Mortgage & Finance Director Mark Guglielmino shares his thoughts on the current state of the broking industry, why some banks hate brokers and more importantly clients are continuing to choose them.
I recently read an article published by the ABC, which covered all things mortgage brokers. Firstly, for what it’s worth, I thought it was a great piece of journalism.
It prompted a widespread conversation in the office, to which I had the following answers to the teams, and the articles, questions.
Broker Boom – Why?
The Broking industry continues to go from strength to strength, taking market share away from the banks direct channel and it shouldn’t come as a surprise to anyone. The value of the mortgage broker has always been the tailored advice and access to choice for clients, accentuated by the strong lifelong relationships brokers build with their clients. Why wouldn’t you go to a Broker?
When I joined the industry, Broker market share was around 50% and since then it has increased to a record of 74% which is a demonstration of the public voting with their feet.
Banks Unhappy – Of Course!
They receive all the interest from clients and are unhappy they have to part with funds. They have less control, of course they are unhappy. That means we’re doing a good job.
Brokers keep the banks honest. If over 70% of all lending in the country goes through a broker, that means every one of those applications has the chance to go to a different lender, so they have to compete with each other to stay relevant and win client’s business. This is an amazing outcome for clients, and the statistics show that since the inception of mortgage broking in our country, lender discounts have increased.
Commission Coming into Question
Commissioner Kenneth Hayne called it "conflicted remuneration" and derided trailing payments, lasting for years beyond when loans were arranged, as "money for nothing".
There has been lots of discussion of Broker remuneration and the conversation is constantly evolving. There is a misconception that Brokers get paid excessive commissions and that we’re paid an ongoing trail commission for nothing. The reality is, Mortgage Brokers are the only professional service that can have their remuneration completely taken from them (months and years after they provide their services) for circumstances that are often beyond our control, in the form of clawback.
A broker’s trail commission is a representation of the ongoing client service that we provide long into the future, and the countless hours of work we do and extra value and service we provide our clients post settlement.
At Coronis M&F, we have implemented a salaried broker remuneration model which helps our broking team focus solely on providing the best outcome for the client, even if that means there isn’t a commission associated with that work. Our entire team of brokers irrespective of their remuneration, work entirely in the best interest of our clients, supporting the broader Coronis Group to live out our purpose, of changing peoples lives for the better.
Putting Clients First, Always.
In my eyes, the fact that Broking is a service that in almost all cases comes at no cost to the client should be protected. We’re able to provide maximum benefit to our clients, working on their behalf to find the best solution tailored to them, and essentially invoice the bank for our time.
Despite the uproar from some banks, the mortgage broking industry continues to thrive due to the value brokers offer through personalised advice, access to choice, and ongoing client service. As brokers, we play a critical role in ensuring competition among lenders, ultimately benefiting clients. I look forward to continuing to put the client first, always.
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