There’s a risk to being a jack of all trades
Although mortgage brokers would love to be the jack of all trades, trying to do anything and everything all at once risks making you a master of none.
Rarely does this become more prevalent in the finicky, oft-times arduous world of asset finance.
It can be a clear case of diminishing returns- your small-business owner or homeowner client needs financing for a new van, or a personal loan for a dream holiday; these requests can take hours and even days yet can have a very minor impact on their income statement.
It is no wonder then, that mortgage brokers are becoming increasingly willing to work with external asset-finance experts to maintain a full-service offering- even if it means sharing a substantial chunk of their commissions.
We can work it out
Ebony Maxwell (pictured above), national sales manager at asset finance specialist National Finance + Loan (NFAL), believes it is a trend that is only getting stronger amid a growing need to maintain a one-stop shop for convenience-seeking customers.
NFAL taps its 60-strong panel of lenders, including the big four and non-bank lenders, to secure asset-financing arrangements for the hundreds of brokerages (NFAL is also on the panel of mortgage aggregator nMB) that are on its platform.
It uses a “tick and flick” model to support mortgage brokers unfamiliar with the asset space.
Maxwell said mortgage brokers are “absolutely” realising the value add of leaving their four walls to secure the best financing arrangements for the clients.
“The smart (brokers) have obviously done their workings out” and realised “hang on a minute, it’s literally taking me 20 seconds to refer my customer over to someone who can run with everything” as opposed to the blood, sweat and tears that come with determining lender policies, checking accreditations all all manner of other administrative headaches.
That’s all well and good, but brokers are still stumping up to 50% of their commission to tap the benefits that NFAL and its competitors provide. But it can be worth considering what the alternative is.
Skirting the competition
Mortgage brokers can be anxious about making referrals to other mortgage brokers who may have requisite products, but could potentially poach their customers, Maxwell said.
“It’s hard because you want to corral your customer, you want to get someone to do the deal but you don’t want them building relationships with other mortgage brokers who can take that business away,” she said.
Whereas with companies such as NFAL, the client stays put while having their needs met.
In one instance, a $2 million application for a hovercraft recently floated onto NFAL’s desk. “If (the broker) is only used to residential mortgages and someone was to come to them with a piece of equipment like a hovercraft, most brokers wouldn’t know where to begin to even place this deal or how to put it up,” Maxwell said.
That obviously depends on the mortgage broker. Indeed, as recently discussed in MPA, diversification has been a major theme over the past 12 months. But for a mortgage broker that does not want to risk making a mess of an asset deal, sharing your commission 50-50 with a firm like NFAL could be worth considering.
Majors exit the market
Up until less than a year ago, investment bank Macquarie was a go-to for brokers for car financing matters.
That was until Macquarie exited the car loans market in April 2024 across both broker and direct channels in order to focus on expanding its home loans and deposits offerings.
This created a gap in the market, said Maxwell, particularly since the big four can be reluctant to hand out commercial accreditations to lower-tier mortgage brokers.
Unfortunately for Macquarie, that leaves the bank out of step with the emerging demand for hovercraft finance.
