One broker tells MPA why diversification was crucial for his company. But why are some brokers refusing to do it?
For many brokers, 2014 is the year of diversification.
Indeed, a survey late last year by FAST found that 89% of brokers are prioritising growing their business outside of residential home loans over the next year.
Scott Beattie, business development manager at Cube Central, successfully led the business to win the AMA for Brokerage of the Year for Diversification in 2011.
Cube Home Loans started in 2005 purely as a home loans company, but about two years later they realised they needed to make a transformation.
“We changed our name from Cube Home Loans to Cube Central but kept the Cube Home Loans brand so that we could trade separately,” says Beattie.
And without further ado, they decided to offer their customers something more, primarily risk insurance and property.
“The property side is not an LJ Hooker type of real estate,” says Beattie. “It’s primarily targeting clients who want to invest in property rather than an emotional buy/sell,” he says.
“So it’s a specific market we’re looking for that’s not geographically restricted, and doesn’t compete with our local real estate who refer business to us.”
Why brokers should diversify
Beattie cites an increased income stream and better client retention as major reasons why brokers should consider diversifying it they haven’t already.
“Sometimes I have been to see clients and there has been no immediate need for them to have any home loan business but we’ve still been able to generate a referral into our Cube Plan and Protect, which is the insurance side,” he says.
This has developed into a relationship which has two benefits. The first is that if the business goes through there is a potential commission.
“But probably more importantly as a mortgage broker, down the track if that client is ready to purchase we already have a relationship with them through the insurance side,” says Beattie.
Why brokers refuse to diversify
So if the benefits are there, why aren’t 100% of brokers rushing to diversify? Beattie says one reason could be because of the stage they are at in their career.
“If I was an older broker with a pretty healthy trail book, maybe I may not be bothered,” he says.
He also recognises that the perceived time involved to diversify may be seen as a turn-off.
“Most brokers are pretty time-poor so it may be something a broker can’t or doesn’t want to commit the time to,” he says.
“But obviously there are aggregators out there who are targeting implementing that for you.”
In a recent interview, Brendan Wright, CEO of FAST, told MPA that brokers would be wise to turn to aggregators and lenders for support and insight into diversification.
“Brokers can choose to identify diversification opportunities and have an aggregator that can support them in that space and connect them with the lenders that have the right product and services to meet the needs of the clients and those opportunities,” he says.
“That’s the best way to go about it.”
Related:
Mortgage brokers: Diversify or die?
Are you planning on diversifying in 2014? Share your thoughts below.
Indeed, a survey late last year by FAST found that 89% of brokers are prioritising growing their business outside of residential home loans over the next year.
Scott Beattie, business development manager at Cube Central, successfully led the business to win the AMA for Brokerage of the Year for Diversification in 2011.
Cube Home Loans started in 2005 purely as a home loans company, but about two years later they realised they needed to make a transformation.
“We changed our name from Cube Home Loans to Cube Central but kept the Cube Home Loans brand so that we could trade separately,” says Beattie.
And without further ado, they decided to offer their customers something more, primarily risk insurance and property.
“The property side is not an LJ Hooker type of real estate,” says Beattie. “It’s primarily targeting clients who want to invest in property rather than an emotional buy/sell,” he says.
“So it’s a specific market we’re looking for that’s not geographically restricted, and doesn’t compete with our local real estate who refer business to us.”
Why brokers should diversify
Beattie cites an increased income stream and better client retention as major reasons why brokers should consider diversifying it they haven’t already.
“Sometimes I have been to see clients and there has been no immediate need for them to have any home loan business but we’ve still been able to generate a referral into our Cube Plan and Protect, which is the insurance side,” he says.
This has developed into a relationship which has two benefits. The first is that if the business goes through there is a potential commission.
“But probably more importantly as a mortgage broker, down the track if that client is ready to purchase we already have a relationship with them through the insurance side,” says Beattie.
Why brokers refuse to diversify
So if the benefits are there, why aren’t 100% of brokers rushing to diversify? Beattie says one reason could be because of the stage they are at in their career.
“If I was an older broker with a pretty healthy trail book, maybe I may not be bothered,” he says.
He also recognises that the perceived time involved to diversify may be seen as a turn-off.
“Most brokers are pretty time-poor so it may be something a broker can’t or doesn’t want to commit the time to,” he says.
“But obviously there are aggregators out there who are targeting implementing that for you.”
In a recent interview, Brendan Wright, CEO of FAST, told MPA that brokers would be wise to turn to aggregators and lenders for support and insight into diversification.
“Brokers can choose to identify diversification opportunities and have an aggregator that can support them in that space and connect them with the lenders that have the right product and services to meet the needs of the clients and those opportunities,” he says.
“That’s the best way to go about it.”
Related:
Mortgage brokers: Diversify or die?
Are you planning on diversifying in 2014? Share your thoughts below.
