He got under the skin of many brokers with his prediction of a housing crash, but wait until you hear the advice this leading financial advisor is offering the big banks about their mortgage businesses.
He got under the skin of many brokers with his prediction of a housing crash, but wait until you hear the advice this leading financial advisor is offering the big banks about their mortgage businesses.
“The banks want people to borrow more money. The ideal client [in a housing bubble] for the advisor is somebody who doesn’t borrow money, who has a modest house and saves a lot of money. This client is not interesting to the banks because they can’t make any money off them,” Hilliard MacBeth portfolio manager with Richardson GMP told MBN sister publication Wealth Professional. “Where the banks make all their money -- really 95 percent of profits -- is from clients borrowing money for mortgages, HELOCs, and credit cards.”
An unwelcome suggestion among mortgage brokers who are constantly competing with the big banks for mortgage market share.
According to CAAMP’s fall mortgage industry report, broker market share fell to 31 per cent from 40 per cent a year prior.
MacBeth, the controversial author whose new book calls for a big crash in real estate prices, also believes that the big banks will soon face their own day of reckoning when they must decide where their bread is truly buttered.
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MacBeth sees the move by banks into wealth management, which started in the 1980s with the acquisition of independent brokerage firms such as Dominion Securities, as a turning point in the Canadian financial services industry, that up until then had kept the four pillars relatively separate.
“The banks didn’t use to be in the brokerage industry,” says MacBeth. “When I started in the industry [1978] they weren’t allowed to be but then in 1987 they started buying firms such as Pit field, MacKay, Ross; after that you couldn’t avoid working for the banks at some point.”
The problem with this scenario is that should the “housing bubble” burst, the banks will be ones most affected by the fallout. First, similar to what happened in the U.S., they’ll be left holding paper on properties severely under water. Second, the big advisor networks of those banks will suffer considerable damage to their assets under management as clients sell assets to shore up their real estate.
“The banks want people to borrow more money. The ideal client [in a housing bubble] for the advisor is somebody who doesn’t borrow money, who has a modest house and saves a lot of money. This client is not interesting to the banks because they can’t make any money off them,” Hilliard MacBeth portfolio manager with Richardson GMP told MBN sister publication Wealth Professional. “Where the banks make all their money -- really 95 percent of profits -- is from clients borrowing money for mortgages, HELOCs, and credit cards.”
An unwelcome suggestion among mortgage brokers who are constantly competing with the big banks for mortgage market share.
According to CAAMP’s fall mortgage industry report, broker market share fell to 31 per cent from 40 per cent a year prior.
MacBeth, the controversial author whose new book calls for a big crash in real estate prices, also believes that the big banks will soon face their own day of reckoning when they must decide where their bread is truly buttered.
#pb#
MacBeth sees the move by banks into wealth management, which started in the 1980s with the acquisition of independent brokerage firms such as Dominion Securities, as a turning point in the Canadian financial services industry, that up until then had kept the four pillars relatively separate.
“The banks didn’t use to be in the brokerage industry,” says MacBeth. “When I started in the industry [1978] they weren’t allowed to be but then in 1987 they started buying firms such as Pit field, MacKay, Ross; after that you couldn’t avoid working for the banks at some point.”
The problem with this scenario is that should the “housing bubble” burst, the banks will be ones most affected by the fallout. First, similar to what happened in the U.S., they’ll be left holding paper on properties severely under water. Second, the big advisor networks of those banks will suffer considerable damage to their assets under management as clients sell assets to shore up their real estate.
