Is business diversification the answer to market volatility?

With the home loan market constantly fluctuating, mortgage advisers often have little choice but to ride the market’s ups and downs. Business diversification is now becoming an increasingly attractive option, and with more and more homeowners looking for professional advice, brokers are increasingly looking to branch out and expand their reach into other business lines.

Australian firm Astute Financial Management recently announced a joint venture with New Zealand’s Mortgage Express, and is looking to bring a host of its Australian products to the market to help advisers diversify their offering. According to Astute director Brad Wood, this will shield its members from any potential downturn in the housing market, and will also help them adapt to the changing compliance regime.

“We were very much an early instigator of the compliance regime in the Australian market, and we’ve been looking for about five years to find a partner in New Zealand that shares our common values and core beliefs,” Wood told NZ Adviser.

“In Australia we run a fully diversified business structure, so it’s not just about home loans – we also run an asset finance business, we offer personal and fire and general insurance, and we run a financial planning business. We wanted to find a partner that had similar thought processes around the diversification of businesses and the opportunities that provides – not only for members, but also for their clients. It is our intention to bring the ability of our members to have access to those products into the New Zealand market.

“We want to be known as a full service provider of opportunities and advice for our members’ clients, and we also want to be able to help our members grow and develop that model.”

Incoming CEO of Astute Financial Management Sarah Johnston says that the new diversified model will be “game-changing” for former Mortgage Express members and their clients. Mortgage Express will remain its own independent brand, and will act as Astute’s first and biggest client.

“It’s a very complicated market when you’ve got to sit and think about your home loan and your insurances, so people are turning to trusted professionals more and more to help them through that process,” Wood concluded. “That’s the model we have in Australia, and that’s what we want to do in New Zealand.”