Mortgage advice coming from a planner near you?

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Financial planners may be better suited to advise borrowers on home loans than mortgage brokers, claims one consultant.

Responding to an article published yesterday announcing Resi Mortgage Corporation’s joint venture with Shartru Wealth Management, management advisor and business analyst at MGF Consulting Group, Max Franchitto, says the concept isn’t new, but argues that “formalising an arrangement is now imperative” if compliance with FoFA is to be met efficiently.

“In fact we are advising many financial planning firms to seriously consider buying a mortgage book of business and integrating it as a service, as FP’s may be better equipped to advise on debt management.”

Franchitto says it’s an “obvious fit” for a financial planner or independent financial adviser to be overseeing the debt management on the client’s balance sheet, particularly with the advent of SMSF and other investment vehicles.

“The financial planner is somewhat better informed on how to optimise that debt management.”

AFG general manager, sales and operations, Mark Hewitt, says it makes sense for a business to be able to offer its clients access to a mortgage specialist and a financial planner under the one roof. However, he’s concerned individuals who try to diversify their offerings too much risk spreading themselves thin.

“We are seeing many planning groups diversifying into debt and hiring a debt specialist in order to be able to offer their clients a more holistic service,” he says. “Conversely, we are also seeing successful mortgage businesses hire planners for the same reason. Where scale allows, the model that works best is the ‘hub and spoke’ model – that is, a number of different specialties like financial planning, mortgages, insurance, leasing and accounting being part of the one business.

“Our view is that it takes an exceptional operator to maximize the opportunities available across multiple disciplines, e.g. planning and mortgages, and that professionals who attempt this risk becoming a jack of all trades and a master of none.”

Franchitto agrees that having brokers and advisers under the same roof can be a viable alternative.

“Either strategy is OK - it all depends on the best possible position for the firm. Owning the mortgage business is always a good advice quality-control strategy.”

When asked if he believed financial planners might be better at doing a mortgage broker’s job than a mortgage broker, Franchitto says it’s a “loaded question”.

“Let’s just say that the entry point for mortgage broking is still considerably lower than financial planning even though I am seeing some encouraging improvement in professional development.”

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