Planners face backlash from mortgage brokers

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Since Wealth Professional announced the merger of a mortgage broking firm with financial planners, a debate has sparked up among the two financial services sectors over which profession should be handling clients’ finances. The latest to chime in is Vow Financial CEO, Tim Brown, who has suggested to Australian Broker that planners are selling their clients products and investments that they don’t want.

“I think brokers actually have a great opportunity to move into, in particular, life and super, which is the traditional role of a financial planner. I think financial planners over the last decade really ruled that space and they haven’t done a very good job of servicing their clients in that space.”

Brown says many financial planners have become tied up in equities and investments and argues that there have been ‘issues’ throughout the network where financial planning groups are now being sued for giving poor investment advice.

“I’m talking about the average mum and dad. I’m not talking about the 5% that put in over $300,000, which is where most of the financial planning space caters for. I’m talking about the other 95% which is the Australian population that brokers are much better placed to cater for because we already look after their debt. We can then look after their property and SMSF’s.”

He says countries where brokers have already started to take over certain areas of the financial planning industry, including New Zealand and the UK, have proven successful and says getting Australian brokers to move into offering financial planning advice shouldn’t be difficult.

“When you look at financial planning, there are two levels of financial planning education: There’s RG146, which allows you to sell life, risk and comment on super and then you’ve got the full financial planning diploma which allows you to do estate planning, equities investments, derivatives – I don’t think brokers want to get into that space anyway.”

For a broker to get educated to the correct level, he says, would mean getting their RG146. “That’s only a year’s education. That’s not much more than what they have to do to get their diploma for mortgage lending.”

Brown says ‘smarter’ brokers are already doing 75-80% of a statement of advice once they’ve completed a loan application anyway.

“The other 25% for a statement of advice is about the client’s risk appetite and also understanding what their current coverages are in terms of life, risk and super and I think most brokers are doing that.”

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