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.”

Do you agree or disagree? Tell us what you think below.

More stories:

Mortgage advice coming from a planner near you?

Mortgage brokers tapping into financial advising

Selling up? Big banks aren't financial planners' only option

  • Matt on 26/03/2013 9:59:05 AM

    So we have spent the last 5 years going through FOFO legislation to get rid of the cowboys in the financial advice industry and now we just want to replace them with new ones who think they can be planners as well as brokers and still look after the client effectively? Did i miss something.

  • Pat on 26/03/2013 8:43:00 AM

    Interestingly (or not), on this page, I am seeing ads by a mortgage broker saying I can grow my SMSF book through them. This epitomises the mortgage trade's approach that there is only one solution for everything - whack on a mortgage and you'll be right.

  • Peter on 25/03/2013 10:54:20 PM

    Mr Brown where do you come from with this nonsense. Since when are mortgage brokers in a better postion to provide advice more efficiently than financial planners. First of all they have to go through all the training and secondly be compliant. Once they have achieved this they are financial planners are they not.

  • SS on 25/03/2013 11:26:18 AM

    Tim Brown is setting himself up to be the financial journalist's "go to" guy in the mortgage industry. Like David Campese (Rugby), Shane Warne (Cricket) or Bob Katter (politics), Brown can be relied upon for a loony tunes comment that will sell a headline. Your 15 minutes is up.

  • Pat on 25/03/2013 11:11:42 AM

    i think it is quite clear that Mr Brown is simply trolling the financial planning industry. No moderately intelligent person would suggest that a mortgage salesperson, who lives and breathes commissions, would be a suitable person to advise people on real financial issues.

    A mortgage broker is simply a bank teller who wishes to diversify their commission source.

  • Ben on 25/03/2013 10:42:39 AM

    Great lets get mortgage brokers giving advice - well you should gear this and gear that. Why? Oh I want the comission for the loans on top of whatever I get from the super and insurance. What a joke! They work on comission now so how would they survive on fee for service? Plus they work on the 'best rates' which is completely the opposite to how we provide advice on super. God help us if this happens.

  • Des Tsagatos on 25/03/2013 9:46:11 AM

    Any connection between Mr Brown's comments and the facts would appear to be purely coincidental

  • Tim Rogers on 25/03/2013 9:31:36 AM

    How about brokers do their primary job better first and then think about other income opportunities for themselves. How many brokers have actively called existing clients during this abnormal interest rate cycle and discussed fixing all or part of their current lending - without suggesting they rewrite the loan so as to generate some commish? Please.

  • Wally on 25/03/2013 9:28:53 AM

    Mr Brown has not the faintest idea of what he is talking about. It's all so easy in his eyes and the SOA is not much more than a loan application. No, Mr Brown that would be the fact find you're talking about. If this is the quality of leadership mortgage brokers have to look towards then nothing could possibly go wrong when they start offering financial advice. I don't think too many advisers are shaking in their boots right now. Next we'll have the real estate agents lining up next.

  • Brian on 26/03/2013 8:22:49 PM

    Brown would possibly be successful flogging 2nd hand cars----- possibly!!!, just don't let this uneducated GIT near Financial Planning ,or SMSF's

  • Craig on 26/03/2013 11:19:56 AM

    Tim Brown is providing his opinion at his special rate of 0% Interest ! He is to me anyway !
    Yes, that's right Tim, because a mortgage broker can flog some poor unsuspecting individual a low doc loan that they probably have no real chance of ever repaying,they are imminently qualified to provide consumers with comprehensive, technically accurate,sustainable financial planning advice....yeah right!
    The meaning of "Vow" is " an earnest promise to perform a specified act or behave in a certain manner".
    I suggest Mr.Brown needs to promise to behave in a rational and realistic manner,and to earnestly promise to stick to his own knitting.

  • Pat on 26/03/2013 10:21:14 AM

    Perhaps Brown thinks 1st April came early this year?

  • mortgaged on 26/03/2013 10:14:48 AM

    This guy has no idea. The first thing that has to happen is for home loans to become a financial product. Secondly all commissions on loans should be banned & mortgage brokers need to then charge a fee for service.

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