End of year wrap up

It’s been a busy and challenging year with big changes in the way brokers do business. As the year comes to an end and we reflect on what has been achieved I think we can say that we have been successful in adapting to the changing scope of mortgage broking. Slowly we have adapted to new ways of writing business, complying with new legislation all the while continuing to service clients in the best way possible, which is something that can make you feel a sense of achievement.

We look forward to working with you in 2012 and although it will bring more challenges, it will also bring more opportunities and successes. If you are taking a break over the Christmas period, enjoy it! I would like to take this opportunity to thank you for your hard work, loyalty and contribution. Everyone at ALCo wishes you and your families a very safe holiday period.

Merry Christmas and Happy New Year!

Til next time,

Lesley

Fee for Service/Advice

I recently read an article about charging a fee for service, or fee for advice as it is also known, and the article brought up a good point – when do you tell the client that you charge a fee for your services?

There are two points to this question:

Firstly ASIC requires you to disclose fees upfront at the initial meeting. Section 158 (e) of the NCCP Act states:

The credit representative’s credit guide must:
(e)  give information about:

(i)  any fees that are payable by a consumer to the credit representative for acting as a credit representative; and(ii)  any charges that are payable by a consumer to the credit representative for matters associated with acting as a credit representative; and(iii)  the method for working out the amount of the fees and charges;

It is important you comply with this section to meet ASIC requirements and also to be upfront with the client.

This brings me to the second point. You have a responsibility to the client, they have a right to know that your advice will cost and decide whether to proceed. As broker services have been mostly free to clients in the past, many clients may not be expecting to pay a fee. It is important that you are clear from the get go.

You have a right to charge a fee and each broker will have their own fee structure to suit their business. Some may charge at levels of complexity, others by type of client. Regardless, mentioning fees upfront is very important.

It can be as simple as stating “I offer my initial consultation for free but once we discuss your requirements and I see the complexity of the loan these fees apply…”

If you have a website you may have a fee section, or have a flyer with your fees available in your office.

ALCo disclosure documents allow you to state your fee and how you calculate the fee. Even though you may have mentioned the fee during a conversation, be sure to put it in writing in these documents.

Do you charge fees? What have been your experiences with letting clients know about them and has it affected your business in a positive or negative way?

Til next time,

Lesley

Price War

It certainly appears that lenders are having a major price war on fixed interest rates at the moment. There have been announcements almost on a weekly basis with lenders cutting fixed rates, some even making multiple cuts.  Lenders are even known to be cutting rates for the life of the loan; this means it’s a great time for consumers to negotiate a better deal than what is offered  first up and to lower rates on existing loans. In most cases, lenders would prefer to offer a customer a better deal rather than see them go elsewhere.

The big question is: is this having any effect on borrowing? Are new customers entering the market? Lenders and brokers alike are hoping this will encourage customers to borrow or refinance but it seems to only be doing this marginally. Reports from the media indicate that the price war is not having a huge effect and that most of the business generated is in the area of refinancing, this may be linked with many customers coming out of fixed term loans they signed up for just before the GFC.

Economic uncertainty and talk of the RBA reducing the cash rate may be forcing some to hold off fixing their rates at this time. It would be unfortunate if the consumer were to lock in a fixed rate loan only to have variable rates cut, it happened to a lot of people prior to the GFC and as mentioned many of them have just came out of those fixed term loans, so it is understandable the consumer would not be keen to be in the same situation again.

What are you experiencing at the moment? Are you refinancing loans or haven’t had a noticeable effect from the price war with lenders?

Til next time,

Lesley

ALCo dives into Social Media

ALCo is diving into Social Media and will be more active in this area by sharing information on Facebook, LinkedIn and this Blog. We want to become a resource for our brokers as well as their clients and build a community around our business.

Social media provides us with a great way of getting to know industry peers, clients and potential clients, on a more personal level. We hope that our audience will get to know us as a business and as a company that can help them reach their financial goals.

Social Media is huge and still growing, the statistics are phenomenal and we want to be part of it. It pushes business interactions beyond just a financial transaction, but rather helps the customer know who they are dealing with and vice versa.

So you can:

Like us on Facebook

Join us on LinkedIn

Visit our websites: The Lending Shop and Australian Loan Company

We would also like to invite you to participate in our online activity by liking, commenting and interacting with our online posts.

ALCo brokers, you are invited to write blogs; make videos to post online or anything else you may think of. Talk to your BDM or email us at admin@ausloanco.com.au about any ideas you may have.

If you have a business page let us know and we will ‘Like’ you back. You will also be able to share our articles on your page and we will do the same.

We hope you join us online!

Lesley

P.S Visit out Facebook page to view a video from one of our brokers, Troy Cameron, talking about the broker’s role.

Income diversification options available to mortgage brokers

A hot topic in the mortgage broking industry at the moment is income diversification. How can brokers add additional income streams to their business? Many have suggested that brokers need to consider adding financial planning or risk writing to their service offering. Adding these services would increase income through additional business generated from these services.

ALCo has a different approach. It is ALCo’s experience that brokers who try to become financial planners or risk writers will struggle to wear both ‘hats’ effectively.  Of course, it can be successful for some, but it isn’t an easy road. Adding this service can result in difficulty with focus and often stretches the broker thin, not to mention the additional costs incurred, the need for double CPD points, software and compliance across two separate licenses.

We have been supporting financial planners, risk writers and accountants with mortgage brokering services for 8 years and we find that adding an additional income stream through referral agreements often works better. This way, the broker can add additional services to their offering by referring planning business to a planner and risk business to a risk writer and earn additional income by doing so.