Planners, mortgage brokers to move closer

Financial planning firms are increasingly likely to link with mortgage brokers, but the different skill sets, remuneration models and legal interpretations remain a barrier to planners actually writing mortgages.

That was the bottom line of a Money Management roundtable last week involving participants with interests in both the financial planning and mortgage broking arenas.

RI Advice Group national manager, practice development, Peter Ornsby captured the sentiments of the roundtable when he said most planners were seeing an opportunity to partner with a mortgage broker because of the different skill sets.

He said that while planners were developing skill sets in aged care and estate planning, they were more likely to choose the partnering route with respect to mortgage broking.

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Ornsby said that in partnering, planners were looking to put a fence around their clients in terms of delivering a whole service, and calling upon the services of like-minded specialists who could deliver an appropriate level of service.

Vow Financial chief executive Tim Brown reflected the view of a company which had grown out of mortgage broking and extended into the financial planning space, but agreed that the ultimate objective was the "ring-fencing" of clients.

"We were seeing the banks moving into that space selling more and more general insurance and also life/risk to our clients, and we thought that was an opportunity we were missing and it made sense to move down that path," he said.

"What we'd also seen is companies which had already gone down that path and emerged from being just a mortgage broker into a financial planning business, so we already had models for success," Brown said.

However he acknowledged that it was a "hard road" for a mortgage broker to go from selling a mono-line product to thinking about other products.

"But we really push that they need to think about having their clients covered by insurance," he said.

Gadens Lawyers specialist Vicki Grey said that since the introduction of the National Consumer Credit Protection Act, the regulatory environment was 90 per cent of the way towards what was required in the financial advice space.

However she believed financial advisers were probably more reticent about moving into the mortgage space because of uncertainty about the legal requirements of being a financial adviser in that space.

"Although, from the commercial perspective we're seeing a convergence of these two types of businesses, the two laws are still quite different," she said. "Certain parts of the legislation look the same and use the same words, but we are noticing significant differences with respect to the way the legislation is being interpreted."

Grey said it was those differing interpretations which represented a challenge in terms of how the convergence of the two sectors would continue.