The trend toward convergence of services taking hold across the financial planning and allied areas, such as mortgage broking, is a good thing for customers but needs to be done properly, says the head of Mortgage Choice.
“If you keep the focus on the customer, they deserve specialist advice, whether on the liability or the asset side of their financial situation,” says Michael Russell, Mortgage Choice chief executive officer.
“We believe in a specialist model of doing this. The way the legislation has been drafted [around mortgage advice and financial planning] it’s just not practical for an individual to wear two hats. There’s always conflict if you’re working under two separate licenses.”
But he believes that offering dual services covering both the assets and liabilities of clients is a big value-add. “It’s an issue of convenience. They [customers] don’t want to have to give their personal details more than once,” Russell says.
It was for this reason that the mortgage broking firm launched its own financial planning business some 18 months ago. Since then, the venture has hit each of the milestones it set at the time, “and we are still considerably underweight [in terms of planner numbers],” Russell explains.
Having launched its financial planning arm in October 2012, with a pilot scheme of 10 financial planning franchisees, it currently employs 30 financial planners, and expects to grow to 60 planners by mid-2015.
This growth is being largely achieved through organic means, though there have been some acquisitions along the way, and the business is not ruling out further acquisitions to aid its growth.
“We haven’t closed our mind to acquisitions. While we’re building the business organically, we don’t want to become distracted [by chasing acquisition targets],” Russell says. He explains that especially in the context of the ongoing Future of Financial Advice (FoFA), vetting potential takeover targets and performing the necessary due diligence is something they would prefer to avoid if possible.
“Around the end of next financial year, probably 60 to 70 financial planners will accommodate the demand we have [from clients],” Russell says. “After that, it makes perfect sense to look at selective acquisitions.”
Speaking again about the Mortgage Choice model of specialising in both mortgage broking and financial planning, he says this provides the business with a considerable competitive advantage.
“Lead generation is a struggle for a lot of financial planners. For years now, our clients [in the mortgage business] have been asking us for referrals,” says Tania Milnes, general manager, Mortgage Choice Financial Planning. “By offering financial planning in-house, we can control the advice process, ensuring consistency and transparency.”
