The mortgage broking and financial planning businesses serve different segments of the same industry and remain highly complementary to each other, sharing similar goals to provide holistic solutions for their clients.
However, when talking about synergies between these two types of business, Glenn Calder, joint CEO at Viridian Financial Group, says the most important is “the philosophical alignment” that two organisations from both sides can share.
Viridian, which last year acquired mortgage broker Smartmove Professional Mortgage Advisors, tells Professional Planner three elements – technical, people, and philosophical – have been key to success.
Prior to the acquisition, the financial planning group only owned a small broking division, on top of its investment and financial advice segments. Calder says that apart from the benefits of scale, the acquisition also created room to learn from its new partner which has advantage in some areas.
“There is a lot to learn [about the two businesses],” Calder says. “The revenue profile of the mortgage broking business is much lower than financial planning business so it needs to be, by definition, more effective, more efficient, and Smartmove is probably the industry leader in that regard.”
Calder says the companies are philosophically aligned with how it will approach technology and the use of offshoring.
“Smartmove has quite a big advance in the offshoring or international component of their business, so we’ve been learning a lot of that,” Calder says.
At the moment, both firms are looking at opportunities for how to best use offshoring and operational excellence to their benefit.
Smartmove CEO Darren Little says the broker has found success with “process-driven” people based in the Philippines and Nepal. Overall, 60 of its 90 staff are based offshore.
“[This] really enabled us to have a consistent level of service in the lending space with a strong technology focus to support and enable what they are doing on the day-to-day basis,” Little says.
Stronger together
By coming together, both businesses have also gained enough scale to currently serve more than 15,000 customers.
However, both believe strong processes and technology are just as important to drive business efficiency, with brokers and planners both facing the same challenge of trying to serve more people.
Little says the use of AI or other digital tools can help with that, but it’s more about just being easier to do business with. “That is really a focus that we have across the group,” Little says.
Calder adds there is a lot of “friction” in the advice process and one of the benefits of Smartmove’s pre-existing processes is their experience in implementing systems to reduce a lot of that friction.
“We are learning a lot of the [their] processes and we would be emulating that across our business as we ultimately head towards a technological outcome… that we see as taking the friction out of financial services more broadly and which would just give us this higher proportion of clients facing staff that what we do now,” Calder says.
“Financial planning generally [needs] to evolve and the evolution would take out that friction.”
For example, Calder says it’s common for adviser to have an assistant adviser, customer service manager and paraplanner which is all overseen by a compliance person and management.
“We have potentially six people catching one client for – often – simple advice,” Calder says.
“The cost [of that] is pretty unsustainable for most of Australians to be able to receive the advice.”
Aside from offshoring some of the back office and paraplanning processes, Calder adds that AI could be used to help with oversight and compliance, reducing friction to enhance client relationships.
“That is where we see the future of it,” Calder says.
“It has to be a combination of people who are willing to evolve and a philosophical alignment that we are making commitment to, because technology has [still] so many rabbit holes.”
