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Speaking on Broker Daily’s latest Business Accelerator podcast episode, Broker Daily director Alex Whitlock and Broker Essentials director and broker coach Jason Back unpacked the often-misunderstood distinction between price and value in broking.
With increasing competition from digital lenders and rate comparison tools, the pair said many borrowers – and brokers – continue to place disproportionate emphasis on securing the lowest interest rate, rather than the long-term financial outcome.
Instead, they said that value in broking is defined by strategy, structure, and informed decision making, not just cost.
“With broking, brokers don’t generally charge a fee. So here’s the thing to consider – if everything is free of charge and the bank pays the broker a commission without affecting your interest rate, how do I articulate the value of what I do versus the freeness of my service? That’s so important to drill into,” Back said.
“The price or interest rate is X, but the cost of not using a broker is Y – these are really two different things.”
What a $17 loaf of bread says about value
To illustrate how consumers perceive value, Whitlock pointed to a real-world example of a premium bakery experience.
“Where I used to live, a bakery opened up,” he said.
“It was only open three or four days a week when it opened, but there were queues down the road for it. The bread was probably three times the price of anything anywhere else.
“I queued for it one time, and I realised that as you got close to the baker’s shop, you could see all of the activity going on in the baker’s shop. They were making the bread. You could smell the incredible aromas as it came out of the ovens.
“I bought a loaf there for $17 – was it worth that? These people can operate three, four days a week with queues down the road because they’re catering for an audience that values what they do.”
Back added: “That’s the real personal thing here, is that for each of us, value is different. I think often we get value confused with price.”
Why price-driven thinking falls short
According to Whitlock, this disconnect becomes more problematic in financial services, where decisions carry long-term consequences.
“I suppose the thing that we’ve got to sort of get through here is that illusion of the cheapest loan. What really sits behind that? Is it really all about the lowest rate? The reality is that a mortgage is not a purchase product. It’s a 30-year financial strategy decision,” Back said.
Despite this, many borrowers continue to treat loans as transactional products, prioritising headline rates over structure, flexibility, or suitability.
Back said this mindset can lead to poor decision making, particularly when clients fail to distinguish between price and overall cost.
“I can tell you thousands of stories about clients choosing the wrong lender because of policies, and they’re thinking about price under policy and not strategy. It’s important to note that a rate is a number, but a structure is a strategy,” Back said.
Technology v broker value
As digital lending platforms continue to evolve, Whitlock said brokers need to be clear about where they deliver value.
“If technology wins on speed and price, then where’s the broker’s opportunity to win?” he said.
Back said the opportunity remains in the human judgement and years of expertise that no machine can replace.
“Digital solutions optimise for efficiency, but efficiency is not the same as judgement. It’s like saying Google can tell you your symptoms, but you still want a doctor to diagnose the problem. This is really where the value that brokers add comes in, particularly around borrowing structure. It’s that idea of not what can I borrow, but actually what should I borrow? There’s a huge difference between those two questions alone,” Back said.
“Technology is always going to be faster, it’s always going to be cheaper. The future broker wins somewhere else.”
[Related: Brokers urged to address workflow inefficiencies]