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In the latest episode of Business Accelerator, broker coach Jason Back and Broker Daily director Alex Whitlock discussed the risks of brokers developing purely transactional relationships and the rewards available to those who successfully position themselves as long-term partners in a client’s financial journey.
“You’re surrounded by transactional people in property,” Whitlock said.
“There is a massive opportunity for brokers who develop a customer-driven relationship with a partner which is long term.”
While brokers often position themselves as long-term partners, Back and Whitlock noted that many borrowers continue to experience broking as a single-event transaction tied to a property purchase or refinance.
Brokers who can escape this transactional trap, they agreed, would be uniquely positioned to take advantage of a rapidly evolving market.
Back added: “Brokers, of course, are not transactional. Brokers are deeply integrated with the outcomes for the customer. The care factor is extremely high. But I want to frame this for the borrower, because the borrower views it as transactional.
“But herein lies the opportunity. Most brokers that I know follow up with their customers. They’ll send them an email. They may even give them a call to see how things are going, because they have the best interest of their customer at heart.”
Difficulties of advice
A key challenge raised during the discussion was the regulatory framework brokers must operate within, particularly around the limits of advice.
Mortgage brokers operate under strict regulatory boundaries and are not permitted to provide legal advice, which can limit how broadly they are able to engage with clients beyond the loan transaction.
“I think there’s been a challenge for brokers historically under our licence agreements,” Back said.
“There have been very defined guidelines around what we can and can’t talk about. So are we getting to the point where, as mortgage brokers, there’s a disconnect between what customers want and need from us versus what we can deliver under the current regulatory regime?”
Back said this did not mean brokers could not become trusted partners and guides within their regulatory parameters.
“I’m encouraging that conversation for our industry, that we start thinking about what it is we need to be talking about with the client so we can ensure we’re taking them down a path that works for them, not just through the transaction, but where we’re a guide, a partner for the life of that loan,” he said.
“It’s a little bit like the saying, pets aren’t just for Christmas. A home loan’s not just for the purchase.”
Back and Whitlock agreed that this wasn’t about churning deals, but instead staying in clients’ lives throughout the loan term to give them advice and opportunities.
“You’ve got the opportunity to say we’re a partner with you in your property, and for as long as you have a mortgage, you have an opportunity to form a partnership,” he said.
“There’s an opportunity to really galvanise the relationship moving forward without stepping beyond your realms of providing advice.”
Standing out
Back warned that many brokers are unintentionally blending into the market by relying on points of difference that have become industry standard, saying that genuine differentiation now comes from how the relationship is framed rather than the services listed.
“I think the role of the broker has been changing,” Back said.
“I’d like to see it evolve a lot faster in the sense that maybe the industry needs to demonstrate a little bit more courage.”
Back also used an analogy involving electric vehicles to illustrate how loans are increasingly viewed as a commodity. While fuel or electricity is essential to make a car run, he noted it is rarely what people talk about or feel emotionally connected to – a comparison he said aligns closely with how borrowers view home loans.
He said brokers can add value by acting as guides who help clients understand the product, how to look after it, and how to elevate it.
“Your role as their adviser, as their guide, is to work through and negotiate, to fight the battles with them, to educate them and to work them through those things so that they can really enjoy and have a great relationship with their properties,” Back said.
He added that if the home loan itself is effectively a commodity, it is critical that brokers stand out by becoming the differentiator.
“If the home loan is the commodity, then you need to become unique, which you are,” he said.
“This is why I say to brokers, think about what makes them unique. Think about where your passions lie, your personality, what you’re good at in your business and really hero those things.
“Because a confident broker that leads into areas that they’re knowledgeable about, that they’re passionate about, it shows in the experience itself and that’s what people are really looking for.”
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