Brokers like the look of financial planning
Peter Coleman
An increasing number of stockbroking and mortgage brokingfirms are growing their financial planning capabilities to meet the challenges of the current market.
Some brokers acknowledge the trend is being driven by a need to replace flagging transactional revenues with recurring revenue at a time when market trading has slowed drastically from a year ago.
Others describe it as a natural evolution by brokers to build long-term advice based relationships with clients rather than the result of any current market volatility.
Sean Preece, head of distribution for Ord Minnett’s asset management division, said broking houses are “increasingly moving strategically into the financial planning, funds management and indeed the platform space”.
“My view would be that broking houses are probably looking to increase their recurring income by developing relationships in these sectors in order to become a viable business in all markets.
“Two years ago we were all making heaps of transactional revenue out of trading because the markets were so good and everyone was happy to buy stocks, but now trading has come virtually to a halt.”
Peter Coleman, head of Macquarie Private Wealth, said it recognised brokers needed “to evolve beyond doing transactional equity trades for clients, which was not a business that was going to survive in the long-term”.
“You really have to protect your relationship with the client these days, grow the services you provide the client and expand the value of the relationship with them.”
Accordingly, Macquarie has been recruiting more financial planners into the ranks of its broking division and also helping its existing brokers to “look like financial planners”.
“We’re developing ‘investment advisers’, who are straightforward brokers but who also have the accreditation to be able to service their clients’ holistic needs,” he told Money Management.
“That accreditation basically enables them to provide advice on a range of products that traditional brokers would not be able to do, superannuation being the main one,” he said.
Stephen Durkin, general manager of banking services and solutions for NAB Broker, said the pace with which mortgage brokers are moving into the planning space is increasing.
“We are certainly aware of that trend, and in fact we’re looking to play a key role in terms of helping brokers move into that space.”
Durkin said many brokers “now accept that they need to change the nature of the role they play to be successful in an industry that is changing significantly”.
AUTHOR
Mike Taylor
Recommended for you
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
Global investment consultancy bfinance is expanding into offering services for wealth managers as they seek advanced investment strategies for their clients.
The majority of advisers are failing to proactively understand their clients’ needs and satisfaction, with just one in four practices formally seeking feedback in the last two years, according to Business Health.
