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Long before the royal commission, a handful of mortgage broking groups saw an opportunity in financial advice. Loan Market, Mortgage Choice and Yellow Brick Road (YBR) all offered, until recently, mortgage broking and wealth management services.
Last year, Mortgage Choice made a business decision to exit financial planning as part of a program of work to focus and streamline the business ahead of its acquisition by REA Group.
“From the middle of last year, Mortgage Choice
Mortgage Choice Financial Planning has not had any financial advisers on its licence since March 2022.
This is a common message — one of support for financial advice and advisers while simultaneously backing out of the industry.
Loan Market, the mortgage broking arm of real estate giant, Ray White, wound up the Wealth Market business in March. Chairman Sam White said he believes in financial advice for all Australians — “not just the wealthy”. Yet like Mortgage Choice, the group couldn’t see a viable business case for keeping Wealth Market going.
YBR got out of financial advice before Loan Market and Mortgage Choice. The group sold its advice business in early 2020.
YBR’s executive chairman Mark Bouris told Mortgage Business sister brand ifa that in financial advice businesses, there are more people and cost in compliance than there are in marketing.
“At one time, it was around the other way,” he said. “Someone has to exit the Conga line. And lots of people have, such as consumers who don’t have over a million dollars in investable assets. They can no longer afford the price that a good planner will charge.”
“There’s just not enough money in it for them,” he said. “It’s what I call profitless prosperity. It’s not only not viable, it’s a liability. Financial advice is a high-risk, low-return business.”
James Mitchell is the head of content at Momentum Connect. He has more than a decade of experience writing about the finance industry, including mortgages, wealth and superannuation.