The entry requirements for broking are “too low”, and if brokers want to be held in the same light as solicitors and accountants, they need to be educated accordingly.
That’s from Brady Henley, managing director at One Plus One Financial Solutions in Tasmania. Speaking to Mortgage Business, Mr Henley called for a higher barrier to entry for mortgage brokers looking to enter the profession.
He explained: “I'm not saying education is the be all and end all of things, but there needs to be barriers of entry which are similar—if we want to be seen in the same professional light as accountants and solicitors and what have you—then I think it's only right that we need to be educated accordingly.”
A broker with a university qualification in financial planning and advice, Mr Henley said that broker entry requirements should be more closely aligned with the requirements for becoming a financial planner.
In February this year, Parliament passed reforms requiring new financial advisers hold a degree while existing advisers are required to meet a standard equivalent.
Speaking at the second reading of the bill, the Minister for Revenue and Financial Services, Kelly O’Dwyer, said: "Under the current law, advisers can become qualified to provide financial advice after just four days of training, and there are no specific ongoing training requirements beyond that.
“The fact that an adviser could reach accreditation in four days has given the industry a bad image."
Mr Henley said: “The barriers of entry into financial planning are extremely more challenging and the reason that that is the case is that . . . our clients have to opt in to our fees every two years; and if we do not meet the goals and objectives that we set down with our clients, they have every legal right to turn those fees off.
“If that was to happen in the mortgage broking industry, I guarantee you we would start to see . . . higher professionalism in the area of education, and . . . not treating it as a transactional process.”
Mr Henley added that, in light of recent reviews into broker remuneration and the emergence of the fintech industry, the importance of providing “sound holistic advice” was “without doubt” growing.
“If we as a profession are not taking into consideration their [the clients’] financial planning needs . . . or having mechanisms in our business to be able to provide that solution, we're doing the wrong thing by people.”
The problem with low barriers to entry, Mr Henley commented, was that it means new brokers “are not going to last long”.
“I don't want to stop someone from having a career in mortgage broking, like young Laura who's one of our team here. If young Laura wants to develop into that mortgage broking area, she's got four–five years of experience in a practice, perhaps doing a Certificate IV is enough for her to start seeing clients. But if . . . someone's coming out of running a mechanical business and they suddenly decide they want to become a mortgage broker, well, that's what I don't like.”
Mr Henley hopes that the reviews into broker remuneration will provide an opportunity for brokers to align themselves more closely with the financial planner mentality of providing a “holistic” service.
He said: “The mortgage remuneration review really is a stepping stone to providing sound holistic advice to people or having the mechanics in place to make sure you're doing the right thing by the client.”