Also, it is in the Broker’s interests to protect the client from risky investments or borrowing too much. The best outcome, from a completely selfish perspective, is to help your client to safely build a profitable property investment portfolio with low cost financing. If the client fails at any stage by over-committing themselves or making bad investment choices they will stop investing and may sell up entirely, which hurts the Broker’s bottom line as it does the clients.
Of the extremely rare Brokers I have come across who try and squeeze the most money from every client transaction with no concern for the client, they are invariably struggling in their own businesses and don’t last long. The Mortgage Broking industry has a fairly natural ‘eject’ button for unprincipled individuals, over and above any compliance or regulatory controls.
In fact, this incentive system of the mortgage industry seems to attract people who already have a mindset of long term sales. There are plenty of one-off sales industries that would be a lot easier for them to succeed in if they had no interest in looking after their clients.
Allowing for my own personal bias of being a Mortgage Broker myself, how can I be so sure this is true? Research shows that people who have used Brokers consistently report a strongly positive result and an intention to use a Broker again.
According to ‘Consumers on Brokers’ survey in the Mortgage Professional Australia Magazine (May 2015), 60% of broking clients did so based on the recommendation of a friend or professional, whilst only 19% responded to advertising. Also, 78% of broking clients said they would use a Broker again.
Further, Macquarie Bank’s Benchmarking Report found that 87% of Brokers considered ‘word-of-mouth’ referrals to be their main source of business.
Similarly, the National Australia Bank’s ‘Engaging Consumers and Empowering Brokers’ survey (Nov 2015) found that 73% of broking clients would use that same Broker again. In fact, 62% of Brokers had a satisfaction score of 8 out of 10 or higher, while only 2% had a satisfaction score of 2 out of 10 or lower.
By the way – the biggest factor common amongst the ‘unsatisfied group’ in the NAB survey was that they had not been contacted by their Broker after taking out their loan, indicating that good communication with clients after the loan is completed should significantly boost satisfaction.