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Convergence of advice and mortgage broking inevitable

Despite a number of challenges, the financial planning and mortgage broking industries will and should converge, says Gadens Lawyers partner Vicki Grey.

“Convergence absolutely will happen and has to happen,” Ms Grey told ifa. “I think it is difficult to give sound investment advice without the ability to provide an entry into geared arrangements.”

Ms Grey, who advises mortgage brokers and financial planners on tax, regulatory and compliance issues, says the convergence is likely to take part in two phases.

The first model to evolve will be a single company offering separate financial planning and mortgage broking services, as seen by the example of Mortgage Choice, which launched a planning business in October 2012.

“The benefit [of this model] is that you can share information, saving a consumer from giving the same info to a planner and a broker,” she said. “It’s just more convenient and cost-efficient.”

The second model to emerge will be single practitioners offering both mortgage broking and financial advice services, Ms Grey said, adding that this is likely to occur “further down the track.”

“Planners and brokers both have numerical competence, they understand finance, so whether you’re talking about one side of the balance sheet or the other, ultimately it makes sense to be skilled to deal with both,” she said.


While convergence is likely and desirable, a number of challenges remain, such as different governing laws and industry structures.

“The types of institutions that planners often introduce their clients to are very different from the world of non-bank lending and mortgage broking,” Ms Grey said. “There might be a bit of a cultural challenge to overcome.”