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Brokers target business from ‘out of touch’ planners

Mortgage brokers have a clear advantage over financial planners in advising ‘mum and dad’ investors in key product areas, the head of a major brokerage has said.

Vow Financial chief executive Tim Brown told ifa that mortgage brokers’ better understanding of the needs of everyday Australians gives them an advantage over financial planners when it comes to providing advice around life, risk and income protection products.

“Planners have not done a very good job of looking after clients in this space, brokers are just more in touch,” Brown said.

“I don’t believe planners have actually spent a lot of time looking after the needs of the largest segment of the market.”

“They’ve spent most of the past twenty years focusing on the top 5 per cent of income earners, whereas the average broker deals with mum and dad investors every day.

While agreeing that financial planners are better placed to offer advice on “equities and things like that”, Brown said mortgage brokers are more qualified to advise on all property-related investments.

Brown includes self-managed superannuation funds (SMSFs) as one of the areas where brokers have the upper hand.


“We find that too many planners are pushing clients into SMSFs,” he said. “Many trustees that don’t meet the threshold of $150,000 in super are being placed into SMSFs on their planners’ advice.”

He also said changes in the financial planning industry and diminishing number of “independent” planning practices were working in favour of mortgage brokers.

“It’s very rare these days to find someone operating completely in their own space as a financial planner, but many brokers are still ‘one-man bands’ and that appeals to the bloke in the street.”