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Mortgage brokers flock to advice

A survey of mortgage brokers under 30 has found a sharp year-on-year increase in the number offering financial planning services, with many more intending to become RG146 compliant.

Data from the latest Young Broker of the Year ranking survey, conducted by ifa's sister publication The Adviser, indicates growing appetite among the younger demographic of mortgage brokers to break into financial advice services.

The survey found that 47 per cent of respondents now offer “financial planning services”, up significantly from 27 per cent in 2012.

In addition, it found that 13 per cent of young brokers who do not currently offer financial planning services aim to undertake relevant qualifications in the next 12 months.

Mortgage broker Theo Chambers of Shore Financial said he has recently seen “how important financial planning is to mortgage broking” and intends to grow his financial advice offering to 50 per cent of his total business.

Reflecting on the survey results, Financial Planning Association (FPA) chief executive Mark Rantall told ifa he welcomed new entrants into the market as “there are more financial planners retiring than entering the profession”, but warned that proper qualifications are necessary.

“It’s great to see new entrants coming from all walks of life, but what’s important is that people moving into financial planning aren’t viewing RG146 as the requisite for providing competent and holistic financial planning advice,” Mr Rantall said.

Urging mortgage brokers interested in entering the market to become certified through the CFP process, Mr Rantall expressed concern that some of these mortgage brokers may be using the term ‘financial planner’ loosely.

“If you are providing limited or scaled advice then that’s not really financial planning advice,” he said. “There are a lot of people who call themselves investment advisers, financial advisers or financial planners right from the property sector to the mortgage broking sector to the full advice sector – which I think can be very confusing for consumers.

“It’s important from a consumer’s perspective to know what they are getting – truth in labelling is important.”

Enshrinement of the term ‘financial planner’ in corporations law would help resolve consumer confusion and misleading use of the description, Mr Rantall said, reiterating the FPA’s long-standing call for legislative reform on this issue.