A branded financial planning and mortgage broking franchise has confirmed that it is reviewing the way its financial advisers are paid.
Mortgage Choice chief executive Susan Mitchell announced the review this week following the release of the group’s annual profit results for the year to 30 June 2018.
The business recently overhauled its mortgage broker remuneration structure in the wake of widespread media scrutiny over its franchise model. Ms Mitchell said the new broker model, which was announced earlier this year, will provide franchises with higher pay and reduce their income volatility.
Speaking to ifa, the CEO said that the financial advice industry was changing, and that Mortgage Choice had to change with it.
“A remuneration model is currently under review to ensure it is competitive in a changing landscape,” Ms Mitchell said.
“The financial planning industry continues to see rapid change and the restructuring of wealth businesses across a number of Australia’s financial institutions provides Mortgage Choice with the opportunity to attract quality advisers to the financial planning network in FY19.”
In FY2017-18, Mortgage Choice Financial Planning grew by 10.4 per cent from FY16-17, delivering a profit of $362,000.
“Mortgage Choice Financial Planning offers a unique proposition for quality advisers looking to change licensees or transition from institutions, to start up their own advice business, with the full support of a franchise model,” Ms Mitchell said.
Mortgage Choice recently implemented a new broker remuneration model after following a review. Ms Mitchell said the new model has already proved popular with franchisees.
“The new hybrid broker remuneration model will provide franchisees with higher pay and reduce their income volatility, enabling them to invest in their businesses while attracting new, high quality brokers,” she said.
Mortgage Choice posted an underlying statutory NPAT result of $25.6 million but a final result of only $4.2 million due to a one-off loss.
The one-off loss of $28.5 million after tax was due to the introduction of the new broker remuneration model but was an improvement on the earlier estimate of a $30 million loss.
Ms Mitchell said there were positive aspects to the results like the growth in their broking and financial planning business, but the positives were limited.
“Despite the strength of our brand and customer offering, settlements in FY2018 declined in a flat market, and we are not growing our franchisee numbers,” she said.
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