New compliance measures … Covid-19 lockdowns …. the tsunami of refinancing - it's been both a challenging and rewarding last five years for brokers.
So, what's ahead for the industry?
LMG Executive Chairman Sam White, representing the industry's largest network of brokers, shared his insights with The Adviser Magazine this week into what he believes are the next opportunities for brokers and their businesses.
Brokers have been overwhelmed by refinancing requests in recent times. But, with the horizon of refinancing activity looming, brokers are reclaiming time to prospect for new customers and generate revenue from existing clients via diversification and referrals.
"There's going to be a greater focus on prospecting for new customers and really working existing customers for referrals," he said.
"The NPS for brokers has remained incredibly strong and I think that should give every broker confidence in the value of their service. It's also an invitation (for the customer) to say, you've helped me with this, now help me with something else.
"One of the things we realised is that we need to start to diversify brokers' revenue. Getting into asset finance and commercial - whether brokers choose to do that themselves and become specialists or whether they choose to refer - we wanted a platform that could cater for all types of lending and give brokers a single view of their customers."
Diversification is often a byproduct of adversity. Mr White noted that when trail commissions were removed in New Zealand, brokers leveraged their relationships with clients to diversify into insurance, which has now become a significant part of their revenue stream.
"(Diversification) is going to be more and more important going forward because as this market gets tighter - I think this year is going to be harder than what it has been - we're going to need to help brokers to make more money from the existing relationships they've worked so hard to build."
Creating specialised LMG Asset Finance and LMG Commercial Finance divisions - with on-the-ground support specialists, referral hubs and Nodifi's leading lodgement platform - is supporting brokers to service their clients beyond simply home loans.
Mr White said the trend of broker businesses becoming bigger will continue, especially with diversification opportunities.
"My view is there'll be fewer broker businesses in the future. Those businesses will be larger and they'll offer a more complete holistic service to customers."
While LMG is helping train and support brokers to diversify their services themselves, it's equally providing opportunities to refer to other specialists in asset finance and commercial finance within the group, allowing them to keep the client relationship and the focus on their specialisation.
"We're now seeing commercial specialist groups who are saying, 'All I'll do is commercial - I won't touch residential or asset finance and, that way, I won't be competing with you if you refer your customer to me. I think that's gonna happen more and more as well'."
The surge in mortgage refinancing will eventually end, especially with lenders withdrawing cashbacks and serviceability becoming tighter.
"There won't be as much refinance activity, meaning clawback numbers will drop.
"I think trail books will be worth more because you're going to have a longer-life loan on the back of that."
As pointed out earlier, existing clients present brokers with an opportunity to generate further business or generate referrals off the back of great service.
"Staying in touch with your customer is just table stakes now. How we engage with existing books and how brokers make sure they're communicating is critical."
The NPS of brokers underscores the value they offer clients.
But educating clients and preparing them to lodge takes time. Mr White noted that brokers are increasingly factoring in the time spent on education and preparation into the transaction.
"I think the concept of engaging and educating customers is hugely valuable," he said.
"There's broad-based education which you can scale through seminars and things like that.
"And then there's specific help for a customer, putting in the time and effort to help them get ready to lodge. I think that deserves a fee and I think customers are happy to pay a fee for that.
"I think customers, generally, expect brokers to get paid properly. Some brokers now charge a fee and if the customer does a loan that fee is refunded partially or fully. I think there are definitely opportunities for that."