You provide two services – but most brokers only sell one

This morning I did a radio interview and I was asked what I thought the common mistakes property investors make with respect to borrowing. My answer was that people didn’t seek credit advice which resulted in poorly structured loans (giving rise to lack of flexibility, poor tax planning and poor risk management). I suggested that borrowers should first seek credit advice on things like how much they should borrow, how to structure it, how much to repay, fixed or variable and so on. This advice is bank-neutral (i.e. isn’t affect by the lender selected). Once borrowers have this advice, they can then turn their attention to the question of which bank to use.

I think it’s important that clients understand that we (brokers) deliver these two distinct services. The first service (advice) can deliver a large amount of value in the client’s eyes – although the value might not be obvious until your work has been done. Finding the best loan and doing all the paperwork is attractive too. However, the “value” is typically less than the advice bit – because the key benefit is saving the client some time.

In marketing, there’s a saying “tell them what they want to hear and educate them about what they need”. Most borrowers (that have not used a mortgage broker in the past) want a broker to save them time and get them the best deal. This is what you should tell them you do in your marketing. However, your sales process should aim to educate your client as to the need, importance and value of your advice. A good broker provides two services – talk about each of them at the right time and you’ll be successful. If you make the mistake of only talking about one of them, you’ll find it much harder to win clients.