Life too risky for mortgage brokers

Nothing reeks like an insurance aggregator’s desperate attempt to justify their existence within the market. As a skilled and experienced mortgage and risk insurance advisor, I just couldn’t help but comment on this article.

Few in the industry would debate the fact that the financial market has some rogue advisors within it; but to suggest that this stems from the brokers who offer both a mortgage and insurance solutions is ludicrous. Rather, I would suggest that there are a far greater number of ‘specialist’ insurance brokers who are guilty of “devaluing the quality of the adviser market”. In fact, I challenge Mr Gannon to recommend someone other than a mortgage broker who would be more qualified to identify a client’s financial risks and needs.

As a whole, the mortgage broking industry takes pride in the professional and qualified advice given to clients. We make an effort to understand a client’s full financial position, which is more that can be said for the numerous insurance agents more focused on selling as many products as possible rather than identifying an actual need. The insurance brokers I refer to give no consideration to a rational approach to insurance, and strike me as being more suited to a life of selling cars or peddling Amway products. The sad fact of the matter is that each one of us reading this will have met an insurance broker exactly like this. Slicked back hair, a stench too much cologne and a smarmy smile….you know the type.

One of the more interesting of Mr. Gannon’s comments was that “"The bulk of those mortgage brokers have aligned themselves with one carrier , which is a joke." I however feel that the joke lies in the fact that insurance brokers with multiple carriers tend to place business with their preferred company anyway; only to rewrite the policy two years later and reclaim the commission. If Mr. Gannon doubts that this is typical of the industry – I would happily prove him wrong.

Countless times I have advised clients with a poorly structured insurance package which has been implemented by a ‘specialist’ insurance broker. So I leave Mr. Gannon with this final point - until the ‘specialist’ insurance brokers begin to lift their game, we skilled brokers with knowledge that spans far greater than one product, will welcome the opportunity your industry creates.

We too are gob smacked at the audacious comments made by Mr Gannon in the above article.
Surely this cannot be the same Mr Gannon who burst into print a few weeks ago about the launch of his new mortgage aggregator...a mortgage aggreagator that would supposedly fill a gap in the existing market by better catering to mortgage advisers who write risk business? Can it really be that he now criticises the very brokers he is hoping will line his pockets with their $350 monthly fee??
This aggregator is a last ditch attempt by Southpark to create critical mass...mass that they are apparently losing daily to superior groups and aggregators. We wonder how long suppliers and lenders will cotinue to line Mr Gannon's pockets in the absence of any demonstrable value....not much longer if the rumours are to be believed..
We applaud Peter Leitch's solid arguments in defence of mortgage brokers. As for the LBA....Ron who?

Being heavily involved in a new service (www.mortgageshield.co.nz) which provides mortgage brokers with the tools to write insurance business, I'd have to strongly disagree with the idea that mortgage brokers do a poor job of insurance advice.

Our experience has been that mortgage brokers recognise that insurance can be a crucial part of their business, and we’ve seen a strong commitment among brokers to implement a professional, effective insurance process. The results are great too – we’re seeing mortgage brokers write multi-benefit packages with large APIs - across a wide range of insurers (not to mention well protected, happy clients!).

MortgageShield’s perspective is that mortgage brokers are perfectly positioned to introduce insurance to their clients – and with the right tools and ongoing assistance, can make this a vital and successful part of their business.

That was an interesting article outlining Mr Gannon's perspective. As the head of one of, if not the largest Mortgage & Insurance Aggregation businesses in the country I found it quite contradictory (boardering on humorous) that Mr Gannon would make such comments after only a month ago attempting to launch himself into the Mortgage Aggregation space with the clear intention of enticing brokers into his Insurance Aggregation group.
At Allied Kiwi we have gone to lengths to upskill our brokers and through our groups exclusive alliance with Mortgage Shield feel our Advisors have the widest range of tools in the market at their disposal to complete a professional and well researched job for their clients with access to up to 6 of NZ's leading Insurers. Ironically I note Mr Gannon's Insurnace Aggregation group does not even provide access to NZ's largest Insurer, Sovereign, I wonder why?
Perhaps a little more thought is required from Mr Gannon before he emparts his undoubted well researched opinion with the market!

Well, hopefully your ill conceived self-serving opinion will not make its way into print so quickly next time Mr Gannon?! There are obviously plenty of mortgage brokers who are eloquent and intelligent enough to see through your thinly veiled attempt to scare business your way. These same brokers, I assure you, are clever enough to learn about insurance products and deal with clients in a professional compliant manner. Dont you wish you had thought before you started typing??

Well, I could not help myself. I have not been in good returns since New Zealand Mortgage Funds Ltd. In defence of Allied Kiwi who have been fantastic and we have been with them for years and there are merits in belonging to such a group for resource, training support etc. Remember though, it is the lenders that have forced us to join or create aggregation groups by imposing large lending volume requirements, my guess is is they paid everyone the same there would be no lending aggregation groups! But that said Allied Kiwi have been excellent and have good quality brokers to provide mortgage and insurance.

I have been a mortgage and insurance broker since 1996 and it comes down to the integrity and willingness of the brokers/advisers to learn and apply process to everything we do, we can be competent brokers in both fields of insurance and mortgages.

As for Newpark we also belong to Newpark and again have to say the training avaialble and the benefits to our business has also been great and second to none in what we are doing at Complete Financial. We belong to both groups and enjoy being with both groups.

Finally, I think it comes down to the adviser being teachable, and using great tools like Allied Kiwis MAS system and InControl by RMS which we use for risk business.

But my guess is that there are brokers in both industries that who are just mucking around...they should just leave! I am sure you will see in other industries those who specialise and those who generalise. Doctors (GP) and Specialists are a classic example. Thats my two cents worth it comes down to the individual broker and let's see if the new compliance rules get rid of the time wasters and I am sure the perception of mortgage and insurance brokers will be much more professional.

He who lives in a glasshouse should not throw stones Mr G.
For someone whos organisation cannot offer all the better companies products because of a meltdown in relations between you and them should be very careful.
The sooner you are out of the industry the better.

Where does one begin? As an adviser (mortgage/risk) who flirted with the idea of joining Newpark you have made me think twice. I want to be part of a group who show innovative, forward thinking, as well as encouragement and support (which you claim to provide advisers, on your Newpark website). Your attitude towards Mortgage Advisers amazes me, that you would publish these views is more baffling. Should your members be worried about any future publications? Do you have any understanding as to just how many of us there are out here...what am I saying, of course you do...otherwise you would not have been promoting your mortgage aggregator group and asking us all to refer our business to you (please see link above dated Sept 21st). I gather you don't mind mortgage advisers, when you are counting the new business $$ we bring to Newpark members. I for one will see to it that no Newpark adviser ever gets my referrals; in fact I encourage every adviser who reads this article to please fwd this on to fellow mortgage/insurance writers and make them aware that this is the man who wants our business! Will you be attending any future NZMBA conferences to promote your mortgage aggregator group? I would very much like to hear more of your views, as will many of my associates. You can scoff at other "carriers", but I appreciate any organization willing to put in the time and work to train, develop, and support mortgage writers. We are beyond "cross selling"...my role is not just about securing a settlement, but providing a complete, sound package, and protecting my clients and their families against future debt. It would appear this is not something you are looking to support. There are clearly those in the market with the foresight to see the value a competent, compliant mortgage adviser can provide, and short sighted people who do not. There have been a number of questions put to you in these responses (why don’t you deal with Sovereign by the way?)…your silence Sir, is deafening.

Opinions are like belly buttons, everyone has one. But good to see comments from the five hour round table of industry experts fire up the debates the industry needs to have. Just to be really clear on a couple of points, In our (Newparks) experience we have seen some Mortgage Brokers dabbling in risk for no other reason than extra revenue, and the advice they are giving has not been what we would deem, Industry Best Practice (And we know there are risk advisers whom fall in to that category too), and vice versa we have seen Risk Advisers dabbling in mortgages, fire & general advisers dabbling in employee benefits or Kiwisaver for similar reasons. At Newpark we believe, like the PAA, that if a broker has the Competence, Skill and Education to do both Mortgages and Risk, thats great, but it's not easy to do both really really well and keep up with all the companies products, terms, conditions etc. We believe specialisation and being an expert is the way to go, but you need to be able to provide your clients with access to the other financial services, (Ring Fencing) because like the NZI ads, everyone (Banks) is trying to steal your stuff (Clients). At Newpark there are several ways to do this for Mortgages. 1. Refer to a professional at our joint venture partners Newpark Broking Services. Which is run by Brokers for Brokers. 2. Have a Mortgage Broker in your business who specialises, or in a joint venture. 3. Provide both services yourself. But in all cases the people providing the advice must have the training, skill, and professionalism to do the right job for the client, and protect the primary adviser relationship if it is on a referal basis. As for product providers, Newpark deals with all providers who get the fact that independent advisers can't promise set levels of business to one carrier. We don't apologise for that, and enjoy good relationships with carriers that make up over 75% of the Health and Life industry in New Zealand. Our members choose who they do business with to best fir thier clients needs. Enjoy your long weekend.

We have been dealing with professionals in the areas of Financial Planning, Insurance Advice, Mortgage Advice and Chartered Accounting Public Practice since 1996. One thing that is very clear from this experience is that it is a rare individual who is capable, willing and interested in providing advice in more than one of these areas consistently over a long period of time. It does happen but it is the exception. Where the advice process seems to be moving in New Zealand is towards a number of oraganisations providing a mix of services that will help advisers regardless of how they want to do business. I don't believe regulation will stop this process but there is a risk the QFE changes will reduce the quality of advice given to clients of these groups. Independent, ethical, professional advisers in all the diciplines will have plenty of choice when it comes to the provision of support services.Competition is good for the client in the end.

As a mortgage adviser (Mortgage Link) and insurance adviser (Triplejump) I would say it is difficult to provide consistent quality advice all of the time for all of the clients. I think the distinction however is what market you are working in.
Most mortgage brokers work with mums and dads in the residential market and in essence this is not too difficult, but working in the development and commercial markets requires a different skill set that many advisers do not have.
The same can be said in regards to insurance – most advisers are arguably quite competent dealing with family type cover; however when they dabble in business insurance they make a complete hash of it.
I think you could argue that it is hard to give both mortgage advice and insurance advise but I think a more appropriate argument would be whom advisers should give advice to.

I feel mortgage brokers who get into risk insurances is no different than risk advisers getting into mortgages.

The quality of their work will depend upon the effort they make to get thorough training and the use of tools to allow them to provide sound advice.

Most of this will come down to the individual.

I'm sure there are some mortgage brokers who do not at present provide sound risk advice, prehaps restricting their advice to the simple option of enough life insurance to cover the mortgage.

And I am sure some risk advisers provide equally skimpy advice around their clients mortgage needs.

Ultimately if the job is not done well, you run the risk of another - more competent - adviser beign able to easily show the poor advice previously given and you risk losing both the risk and the mortgage business.

Before any adviser steps into a 'new' field, they need to ask themself if they are prepared to be fully trained - including the time and cost this will involve - and are they going to earn enough income and see enough potential clients to make this ne field a significant part of theri business on a regular basis, and not just during periods when markets are down or interest rates and the property market lead to fewer mortgages being written.

Under compliance it may be that we need to continually 'prove' our competence in all fields of advice we provide, even category 2 products.

And of course the same argument can be made for mortgage brokers or risk advisers now selling KiwiSaver. Do you want to still offer this service when the higher costs of ebign an AFA apply?

All this comment would be OK if yesterday my former client had not phoned to ask if there was any possibility cover might still be in place for her husband.

The policies in place through this office had lapsed (we had phoned to check why) after her mortgage adviser had advised not to change direct debits to the new bank (where he had placed the mortgage.) He advised he would be placing new insurance cover.

The husband and father (of young children)died this year. There is no insurance in place as the mortgage adviser was not able to secure new cover because of a medical condition.

Who would advise cancelling before securing new cover? While we all make errors I believe this behaviour is neglient and should be held to account. Your comment?

It is good to see this debate occurring – however it’s hard to escape the feeling that mortgage brokers are being underestimated by their insurance counterparts!

There is no reason why a mortgage broker, who has the genuine aim of protecting their clients and adding another quality service to their business, can’t help their clients set up insurance. It just comes down to process and having the right tools to do the job (and to follow up with reviews, ongoing service etc). And while technology is not the answer for everything, it does make it much easier to take each client through a clear and consistent process. This is one of the major things we’ve noticed at Mortgage Shield – once a mortgage broker has the right tools and information (and the confidence that comes with these), the insurance packages that they write are solid, multi-benefit options – that any insurance broker would be happy to have written!

It looks like Darren Gannon's shooting from the hip got a few "Jack's of all Trades" in the heart. Good on you Barry Read for your balanced perspective in support of Newpark. It is my view that an expert Mortgage Broker and an Expert Insurance Broker are very unlikely to be one in the same. I refer my insurance clients to an expert Mortgage Broker, this to ensure they get the best possible advice in a field i have knowledge of but am not an expert in. The highly regarded Mortgage Brokers I know of do the same in reverse for the identical reason.

Surely this argument is only made possible by the incredibly low barriers to entry in both markets. This is hopefully about to change but historically anyone in NZ could get agencies with the major carriers and start giving advice, whether its Insurance or Mortgages so of course mortgage advisers will look to insurance sales in the current economic climate. I wouldn't expect my Doctor to give me legal advice, but if he did I would expect him to show me his law degree. The question isn't whether Mortgage Brokers are capable enough to advise on Insurance, the question should be, if they want to enhance their offering to their clients by offering Insurance advice, what steps do they need to take to become a competent, qualified, compliant Insurance adviser. The same should be said for Insurance Advisers who "tag" on a homeloan, or a reverse equity mortgage to their insurance advice.
There is also a myth that longevity in either industry equals a higher standard of advice. Of course experience is advantageous but I know plenty of stalwarts who couldn't read a balance sheet if it was written in red crayon and I know many "new" advisers who could competently present advice to a company accountant with a deep understanding of the issues at hand. My point is that instead of getting defensive about who enters our market, lets raise the standard, improve the accountability and get on with helping NZ’s buy their first home and protect their wealth.

Boy, things sure get personal from time to time. I’m sure that there were many more people at that round table meeting from within the industry so I wonder what their comments might be? They would agree I suspect. Maybe the comments from the meeting hit a nerve with some mortgage and insurance advisers and hence their replies above.


Please correct me if I am wrong but by being part of the Newpark Group I can place my business where ever I see fit, I am not restricted to place any percentage with any one company, I get the benefit of associating with very successful insurance advisers with a huge amount of experience who, because we are part of the same group, are more than happy to share their wisdom and the training and support that is offered by being part of the Newpark Group is fantastic.

With regards to the Newpark Broking Services I was of the understanding that this was a vehicle to get mortgage professionals and insurance professionals to work together by referring to each other. Not to try and get advisers to sell both mortgages and insurance.

And what’s with all the personal attack on Mr Gannon? Are we not allowed to have an opinion anymore? Could it be the good old NZ tall poppy syndrome kicking in again?
In my time of being an insurance broker I have always referred my clients to specialist in the field of accounting, law, mortgage broking etc. I want the best for my clients and I feel that by referring them to a specialist they will get the best advice. I too, like “Angry Insurance Adviser”, have come across clients who have been insured by their mortgage broker with non disclosure in the form of smoking status, family history, cholesterol levels and even heart surgery that was not put on the original application! All too often a client who is dealing with someone who has financed them into their home, be it a banker or a mortgage broker, will do whatever that person tells them to do just so long as they get their money.

I recently saw a client who was referred to me after they had seen a mortgage broker who also sold insurance. They were told that they could not get further insurance for one of them because of a medical condition. Even though the medical condition was terminal I was able to increase the life cover for this client by over $150,000. The mortgage broker had happily organised their loan knowing that they required both their incomes to finance this and yet the greater of their incomes is soon to stop forever! What would happen to this family if I was not able to secure the extra life insurance?

I am sure that there are plenty of insurance and mortgage advisers out there doing a good job for their clients in both areas. I don’t think that Mr Gannon was referring to them. But there are many mortgage brokers out there who have been encouraged by the insurance companies to sell their products direct rather than going through an established insurance adviser and the mortgage brokers are taking up this option to increase their income. Not something they would have thought about before mortgage commissions were reduced or the economy slowed I’m sure.

There is a provider out there who I think pays higher mortgage commission and trail if you also place insurance business with them. Do the mortgage brokers who sell these products declare that to their clients? And what is with the short form application? Is this not non disclosure waiting to happen? I think some of the insurance companies need to have a look at who they are dealing with and why.

My goodness, who would have thought that such an article would have stirred up so much debate, and emotional responses from all corners of the NZ broker market. It is good to see!

It is unfortunate however that some of the more senior industry players do not reflect upon why mortgage advisers needed to get into the insurance in the first place..

I doubt very much that the various mortgage aggregators in the market would even have bothered with getting into insurance, if they hadn't devalued the mortgage broking market to such an extent that the major trading banks had to cut commissions by a third to make dealing with the broker channel viable!

They certainly would not be looking to insurance for residual income options if the fly by night, non bank lenders were still around!

It appears that some people have very short memories!

The reality is that there are very few advisers in the market that can provide advice on both the insurance and mortgage fronts that is of equal quality.

I can attest to this having worked in both the mortgage and insurance broker markets.

People may chastise Mr Gannon for his comments, but in a large part they are true.

As a consumer, would I look to getting mortgage advice from someone who spends 85% of his time writing insurance?

Or would I want to get insurance advice from someone who has been a mortgage adviser for the last 10 years, only to get into insurance now because he gets paid more for it (or the aggregator he is aligned to).

No! I would rather my adviser have the integrity to refer to someone who is a specialist, and who is willing to provide me with more than one choice of insurer, or lender.

As, for Andrew, Mr & Mrs Smith, and amazed, surely if you believed in your words, you would be willing to put your full name to them!

Thankfully, regulation is on it's way!

Darren Gannon was the only producer group leader invited to the Round Table which surely shows he is one of the respected industry leaders. Whilst we are all entitled to an opinion it is obvious some are able to have an opinion on something they know nothing about i.e Newpark Group. For the record I still hold a Sovereign agency which I use.

Perhaps before slamming Darren's thoughts maybe it should be asked where they came from. As part of a group of Newpark's top Brokers I recently attended a meeting in Australia with one of Australia's top writers. It was evident from this meeting that Brokers/Advisors in Australia have had to specialise and network together. Is this our future?Only time will tell but maybe something we should be prepared for.

By the way Mr & Mrs Smith, Ron who? happens to be Ron Flood a person who has a lot of respect in this industry and one you could obviously learn a lot from.

I find this conversation just slightly depressing. The people above who, like Mr Gannon, feel that we're only capable of being proficient at one thing (i.e. providing either mortgage OR insurance advice) must have little faith in the ability of the types of people that fall into this industry (I use the word "fall" because I've met very few people that choose it). Perhaps this is true. Perhaps the majority of us are poor performers with less than fair intelligence? Perhaps providing great mortgage advice (or insurance advice) is all we should ever aspire to? Heaven forbid that we should push ourselves, be interested in a healthy range of things, study hard, extend our abilities, and develop the service we offer our clients. We wouldn't want to hurt our grey matter with such reckless ambition.

Let's get real. Providing good quality mortgage (or insurance) advice is hugely important, and is challenging, but it's not so complicated that we don't have the capacity to do more. There are plenty of people out there (in our industry - and most certainly in others) that work hard, have an ongoing passion for learning and extending themselves, and excel at more than one thing.

I think that most would agree that a dedicated (and at least somewhat sharp) person could become a competent mortgage or insurance adviser within the space of a few years. Apart from fine tuning their skills, and keeping up with industry developments, what is a motivated and passionate person supposed to do with the rest of their career by way of challenging themselves? Or is that it?

The most successful people that I have met within this industry are always great at building relationships - but they are often living proof that a keen mind is not a prerequisite for success. Let's face it, the intellectual requirements although reasonable, are far from at rocket science levels. So, I'm not sure on which side of the fence I sit. If the average adviser in our industry is fairly dim, then Mr Gannon's comments are on the money (which, like I say, is slightly depressing - but could well be true). However, I'd much prefer to sit on the other side of the fence - where the grass is greener and life is generally more upbeat.

From my experience mortgage brokers are very well positioned to write risk insurance. In most cases mortgage brokers are required to complete an application form that addresses assets, liabilities, income & expenses in some detail. Detail that opens up excellent risk management potential. This simple analysis puts them streets ahead of many so called risk advisers that complete no or very average fact finds. Mortgage brokers position themselves nicely to provide quality risk advice and through robust process will make big progress in the life insurance market.
Darren Gannon has expressed his unqualified opinion on this matter. Maybe a better understanding of the mortgage application process is required by Darren before such loose comments are made.

Interesting to see that after a short article many of you choose to attack Darren Gannon rather than reflect on what he is saying. For any of you who have been to Australia or MDRT and spoken to top producers about how regulation has affected them, how they now do business & how there business has improved then you would understand Darren's comment is well founded - Specialisation is the way forward with forming strong networks to provide qualified referrals where you know your clients are getting the absolute best advice from someone working 100% in the area they are seeking advice be it insurance, mortgages, fire & general, accounting or law. I suggest that rather than taking Darren's comment as an attack on anyone personally that you get in touch with your BDM and ask to be put in touch with an australian counterpart and find out what they do - An hour of their time could well be the best thing you do this year. I know the contact made whilst on the Newpark Top Advisor trip was one of the most valuable things to happen for those of us that were there and for me personally was one of the best conferences I have attended

With compliance coming on, lets wait before you crucify Gannon.I await with antcipation.But a question I do have for him , is how newpark is going to react and help his members with the issue about sovereigns 230% commish deal.because thru other carriers they dont get that.comment people???
I really am curious.
Is it about the clients or the money!