Mortgage Brokers: What’s Best? Know your Client or Educate your Client

Mortgage Brokers: What’s Best? Know your Client or Educate your Client

Mortgage Brokers: What’s Best?

Know your Client or Educate your Client

Good Debt can be the most powerful way to build wealth, while Bad Debt can cripple one’s finances for years.  Mortgage Brokers can make a difference.  With the help of a Mortgage Broker, all Australians can grow their wealth and secure their financial future.


Software supporting “Know Your Client”


From July 1, 2020, all Mortgage Brokers must act under new rules which demonstrate the “Know Your Client” rule.


Malavika Santhebennur, of The Adviser, has detailed how the industry can adjust to the new requirements in her article, Compliance in the Digital Age.  In the article, Scott Stierli of Mortgage Choice told The Adviser:


Technology can be used to automate and collate customer information efficiently.  It will also play a big role in providing a robust system of record for all the broker’s actions and customer interactions.


Platforms are now providing integration with third-party applications.  This has resulted in improved efficiencies.


For example, the broker can determine the actual spending habits of their client rather than “what the clients think they spend”.  There can be a vast difference between actuals and estimated living expenses.  The broker must now demonstrate that they do have an accurate record of these costs and that spending habits have been considered when selecting a loan for that client.


Educating your Client supports the KYC rule


According to Your Client Matters, the key to writing more loans is the education of clients by the broker.  This helps to be relevant and stay at top of the client’s mind long after the loan has been approved.


This is important for repeat business.


When a client contacts a broker for the first time, their real concern is for the broker to find them the best loan as quickly as possible.  The broker has the tools to do this very efficiently.  However, within a couple of weeks, the transaction is completed.  The client may return in a few years when the need for a loan arises, or they may simply choose another broker.


There is a golden opportunity here for the broker to use that intervening time, to nurture that client. 


With education, the broker can mold the way the client thinks about debt management more effectively.  Through education, the client can be taught to respect debt, but leverage to maximum advantage without exposing themselves to excessive risk.


To remain relevant, the broker could provide their client with a digital tool that the client is likely to use regularly.  All the better if the digital tool can incorporate an educational component and promote new business.


A Historical Perspective of Property Investing


When I was in my thirties, I had three older friends, who like myself were dedicated, property investors.


What stood these friends apart was that none of them had tertiary education, their incomes were average, but they all had the same key motivation.  They all wanted to be financially independent, unlike their parents.  To achieve this, they scrimped and saved until they had a 20% deposit for a property purchase.  Once the loan was secured, they set out to repay that loan in the shortest possible time.


Generally, they could repay a 20-year loan in about 10-years.  Once the loan was repaid, the next property would be purchased and with the rental income from the first, this could be repaid even faster.  And so, the compounding effect of all that rental income started their wealth journey.


From very humble beginnings they all became quite wealthy.


What was interesting is that they never wanted to be overextended with debt.  They borrowed and reduced debt as a matter of priority.  The speed at which debt was reduced, saved thousands of dollars in interest costs.  When loan interest rates started to rise, they were sitting pretty in that they were well in advance of loan payments and could adjust their future borrowings to meet an environment of high-interest rates.


I wonder what would happen to current borrowers if interest rates rose to 7.00% or more?


I find it interesting to look back historically and perhaps current borrowers may learn something from little history lessons like this.


It is close to 30-years since Australia had a recession and the effects on my property portfolio are etched in my memory.  Just talk to others who experienced that time to hear some horror stories of having to sell a property when the property market had collapsed.


Imagine home loan interest rates capped by the government at 15.6% and investment property loans of 21.5%.


financial planning software for mortgage brokers

Paul Keating said the 1990s downturn was “the recession we had to have”.



Converting clients to serial Property Investors


With 37% of the Australian population investing in real estate coupled with the high homeownership, Mortgage Brokers are in a perfect position to educate their clients on how to manage their loans efficiently and safely.  The value in dedicating financial resources towards property investments can be reinforced.


If the broker can demonstrate scenarios, like that of my friends, their clients will understand the importance of good debt management.


Even the brokers’ best clients are unlikely to need a new or refinanced loan more than every few years.  The broker needs a means by which the client remains loyal when it comes to future loans.


One way to do this is to give your client access to digital tools they will use regularly.


Mortgage Brokers buying real estate



Introducing Financial Mappers Lite for Mortgage Brokers


Financial Mappers LITE is a 5-Year Savings Plan for client use only.  This plan is a fully integrated financial plan incorporating debt management with personal, investment, and superannuation cash flows.  The software generates reports on their current financial position and evaluates their insurance needs.


The client uploads the plan to the Plan Review.  This allows the client to review the plan, one section at a time with explanatory notes explaining the graphs and tables of information.  In this Plan Review area, the broker’s educational content, including videos, can also be accessed.


The product is white-labeled and provides an opportunity to include marketing material.


The client can share reports generated within the software. These reports will support the “Know your Client” rule, in that the client has provided the broker with a year by year cash flow analysis of their financial intentions for the next 5-years.


Financial Mappers Lite does not give the broker access to the client’s plan.  However, if this is required a similar product is available in Financial Mappers Pro.


Both Financial Mappers Pro and Financial Mappers Lite may have a place in the Mortgage Broker’s third-party digital tools. Our recent integration with Worksorted shows how simple this process can be.


To find out more:




mortgage Brokers and Financial Mappers Lite



Glenis Phillips SF Fin

Designer of Financial Mappers



Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.

I am a founding board member of Plencore Wealth Ltd and Plencore Online Pty Ltd. I am the designer of the product Financial Mappers and Financial Mappers PRO, cloud based modelling software for Personal Finance. This software is sold on the web site am an educator, investor and expert in both personal finance and mathematical modelling and the author of 'Map Your Finances'.I have both a Graduate Diploma in Applied Finance and Investments and a Diploma in Financial Advising from the Securities Institute of Australia. I also have a Financial Analysis Certificate, by Distance Learning from University of Technology, Sydney. I am a Senior Fellow and Senior Mentor of FINSIA.


Leave a reply

Your email address will not be published. Required fields are marked *


line-height: 1.3em;