It's the ultimate proactive thinking.
Some mortgage brokers are now moving to diversify their product offerings as signs of a market slowdown begin to appear.
“Many operators are beginning to add commercial and personal insurance to their product mix,” said Gord McCallum, president and CEO of First Foundation Residential Mortgages in Edmonton. “For some it’s a strategic move; for others it may be a hedge in anticipation of the eventual cooling of the market.”
Six months ago, McCallum’s firm began offering clients home, business and auto insurance as well.
“It is a value-added service we want to offer clients to differentiate our firm from the competition,” he said.
The product offering is additional ammo in the firm’s battle against banks, and relies on employment of a licenced insurance broker to operate the firm’s auto insurance business. Mortgage brokers occupy the top floor of the office while the auto insurance is handled at the ground floor, he said.
“We are fighting fire with fire,” said McCallum. ”Auto insurance is an advantage because banks by law can’t offer general and auto insurance in-branch.
“So far the system has been good for cross-selling. Our brokers are able to generate leads for the auto insurance and the insurance guy is able to refer clients to our brokers.”
Traditionally, brokers refer their clients to licensed professionals in other fields rather than establish that discipline as an integral component of their business, said Julie Parkin, mortgage agent with Dominion Lending Centres Homestead Financial, in Toronto.
“As an agent, I am legally obliged to offer life and disability insurance through our mortgage protection plan that is underwritten through Manulife,” she said. “However, I do have a network of professionals I bring in to offer clients general, life and disability insurance.”
But a number of firms are slowly moving towards a “one-stop-shop” model according to John Dearin, a Dominion Lending Centre broker in St. John’s.
“We are currently talking to a certified financial service planner to help us offer debt consolidation services,” he told MortgageBrokerNews.ca. “We are still trying to determine whether this person will be an independent contractor or our salaried employee.”
It’s all about keeping the client from having to go elsewhere for related services.
“Because their firms don’t handle insurance, brokers have been sending customers out the door to other businesses,” Dearin said. “Now, especially when tough times are looming, firms are saying ‘we should offering those services as well.’”