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In first episode of the brand new Finance Specialist podcast series, the conversation posed an interesting question: should brokers diversify or stick to a niche?
As previously discussed by Broker Daily, there are a variety of benefits to diversification. Becoming a one-stop shop can keep clients coming back time and time again as one broker is all they will need.
However, equally powerful is the broker who can excel in a particular field. For Trent Carter, director of Provident, those who home in on the SME space can reap the rewards.
“Part of your own professional development as a finance professional is to understand the environment that your client operates in. Now, as a broker, you’ve got a choice. You can deal with very niche markets or you can deal with very broad markets. And no matter what you choose to do, there’s no right or wrong answer. It depends on how you want to set your business up, but you need to be knowledgeable about that,” said Carter.
“If you’re going to be very macro and deal in a diverse range of industries, you need to be aware about macro issues. So, what is the Reserve Bank likely to do or what are the different opinions from the banks in terms of what the Reserve Bank’s going to. So, you don’t necessarily need to be the expert, but you can read what the experts are telling you and provide a balanced view to your clients.
“Same with the election. Understand what things are coming up potentially on both sides of politics in terms of policies that could influence small businesses, regulation changes, those types of things. The mass market knowledge through the regular press is what becomes popular knowledge and then that becomes opinion. And sometimes it’s not right, it’s just sentiment. So sometimes you need to provide that balanced view. And the only way you can provide that balanced view is by just devoting a bit of your time to reading the press. Reading a diverse range of press. Don’t get caught in one corner.”
Determining whether to adopt a broad approach or specialised offerings comes down to the individual. There are benefits to both sides and what is ‘best’ depends entirely on the broker in question.
“What works in someone’s business is not going to be the same between any other two people. I’ve seen brokers develop very successful businesses in both approaches. It just depends about what you’re most passionate about. And I think as long as you’re happy going to work each day and servicing your clients and that gives you a bit of a buzz, that’s the right area for you to be in,” Carter said.
“It is a personal journey. I think before you make any strategy on how you’re going to diversify your business and add income streams. Think about what you like to do. And if that is servicing SME business owners and mum and dad business owners, perhaps a general path is more like the way to go. Perhaps you’re all things medical, perhaps all things construction and property development, it doesn’t matter.”
For Carter, working in the SME space allows for diversity in the types of clients serviced. Despite this, having knowledge on the area you’re servicing is important when operating in a niche.
These themes were recently discussed in an interview with Prospa’s general manager of sales and partnerships, Roberto Sanz. He said that many brokers are turning to the SME space.
“Because brokers have the foundational skills needed to assess lending needs and navigate complex financial situations, expanding into small business lending has been a natural progression for many in the industry. Leveraging existing skills to address a critical market need,” said Sanz.
“While residential lending is still the foundation of many brokerage businesses, there is so much opportunity to easily expand into the SME sector, largely thanks to the technology available.”
The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full episode of Finance Specialist, click below.
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