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Broker Daily recently sat down with NAB’s executive, commercial broker and equipment finance sales, Chris Thomas.
The commercial side of broking doesn’t receive the recognition it should, he said. For a profession that can be even more important than the mortgage side, there is a misunderstanding, limiting development.
Commercial broking goes beyond loans for commercial property. Thomas described these brokers as “full-service,” as they provide holistic business solutions.
From property, trading, importers, exporters, and farmers, these brokers facilitate deals that keep the economy churning.
“With that comes a multi-product solution,” said Thomas. “And it might mean that they are doing the business loans for the working capital, specific equipment finance loans for equipment. They are doing the home loans for the housing that those business owners have, investment property. They are also doing trade finance for the importing and exporting side of the business.
“Very good broking firms will then also leverage those relationships with the business owners to branch out to provide services to their staff. Look at a really great commercial broking business, it’s not just about how many commercial loans they are providing. It’s how many solutions across vast levels of product and services that they are actually facilitating across multiple lenders for that whole connection of people and then the broader networks.”
Thomas said the profession is underappreciated and misunderstood. He believes that once greater awareness emerges, the “depth and breadth of impact” of commercial brokers will be recognised.
Further to facilitating loans, effective commercial brokers assist in the guidance of a business.
As discussed consistently in Broker Daily’s Finance Specialist podcasts, the best commercial brokers will develop a strong understanding of a client’s business to help provide a calculated service.
In fact, Thomas said it could be the most valuable thing commercial brokers offer.
“Most business owners absolutely know the role they play in their business. But they may not be an accountant or they may not be a finance person. They may not have a law degree. They may not have a HR degree. They rely on a lot of people around them to help with that advice,” said Thomas.
“Commercial brokers are achieving that level of trusted adviser status, which then places them in an enormously impactful position to be part of those customers’ lives. And I think when you think of that as an intangible component to what they do, it could actually be the most valuable part of what they do.”
With this vital role these brokers play in the development of businesses, there is a skill ceiling needed to perform effectively.
Thomas said the service they provide “can’t be assumed,” as care and attention to detail are crucial.
“Helping build capability and helping reinforce knowledge is a really critical part of the factors of success because customers are really demanding and you’ve got to be on your A game all the time. Having that skill set wins you the trust and the credibility to be elevated into those positions of trust,” Thomas said.
“We talk to a lot of brokers about moving into commercial. And my standard response to many is, are you prepared to invest in the strategy? It just won’t come.”
He believes the current 35 per cent market share that commercial brokers have will climb to 50 per cent in the “not-too-distant future.” However, this requires the breaking down of more barriers.
This will be achieved through “a combination of investment, growth, merger, acquisition. But mainly, just greater depth of private services and advice that can come together to support, effectively, a very under-banked SME market.”
[Related: Shining light on commercial and asset finance]
