Don't say you're 'independent' though Marty, ASIC doesn't like brokers doing that.
Kudos to MC1's play on words though, that gave me a great laugh.
flongle - Has anyone used it as an investor?
- Thread starter Gill Bates
- Start date
Don't say you're 'independent' though Marty, ASIC doesn't like brokers doing that.
Kudos to MC1's play on words though, that gave me a great laugh.
I do not charge my clients a fee for my service . The end.
Though I don't want ASIC knocking on my door so I won't use that 'I' word.
Whilst I can say this as a matter of my intent (my intention is to act independently of any lender in the advice that I give and recommendations I make, etc, etc), there isn't a broker in the country that receives commission from lenders that can legally make this statement. As a result, this implies that the broker must charge a fee for their service instead of receiving commissions, which Michael has suggested we shouldn't do either.
I'm sorry, but my business is not a charity. Most brokers are happy to be upfront about how they're paid, but like everyone else, we do expect to be paid for what we do. It's also interesting that Michael is charging $400 to match a broker and a borrower - I thought that with such high and mighty principals they'd be giving this away?
As for the rest of it, whilst there's a few nuggets of truth, Michael Lee and Fongle has twisted it to the point where it's completely misleading as to how brokers and lenders actually operate.
The reality is that most consumers using Flongle to originate their loan are simply going to end up with a product that looks cheap when they sign up, but is unlikely to take into account their actually needs and will almost certainly not deliver good advice. It's likely to cost consumers significantly more in the long run. This week alone I've had two discussions with borrowers where I was able to clearly demonstrate that their cheap rate was (a) impeding their ability to build an investment portfolio and (b) was very quickly going to be come a very expensive loan. A good sales pitch does not mean the best outcome.
This is little more than marketing hype to take advantage of consumers greed and fear. Not dissimilar to the 2012, "One Big Switch," debacle, but in this case they're charging a fee for it.
I'm sorry if I come across as a little angry in this post, but I find some of Michael comments more than a little offensive and deceptive.
Last edited:
at this time...
That's the thing isn't it?
For anyone who just rolls up to a broker and wants the best rate for their PPOR, many of the services you guys are referring to are irrelevant. Flongle could well be a good option for them in that case.
But it would have to do a lot of work to marry up a more sophisticated investor with the right lender, in which case it could offer a premium service with more fees for the right structure and portfolio advice, just like a broker can do.
It's not there yet and may take years but automation of many of at least the basic functions of being a broker should be cheaper in the end. And this benefit should be passed to the borrower in the form of cheaper rates courtesy of not having to pay the broker channel and the competition that should build up more transparently using a service like this.
I reckon it will take many years to get this up to the level where it provides more value than the brokers on this forum but I can see how it could happen in the right hands. But just bidding for rate isn't going to cut it IMO. And most people want someone to speak to in the first instance.
It's a hard road to hoe but good on Michael for giving it a go. The competition can only be good for borrowers like me!
It's cheaper for a bank to acquire loans via a broker than it is through their own staff.
Through their front facing channels (branch and customer contact centre) they get the tyre kickers as well as the dodgy applications and the ones that don't get approved for whatever reason. That alone consumes a lot of time and the approval conversion rate is pretty low. They have to pay the wages of all these people to train them and to have bums on seats to service the customers.
A broker on the other hand does all of the above on their own time and dollar. The broker submits a loan only when there's a high chance of approval. So from a banks POV the approval conversion rate is pretty high with minimal effort on the banks part.
There are a plethora of things loaded into the interest rates available to the customer. Staff wages and broker comms are just a small part - it's just a cost of doing business and banks are not a charity.
The % of broker introduced loans compared to bank originated is growing quickly and I know of at least on bank (and I'm sure the others) that are pushing this channel.
Prior to being a broker I worked for a Big 4 bank in lending but also in HO and I was fortunate enough to have visibility to a lot of things.
OK, it seems that some brokers can offer a loan structure service.
So this frongle could be useful for a borrower for a straightforward loan.
An experienced investor that knows what structure they want could/would negotiate the discount them selves.
So this frongle could be useful for a borrower for a straightforward loan.
An experienced investor that knows what structure they want could/would negotiate the discount them selves.
thats the other side to what brokers do, we negotiate price. Almost all loans need to be negotiated as every bank is doing under the table deals so as a customer direct knowing what each bank is offering is difficult so makes it harder to negotiate.
