Should mortgage advisers diversify their products?

One adviser says 'no' amid growing market

Should mortgage advisers diversify their products?

As the New Zealand mortgage market experiences growth, the question of diversification for mortgage advisers has become a hot topic. While some see it as crucial for long-term success, others argue for maintaining focus on core competencies.

Tapere Hewett (pictured above), managing director and mortgage adviser at Hewett Mortgages based in Auckland, agrees with the latter.

“At Hewett Mortgages, we look after the first-home buyers, property investors, and existing homeowners,” Hewett said.  “We don't do insurance as a wraparound service because I believe this requires specialist advice and time.”

Diversification v specialisation

Diversification in the mortgage industry has long been a trending topic. For many, it represents the pathway to scale and growth – and there is reason behind this.

Offering a wider range of products, such as commercial loans, personal loans, or even insurance or financial planning, can open up new avenues for income generation, especially during market fluctuations.

It also prevents advisers from having all of their eggs in one basket, while potentially also opening up their services to a whole new swathe of customers who may not previously have been aware.

And by catering to various financial needs, advisers can build stronger and more holistic relationships with clients, fostering loyalty and referrals.

However, Hewett argues that having too many “baskets” when giving advice is not a good thing.

“We are a family-owned and operated business, we are property investors and own our own home.  We are also a Pacific and Maori-owned business with a vision of enabling home ownership for all Kiwis,” said Hewett.

“We should be able to live in our own space on our own terms.  Our motto is Mana Motuhake, and it means independence, self-determination, controlling your own destiny and how you live.”

With a strong vision and sense of purpose pulsing through the company, Hewett can’t see how diversifying their offering could lead to equal or better results than what they do now.

“We care about our clients and their future, so with that comes education around financial literacy and well-being,” Hewett said.

“For our clients, we just want someone who has the same care for insurance as we do homeownership and mortgages.”

Referral partners in a busy market

Another argument against diversification is the growing complexity of the mortgage market.

This complexity is causing some buyers to wait on the sidelines, despite activity from first-time buyers and relaxed lending criteria from banks.

According to the February 2024 Advisers Survey by and Tony Alexander, these buyers are seeking greater clarity on the new debt-to-income (DTI) rules and future interest rate direction.

Hewett echoed these concerns, explaining that the brokerage is looking into back-office automation to help free up time to advise on regulatory changes and fluctuations in housing prices and interest rates.

“We are building our team, a solid foundation is important to us, so having the right people on board who share the same values and passion for helping clients own their own homes is imperative,” said Hewett.

“Leading by example is also super important, we are still active property investors, and we too are learning every day.”

But what happens when a client asks for insurance advice? Well, the same thing that happens when an insurance client asks for mortgage advice, explained Hewett.

“We refer our clients to Jaime James insurance and Jason Venu’s Coversure Insurance – they are our go to for specialist insurance requirements,” she said.

“Ensuring your family are protected in times of illness, trauma and death are mandatory in my opinion, so we make use of this referral relationship quite a lot.”

Where do you sit on the topic of specialisation versus diversification? Comment below.