Opinion: ‘fast and cheap’ broker education isn’t good enough

One expert’s controversial take on meaningless minimum qualifications and the industry complacency behind them

Whilst there is some high quality education provided in the mortgage broking industry by some very dedicated and passionate teams and businesses, the industry is being let down by short-term-thinking and training providers willing to cater to demands for ‘fast and cheap ‘education.

Unless you’ve been hiding under the proverbial rock for the last few months you would have seen the Sydney Morning Herald reports on woeful education standards and cheating in the financial planning industry which has led to numerous Senate enquiries. The mortgage broking Industry would be wise to pay heed to the lessons being learning in the financial planning industry. If this industry thinks that it is immune from such speculation then it needs to think again.

Mortgage broking is an aging industry and many groups are looking to grow by bringing in new people into the industry. These new entrants will, when they have received their certificates, be appointed authorised representative’s under someone’s ACL and PI cover and that is where the rubber meets the road.

What actual cost to business and more importantly cost to reputation will ACL and PI holders incur now (and ongoing) when inadequately trained [but certified] brokers, make mistakes because their qualifications were issued without the student really achieving competency?
 

"We are allowing these so called education providers to give new entrants a sub-standard level of education and then accepting that the burden of really training the person falls on the business"
 

Somehow, we’ve arrived at a point where we think it’s OK for education providers to tell us that they can teach a new entrant everything they need to know to achieve a Certificate IV level of competency in a couple of weeks online, with minimal trainer contact and all for only $500. We are allowing these so called education providers to give new entrants a sub-standard level of education and then accepting that the burden of really training the person falls on the business. Aggregators and Franchise groups are basically having to complete the foundation training that should have been provided by a genuine Certificate IV level training program.

It seems that the industry places so little value on the quality of education being provided by education providers that qualifications are viewed as just a piece of paper that has to be purchased prior to getting on with the real work – i.e. it’s just a ‘ticket to operate’. This means, the provider who is willing to provide the cheapest rate and shortest time-frame gets the nod. In my personal opinion, quite a number of these ‘crash course’ training programs would not pass an audit by the training regulator. The scary thing is, if an RTO is found to be operating in a non-compliant manner they can be compelled to withdraw the qualification from the student but not compelled to provide a refund.

What am I referring to? Simple. If you are new to the mortgage broking Industry, you cannot reach Certificate IV level of competency in the time frames that many of the RTOs are currently delivering it in. You certainly cannot reach a diploma level of competency in 3 weeks if you are new to this industry. We hear this all the time, the new entrant with their newly minted qualification doesn’t actually know what an LVR is when they arrive at the new aggregator or broker business. Figures quoted to me on new entrant drop outs are alarming at best, damning at worst – more than 60% of new entrants drop out within three to four months of joining the industry.
 

"If you are new to the mortgage broking Industry, you cannot reach Certificate IV level of competency in the time frames that many of the RTOs are currently delivering it in"


It’s time we started taking a more sustainable and long term view. The industry must start placing more demands on training providers and no longer accept cheap qualifications of no substance delivered in ridiculously short time frames. We must send a message to those institutions educating our new generation of best and brightest that the industry does not want worthless pieces of paper. We want our new brokers who have a qualification to actually come with a solid foundation of knowledge about the industry they operate in - the products, loan structuring, how to market themselves, how to conduct client interviews and importantly how to do all this whilst maintaining compliance with the various state and federal legislation that they operate under.

Brokers graduating from quality education programs will help franchise groups, broker businesses and aggregators to grow their business by focusing on fine-tuning the new entrants, helping them achieve their goals not having to try and babysit them and give them the education they should have received in the first place. Or worse still, toss them in the deep end and only work with the ones that survive.

Paul Eldridge is managing director of the Intellitrain group of companies and co-founder of Australis College. All views expressed in this article are his own.

Do you agree with Eldridge? Do you notice a lack of knowledge in your junior brokers? Add your comment, or email the editor.

Add your comment
  • David20/09/2017 10:58:43 AM

    I have just enrolled in the certificate. But I am having problems trying with sort through all the various aggregators and see which on is the best to join. Any advice anyone can give would be great. I live in Brisbane.

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  • Shaun26/07/2017 11:53:35 AM

    Hey Din,

    Happy to help you in not only getting the qualification but also in achieving the ultimate goal of becoming a successful broker.

    I am an ex Bank Manager and established broker. Txt me your number on 0406836647 and will have a chat.

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  • Din7/07/2017 2:59:46 PM

    I have thinking over some time to become mortgage broker. I have bachelor degree of IT, after working 15 yrs and on my mid 40s its time to career change. I am good with numbers, communications and passionate to learn.

    Will be starting from scratch. Any good institutions you can recommend?

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  • Timb27/10/2014 2:56:52 PM

    This is what happens when 'academics' and 'regulators' are involved with putting together the training/education. They add a lot of fluff and unnecessary information into the courses/training to bulk it out and make it look more valuable than what is really necessary. But the reality is only a small margin of it gets used in the real world day-to-day activities of brokering. No different to a degree, I believe I would use less than 5 % of the information I learned in my University degree in the real world- the education requirements and content of the education need to be thoroughly reviewed in my opinion - but the brokers with the know and what should be in the education are getting on with business rather than putting together training programs.

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  • Jeff Mazzini27/10/2014 2:51:11 PM

    One has to also understand the industry better, in that one of the main reasons there is a high turnover of new entrants into this industry is more about the lack of leads and income.

    Many new entrants have stars in their eyes when they hear the potential income they can earn but in reality they need to carry themselves financially for up to 6 months or more.

    Perhaps if there was industry solution overall via solutions from within the industry or representation to Governments to have this professions noted and the need to provide income support system for the first 6 months of operation.

    Many Aggregators, Licence holders may need to also strongly consider and understand that without income support that the new broker will struggle and high turnover rates will continue.

    Allowing the many new entrants to "book up training" via Vet Fee Help etc also places many pressures on those that need to heavily fund themselves into their new chosen career. Yes once they reach the $50K amount of income then they must start to repay the study support loans but until such time that they reach that income figure and repay the loan it counts as a liability of their statement of position.

    Some new incoming students are also wrongly advised in regards to structuring their income in such a way as to avoid the repayment of the study loans, which in itself could be described as unethical and unprofessional.

    The industry is a mature industry in many ways but would be a lot better off if there was income support for at least the first 6 months and until that changes do not expect the high turnover numbers to cease.

    So to rate education as a main factor for the high turnover of new entrants is in it self not correct but may be a smaller contributing factor in some cases. To generalise in nature about providers of education in no way does the education industry or it’s many ethical providers any good.

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  • Aarong27/10/2014 1:52:52 PM

    No doubt some do want to have higher qualifications and nothing ever stood in the way of that. There are no barriers to this now, nor have there been. In fact, mandating that everyone get more credentials will prevent others from standing out.

    Every accountant doesn't need to be a CPA. Everyone solicitor doesn't need to be a barrister. My point is that the Australian broker market pre-NCCP overhaul was the best and most resilient market in the world and its undoing will be needless regulation.

    It all comes down to the job of regulations itself. Regulators tend to regulate. Once they have everything the way they thought it should be, they don't stop. They still are regulators and they still look for new ways to regulate. Here's the latest.... degrees. Then it will be degrees with accompanying post graduate credentials....All to do a job that is perfectly done with a 2 week course and some on the job training. Why not make VCR recorder technicians get bachelor degrees while we are at it?

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  • MPA Editor27/10/2014 1:26:30 PM

    Interesting point of view Aarong; I'm sure many brokers will agree. But perhaps certain brokers might want to distinguish themselves to clients by having extra qualifications?

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  • Aarong27/10/2014 1:12:03 PM

    Just on full disclosure, I actually used Intellitrain under the recognition of prior learning and it was great.

    However, I think the industry has just gone crazy with compliance and the reason is a fundamental one where brokers are being required to be credit managers. This necessitates more education and really this never should have been the case as the broker market was running just fine prior to the NCCP/regulation requirements.

    A broker should be able to do a 2 week course with an aggregator and then go out and be a broker. That is how hundreds if not thousands of Aussie brokers did it and they cranked out some pretty fantastic brokers. 1 week of sales training and 1 week of software training and off you go.

    The regional managers then had you go out with other brokers for visits to see what happens in the field and there was always support there ongoing. This is all that is needed.

    That is all you need if you are just finding the cheapest/best (oh the horrors of saying 'best') product from a lender you think will accept a scenario. This all brokers were ever expected to do and is all we should ever be expected to do. It should be up to the bank to say 'yes' or 'no' and not brokers to say this for them.

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  • Paul Eldridge28/10/2014 2:11:15 PM

    Thanks TJ (Ballarat)

    Absolutely spot on.

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  • Paul Eldridge28/10/2014 2:07:07 PM

    There should be no need to be concerned. If the training companies are doing their job correctly then the industry has no worries. The problem will occur when a poorly trained broker starts to operate in the market, does the wrong thing, gets caught then blows the whistle on the quality of training provided to operate.

    I would like to see the source data for the assertion about university grads and employment levels.

    Remember - ASIC does not stipulate anything other than a Cert IV as the minimum education standard. The assumption is, this level of training is sufficient to commence.

    We all have a vested interest in ensuring that we look after the best interests of this industry.

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  • TJ (Ballarat)28/10/2014 1:05:29 PM

    I have seen broker groups & trainers "walk" very unlearned and unskilled trainee brokers through the whole diploma in Financial Services (even existing brokers who didn't want to do the required extra learning), inclusive of open book exams and the handing out of past responses to all questions to simply copy. This is the practice that needs to be stopped. I did my Diploma on-line via RPL (after being in the industry for 20+ years) and was put through the ringer in passing. There is no way those that have been aided through the training would have passed!! Some aggregators seem more hell bent on getting brokers to pass these industry qualifications so as to be able to write business than ensuring they have got suitably trained and knowledgeable brokers operating under their banner.

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  • Jeff Mazzini28/10/2014 11:36:55 AM

    Further to Peters comments above, I feel its also very important to understand that globally the highest group of unemployed people are university graduates. There is an issue with education overall and its not designed to meet the digital technology age and we must also remember as has been highlighted above the training happens in the class room etc and the education happens in the work force when applying what was learnt, plus the guidance and support of those within the business.
    There is no profession in the world that does not require ongoing in house up skilling but sadly many arrive at that the door only to be shown a desk and told to get on with it, as everyone else is busy trying to make money.
    Paul you make reference to concerns about going the same way as the Financial Planning Industry enquiries and your statement will come true if you continue to write such articles. How about the Finance, Mortgage Broking industry addresses the most important parts first and that is to ensure the new entrants into the industry can survive whilst in their start up and growth stage. Surviving is ensuring that they have an income stream and have an appointed in house mentor and feel both will solve the issues that have existed since the industry commenced.The industry bodies should also tackle the regulators and place in front of them what they actual feel will help make a difference and suggest the right education subjects to being taught.
    Lets start there first and Paul if you have issues with providers you have a pathway of appeal to take and I personally feel that should not be via the media, as this is read globally and does not place the industry or the support services in good light.

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  • Paul Eldridge28/10/2014 11:30:57 AM

    It's not accurate to compare Cert IV's and Diploma's to degrees and University.

    Vocational Education which is what Cert IV's and Diploma's come under, is aimed fairly and squarely at practical work-place training. That is, providing training that teaches the student what they will be doing right now in the workplace.

    University degrees are more theoretical and less practical. Both types of education have their respective uses.

    To try and combine them into the one is incorrect.

    So, if we take Vocational Education and Training (VET) at its intended purpose - to provide real-world, vocational training so that students are job-ready, then we start to understand what we should expect from RTO's providing Cert IVs and Diplomas. Namely - practical, real-world training that enables students to come out and have practical job-ready skills.

    So, is Peter correct in saying that nothing prepares you for that first time, having a conversation with a real-life customer? I would answer by saying that if you prepared the student by giving them live, scenario-based training where you take them through a whole bunch of simulated interviews, then you can prepare them far better than charging them a few hundred dollars and getting them to read stuff online, pass a few questions and then try and figure it out for themselves.

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  • Peter Heinrich28/10/2014 10:49:21 AM

    To blame the high turnover of brokers on education or lack of it, is wrong. Prior to regulation (2010) the turnover was exactly the same or higher. Brokers came into the industry with no training whatsoever and huge numbers of them failed, not because of lack of training, simply because they weren't suited to become brokers in the first place. Now with a reasonable requirement to have some qualification they at least have an idea of what they are getting into. That the courses are too short I agree and more emphasis should be placed on what they learn but no one ever did a training course and was ready to produce immediately. For example hundreds of thousands of people do University courses but they are not productive until they have joined a company and find out what the company wants them to do. They go through an on the job learning process and eventually become productive. What the university education gives them is the ability to research and an understanding of the legal and compliance issues they face.
    Mortgage Broking is no different. The course is simply to prepare them for what lies ahead. They should understand the legal and compliance issues involved and roughly what they need to do to establish a business. No one is fully prepared until they actually get in front of live customers and the real life issues come up. If they don't know the answers they should have the ability to do the research and know where to find the answers. It is a fact of life that many will fail.
    It is also another thing to know that even if you 'make it' you will have a huge debt hanging over you. Training should be relatively cheap, (or subsidized) offering reasonable value and 'roughly' preparing a person to enter the business where they truly learn their trade. Its one of the reasons apprenticeships take 4 years. By the time an apprentice finishes their study their work experience should have prepared them for their trade. Nurses do it that way, teachers do it that way, lawyers do articles, doctors do internships etc.
    What could be argued is that the topics required to obtain a Cert IV or Diploma, could be more relevent. Currently they are set by a Government dept. In all my years of training and working in the mortgage industry I have never been asked about the content of a course by the relevent body nor have I ever met anyone in the industry who has ever been consulted on what should be in a Cert IV course. Some of the topics are irrelevent to a future broker but I guess that could be said of most university courses. A requirement for a training company to retain their license is that they should regularly consult industry on course requirements. I have seen no evidence that the Government department controlling training does that.

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  • Paul Eldridge28/10/2014 10:00:10 AM

    Unlike test driving a car, you can't at the moment, go to one RTO, do their course, then go to another RTO and do their course and then compare which one actually had a quality program.

    i.e. you have nothing to compare your experience against if you completed your qualification via one RTO.

    So in the absence of being able to test drive a qualification to really get a sense of what you might be missing out on, it behoves the industry to set a minimum expectation of at least what sort of quality is needed. Maybe the MFAA and FBAA should have an entrance exam as a way of creating a minimum education/knowledge benchmark - i.e. if you cant pass this exam, then you really don't have the fundamental knowledge needed to start working in this industry.

    If we don't do something about managing the quality of education provided in this industry ourselves, then ASIC will. This is the cautionary tale - we don't want the same kind of scrutiny that the Planning Industry is facing. Personally, I think the Diploma is sufficient. It doesn't need to be higher. What it needs to be is a quality Diploma.

    I don't want this discussion hijacked into talking about degrees. The point I am making is that if you really think about all the information that a brand new entrant has to learn in order to actually become a successful mortgage broker it takes a lot more than 2 weeks.

    A quality RTO will actually provide real training that is underpinned by the Cert IV (and/or Diploma) qualification but which is eminently practical and gives the new entrant the practical knowledge and skills needed to have a good chance at doing well.

    You cant pass that sort of knowledge over in a couple of weeks. So these new entrants are being cheated out of being trained correctly. The industry is being cheated into accepting sub-standard education and having to fill in the gaps in the knowledge.

    The education cost is being borne somewhere.

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  • Paul Eldridge29/10/2014 2:32:48 PM

    Hi Peter,

    I agree with you absolutely that the training must be practical. This gets to the heart of my point. This sort of real-world, practical information is what should be taught to people joining the industry and you can't do that by having someone go through a self-paced online course with very little to no trainer interaction and hope that the person is getting any sort of real education or practical knowledge about what is needed to succeed in the industry.

    You mentioned that you have seen assessment submissions but have you been through the actual courses? It would be interesting to get your feedback on what is taught during the class. Would be great for you to have a look at our New Entrant Program where we do exactly as you are saying - we take new entrants through scenarios where we present what the borrowers are looking for. I would be happy to give you access to our program to evaluate what we are delivering via our program and I would challenge other RTO's to open up and show you what they are delivering now as their current stock offering.

    RTO's have had to consult with industry about the relevance of their courses for years now and it is part of the SNR standards for continuing registration of an RTO its not a new thing.

    The RTOs who are in education for the right reasons have nothing to fear about the points I am making as they are committed to providing real education that actually helps the person become job-ready when they complete the course.

    The feedback I am encouraging from industry is that we, as an industry, expect more from our training providers. We will not, as an industry, accept programs where the student gets little to no live trainer input and is expected to absorb all the information and somehow come out ready to operate in ridiculously short time-frames.

    We will not as an industry accept training providers and programs which are little more than self-service, tick and flick exercises. Where students who do not have the ability to compare other programs prior to picking an RTO, complete a self-paced online program over two weeks and thinks that this level of service is OK because that's all they know.

    We owe it to the industry and the participants joining our industry to set far higher standards about the quality of training and training programs provided by those RTOs servicing this industry. If this means I get a bloody nose for putting my name and my college's name out there, then so be it. I am proud to stand behind our New Entrant Program and am proud to stand behind the results we are getting from the students who go through the rigorous program we have created. Something that takes them months to achieve, not weeks.

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  • Jeff Mazzini29/10/2014 1:54:44 PM

    Peter T, well done most constructive feed back we have had for some time now and yes the rules are changing shortly whereby industry consultation into the required outcomes to meet skills for the industry will be a requirement. The regulators that set the courses in consultation with Industry are now handing this back to the RTO's to allow better outcomes etc.
    It's only with great feed back and input make getting this right for all.

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  • PeterT29/10/2014 1:03:42 PM

    Whilst I certainly agree with the general theme that broker education is inadequate, I've yet to see a formal education solution that solves the problem. I've reviewed almost a dozen diploma assessment submissions for colleagues, including Intellitrain, and they all miss a fundamental point...

    Brokers are problem solvers.

    To date there isn't a single course available to brokers that addresses creative thinking and problem solving skills. Every Cert IV and Diploma I've seen focuses heavily on compliance and only the most basic loan writing skills. The various case studies actually suggest what I'd consider to be bad solutions to the problems they present.

    How many brokers actually understand their panel lenders servicing calculator math logic and how it reflects that lenders assessment policies?

    I'm yet to see a Cert IV or Diploma question that includes the statement, "The borrowers long term objective is to..." In the last fortnight I've interviewed 4 new clients whose previous broker implemented loans that met their immediate needs, but actively hinders their long term goals.

    The closes thing I've seen to meeting this need is the MFAA certified mentor program, but even this relies primarily on the mentors experience and ability. Unfortunately I don't recall any sort of problem solving assessment as part of the process of becoming a certified mentor and there's certainly no content on how to teach problem solving skills in the program.

    To turn out better brokers, problem solving skills need to be addressed in terms of addressing and meeting clients financial objectives. This needs to take into account their existing resources, and some modelling of where they're going in the future. Tax issues, risk mitigation and lender policy need to be addressed. Even when this is mentioned in existing courses, nothing beats real world practice and implementation. This is something that no classroom will ever be able to implement.

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  • Eddy Magnusson24/02/2015 11:26:46 AM

    Hi completely agree that brokers need a great deal more training in finance. I work in an office full of financial planners who work under AMP. Their standard of education is amazing! As a broker I have learnt a lot from them in terms of correct loan structure, particularly for property investing. I am aware that I am not allowed to advise on this area but if a client comes to me with this goal in mind in have the knowledge to be able to structure the loan correctly and along with a financial planner we can put the most effective strategy in place for the client.

    I get very frustrated when I see brokers doing the bare-bones work to get the loan through. This often ends up costing the client more money in the long run, therefore not actually putting them in a better position than they could have been. Which technically is not compliant but always goes unnoticed by compliance. So to those saying that compliance is to tough, count your blessings at the moment because as brokers, we can get away with a great deal. It see our compliance coming more into line with financial planners in the future (understandably), and they have to go through a phenomenal amount of compliance. So just be ready for that!!

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  • Neil30/09/2016 2:30:11 PM

    Hi Paul, I am looking at doing a Diploma in Mortgage Lending. Which provider would be the best to go to in terms of getting a very detailed course knowledge, and can even help with job placements? Any suggestions

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  • Paul Eldridge10/10/2016 10:16:48 AM

    Hi Neil,

    As a founder of Australis College I would have to disclose my interest there. I am a non-exec board member of that business now and not involved in the day to day operations however, I know that consistently they educate aspiring new brokers with a great track record of their graduates being placed into various aggregators. www.australiscollege.edu.au or give me a call and I can point you in the right direction - 0419 663 904 cheers and best wishes.

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