argues that brokers need to prove their worth in order to
While the last year or so has changed the
face of finance in many ways, the relationship between funder,
broker and dealer in the consumer motor finance sector remains
strong in the main.
There have been few casualties among
brokers, and certainly the larger players are still in the picture;
compared to the secured loan industry brokers, we have managed to
get off quite lightly.
Despite this I believe it is necessary to examine
the role of the broker in the industry, and see the changing market
as an opportunity to reinforce the value of the broker. If we do
not do this then the market will eventually do it for us – probably
sooner rather than later.
For too long brokers have survived by the simple
process of taking a finance proposal from a dealer and placing it
with a funder and simply splitting the commission, often placing a
proposal with a funder that the dealer already has a direct
relationship with. To me, this does not represent good value for
anybody except the broker and needs to be examined.
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A serious broker needs to be able to manage both
sides of the transaction with equal measure and ensure that there
is true value in their service for both the funder, whose product
the broker is promoting, and the motor dealer, who trusts the
broker to find the best home for the deal.
So how does a broker manage both sides of the
equation? A broker should be able to demonstrate to a funder how he
will promote their product, with a clear strategy regarding how and
where the funder’s product will be used. The image of the broker in
the marketplace should be important to the funder, as the broker is
an extension of the funder when representing the funder’s name and
product to dealers.
The broker should also be able to demonstrate to a
dealer why a commission is deserved for any given finance proposal.
It should not be good enough that the broker is simply seen as a
time-saving shortcut. The broker should bring skills or service to
the dealer which mean that a more comprehensive finance offering
can be promoted to the customer, whether through IT platforms,
niche product offerings or through a more thorough evaluation of
the options for the proposal.
There is no doubt that brokers who can serve both
masters have a strong case for a prominent place in the industry,
and interest from both funders and dealers in their services
remains strong. However, as the finance market begins to open up a
little more over the forthcoming months, I believe funders and
dealers should take the opportunity to re-evaluate their broker
partners – and it is important that the broker community
re-evaluates itself, too, before it is too late.
The author is managing director of
DSG Financial Services