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Why are so many brokers moving towards boutique broking groups?

Man on rope above sharks

Like sharks circling schools of fish, the feeding frenzy of broking group mergers, acquisitions and consolidations are leaving brokers with fewer options and a feeling of increased insignificance in the ever-growing mass.

These predator-like groups are headed up by leaders whose only two mandates are getting the most out of the masses for shareholder returns.

Conformity, uniformity and control become the order of the day and whilst this might suit the unimaginative, an ever-growing cohort of brokers are choosing to avoid these predators in favour of a better outcome.

A completely contrarian mindset lies in the Purple Circle aggregation methodology. Here, brokers belong to a steering committee which provides direction and advice to the company leaders. The leaders’ mandates are ‘to enable and empower’.

Not only this, but brokers can also earn shares in Purple Circle upon hitting milestones, meaning they participate in all the upsides that come with owning their own aggregation business.

The ‘2020 Boutique broking group of the Year’ is experiencing unprecedented growth in broker numbers, with almost 2 brokers a week currently joining the movement.

Purple Circle CEO, Michael Stephens says “Never before in the history of mortgage broking have we experienced a similar and enduring season of uncertainty and confusion. Brokers find themselves treated as a commodity and pawn in a much bigger game, one in which they receive no benefit.

Purple Circle gives the balance of power back to its brokers, enabling them to be masters of their own destiny. Many of the brokers contacting us just want some control back and to create a better future for themselves in the process.”

Small and Medium Enterprises (SME) Guarantee Scheme

The Scheme will enhance lenders’ willingness and ability to provide credit and will be available for new loans made by participating lenders until 30 September 2020.

The Government will provide eligible lenders with a guarantee of 50% per cent of new loans. Some generic terms are:

  • Businesses with a turnover of up to $50 million.

  • Maximum total size of loans of $250,000 per borrower.

  • Loans will be up to three years, with an initial six month repayment holiday.

  • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Reduced Interest Rates

Consider your current banking arrangements. The Reserve Bank has recently reduce the cash rate and lenders have passed this on to various loans they have.

Instant Asset Write Off

An increase in the instant asset write-off threshold from $30,000 to $150,000 30 June 2020.

Deferment of Loan Repayments for up to 6 Months

The banks are developing their own approach as to how to deal with requests from their clients for repayment holidays. Some are automatically granting the request, others are assessing the requests individually.