New brand and direction for large mortgage advice business

After 11 years as first iRefi and then mortgagehq, one of the country’s bigger mortgage advice businesses writing about $750 million in mortgages last year, has rebranded to MHQ, will have new owners from April 1 and a new take on helping clients create wealth.

Simon McDonald and Zhiyang Cheng are buying the business from managing director Blandon Leung after several years with the mortgagehq and the ambition to be the majority shareholders and owners.

“We want more control on how advice is being provided,” McDonald told TMM.

The business was set up in 2015 by Andrew Malcolm and Leung. After a difference over its direction, Malcolm was going to buy out Leung but after that deal dragged out, he decided to concentrate on his other businesses.

At the time McDonald and Cheng had been talking about starting out on their own, but Leung came back into the business part-time and offered the pair the opportunity to take over and run the business as well as buying it. That deal is now unconditional. 

McDonald essentially took over the managing director role in October last year when Leung started the process of buying out Malcolm to then sell all the shares to McDonald and Cheng. 

Cheng leads the sales team and coaching and will stay in that role.

McDonald says both have the same long-term goal for the business – a holistic in-house approach with both taking responsibility and influencing its direction. It means moving away from a transactional to a much more relationship-based business. 

Walking alongside clients

He says MHQ has good foundations that have been built up over years. Previously there was a relationship between two businesses, wealthhq and mortgagehq. Wealthhq concentrated on managed funds, KiwiSaver and insurance, while mortgagehq focused on mortgages.

Moving from mortgagehq to MHQ means the business can stand for many things – managing clients’ money, managed funds, managing risk through insurance and managing the expectations around the use of mortgages, McDonald says.

“We are incorporating those other aspects of financial advice to build something that outlasts individuals. We're also moving from our tagline “financial freedom faster” to “partners in financial freedom”.

“What essentially that means is that we're walking alongside our clients in all facets of financial advice, not just managing mortgages.”

Time sovereignty

The old focus was speed and growth. The new focus is much more on resilience, optionality and “time sovereignty” for our clients, he says.

By time sovereignty, McDonald lays out a thesis about how the introduction of AI and other automation technologies in modern society means there is a hyper focus on speed because it's being enabled, but in his judgement taking the time to make the right decisions and inputs into these systems can have a better effect.

As an example, if a business owner wanted to make operational changes internally or change the company’s vision and used AI for the inputs, it would spit out a new business plan in seconds. The business will have people empowered by AI to push this through and make major changes to the business, McDonald says.

“Unfortunately, if the thesis hasn't been well thought out and the appropriate amount of time and judgement hasn’t been put into what the effects are going to be, you can get quite a way down the road before you start to see some major flaws. So, in the world where you can have outcomes  quickly, we're now focusing on making sure that we slow down those decisions.”

He says MHQ makes sure clients understand these decisions within their own goals.

Flexibility to make decisions

There is a focus in the regulated industry on ensuring that advisers really understand their clients and their end goals. “What we're finding is clients are valuing time sovereignty, their ability to be flexible and make decisions – taking a holiday with their family and spending more time with the kids while they are young.

“So, now we're developing a much more client focused approach around understanding these issues from their perspective before providing the next steps in terms of the financial mechanisms that can essentially imprison them if they don't take these decisions seriously.

“What we're seeing from clients is much greater stability and understanding around what the next steps are. And we're taking a lot more time on the frontend with clients, so not making it a transactional arrangement. We're focusing on them over the next 10 to 15 years, even longer as opposed to get the mortgage and move on.”

How does this affect clients? It gives them a better understanding of what the full process is going to be and provides them greater stability by incorporating integrated advice about mortgages, KiwiSaver and insurance and how they can support each other. It also gives better risk management with complete financial planning goals in mind.

“In terms of time sovereignty, it provides greater long-term resilience for our clients and better outcomes over that period.”

Trail and diversification

As for the business, McDonald says as mortgage trail disappears, MHQ has adjusted internally to ensure its bonus structures for advisers are tailored to meet its values.

Because there haven’t been any similar changes to insurance and KiwiSaver and by encompassing them as part of holistic advice, we are diversifying and trail income is expanding because we are growing in these areas.

MHQ remains a strategic partner with Leung, who is focused on AI and technology. McDonald and Cheng are incorporating as much technology into the business as possible so it can get its advisers to hyperfocus on their relationships with clients.