Boutique aggregators: the smaller alternative

Boutique aggregators are often dismissed as an inferior alternative to the larger groups because of a perceived disadvantage in scale. But while scale has very significant benefits, it isn’t the be all and end all.

Alan Hemmings, chief executive officer at Oxygen Home Loans, acknowledges that many see boutiques as ‘second tier’, but says he doesn’t agree with this assessment at all. Although they may not be able to compete with larger aggregators across every aspect, there are some areas where boutiques actually have an advantage.

With fewer broker partners, says Mr Hemmings, smaller aggregators can offer a more hands-on service.

“In general, the boutique aggregators probably offer a bit more of a personalised service,” he says.

“If they’re not having to deal with thousands of brokers they can pay a bit more attention to the smaller individual – that’s probably the biggest thing they have over the other guys.”

Lead generation is one area in which smaller aggregators sometimes have the edge over the larger players, according to Mr Hemmings.

Oxygen is closely affiliated with the McGrath real estate network but is also committed to working closely with all its brokers to build other referral sources, Mr Hemmings says, adding that as a smaller group, it is vital for them that their brokers continue to grow.

“We work with them to build external referral sources as well, so it’s not just a case of come in and work on the McGrath business; we need them to be able to go out and build other referral networks as well,” he says. “If they are doing that, it means both our businesses are growing – so to us, it’s vital.”

Frank Paratore, chief executive at Ballast, agrees that smaller groups can offer brokers something more, noting that the boutique value proposition is about quality rather than quantity.

“We do things a little differently – we believe we are a bit more hands on and intimate with regards to understanding our business partners’ needs,” he says. “Our value proposition as a boutique is not just on the aggregation; it’s always been centred around the full service – value adding and helping these guys build additional revenue.”

A more intimate aggregator-broker relationship can provide a broker with the right tools and guidance to grow. While Mr Paratore is quick to say all brokers are welcome to approach Ballast, boutique groups predominantly target those brokers who are looking for rapid growth.

“The type of broker that we are looking towards is the broker that sees the diversification of financial services as the way forward,” he says. “I am constantly talking about ‘relationship based’ as opposed to ‘transactional-based’.

“Ultimately, the type of businesses that we are involved with are those that are diversifying their products and services outside of just lending,” Mr Paratore says.