I have read with interest ongoing industry commentary on the “evils” of part-time mortgage brokers, and I suggest the focus is on the wrong descriptor. Being part-time is not the issue.
The issues that need to be addressed (I believe) are: risk management, commercial viability and, therefore, business support models.
If being part-time was somehow the weakness that undermines an otherwise successful mortgage broker, why is it that so many other professions accommodate and reward part-time employees and contractors?
The accusation is, with respect to mortgage brokers, that you cannot be professional, compliant, up-to-date technically, and commercially viable if you do not work full-time (and arguably 60-80 hours a week).
What a load of rubbish!
There are several important reasons why an established or new-to-industry broker may wish to balance their mortgage broking workload with other facets of their life and/or other revenue-producing activities. Hours worked does not, of itself, determine professionalism and individual success.
There is no doubt that being a mortgage broker today is far more demanding (and arguably less financially rewarding) than it was prior to the global financial crisis and the introduction of responsible lending requirements.
We now have more extensive regulatory and lender requirements to collect, verify and document the information, and more data input obligations as lenders continue to outsource and automate loan application submission.
The commercial requirement to know your client, however, has always meant mortgage brokers should collect and verify income and expenditure, to accurately assess an applicant’s financial situation and debt servicing capability.
With the appropriate business support processes and structure in place, there is no reason a part-time broker cannot maintain their professional and client obligations. The onus is on the licencee to train, monitor and supervise their authorised credit representatives to ensure they are competent.
There are costs that must be incurred by mortgage brokers with respect to obtaining and maintaining their authorisation. And there is therefore a commercial need for brokers to produce enough revenue to meet such costs.
What constitutes success, financial or otherwise, will differ for one individual to another. It can be a long-term goal to be achieved over time, in conjunction with personal, family or other obligations and priorities. Alternatively it could be an immediate short-term priority intended to allow breathing space in the future for a less hectic schedule and lifestyle.
The new-to-industry broker faces the challenge of financial survival in their first 12 months whilst they establish their business. They may therefore need to maintain a secondary source of income during the first year or two of their new venture. Not everyone coming into the mortgage broking industry has a significant redundancy payment that facilitates the purchase of a business or franchise, or the funding of lead generation activities that drive immediate results and revenue.
At the other end of the spectrum, many established brokers have worked hard to build their business and a sizable loan book. A significant component of their income is therefore not driven by new loans but more from client relationship management.
It is therefore reasonable that these brokers may seek to invest time in other interests and activities, whilst maintaining a desired level of income. This will require a commitment to continuing professional development and technical training, along with industry body and EDR memberships, but it does not mean they are no longer professional or committed if they choose to work less than full-time.
With change comes opportunity. I believe that there is an opportunity for licencees to develop business support models that facilitate and support a variety of broker businesses. It will, however, require brokers to accept the need to pay for the support and services they need.
Brokers, broker groups and aggregators must and will evolve and adapt to the regulatory changes, the economic challenges and client needs.
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