To attract young recruits into the third party distribution channel, salaries are a must, as The Adviser discovers
A majority of mortgage brokers believe entry level advisers should be paid a salary.
According to a recent straw poll conducted by The Adviser, 52.8 per cent of brokers believe new recruits deserve a salary.
Many brokers believe a salary will help the industry attract new blood – something it desperately needs.
Statistics from the Mortgage and Finance Association of Australia (MFAA) show the third party distribution channel is an ageing industry.
In the last two years, the proportion of the MFAA’s membership under the age of 30 has almost halved, falling from 11 per cent to six per cent.
Meanwhile, the percentage of brokers over the age of 50 has grown from 27 per cent to 37 per cent.
“We are very concerned about the low levels of young people entering the profession and we are making representations to the federal government for the establishment of a traineeship program suited to a contractor model, which mostly applies in this sector,” MFAA chief executive Phil Naylor said.
Of course, traineeship programs aren’t the only way to attract young, new-to-industry recruits.
As the recent straw poll indicates, paying entry level brokers a salary could be a good way to attract and retain new advisers.
Smart Lending’s Melissa Gielnik is one broker who advocates paying entry level brokers a salary.
“You can’t just ask a university graduate to start working for no money,” she said.
“If you want good quality brokers with the right attitude, you have to be willing to pay.”
The Victoria-based elite business writer currently pays two loan writers a base salary as well as a portion of the commission earned on loans settled.
“While broker commissions can prove very lucrative for successful brokers, you can’t expect new-to-industry recruits to be writing big volumes as soon as they enter the industry,” she explained.
“As such, they need some form of incentive to continue in the profession.”
And Ms Gielnik isn’t alone. House + Home Loans’ Rael Bricker said he pays his loan writers a “salary in the first instance”.
“If they get to a point where they would prefer to move over to a 100 per cent commission model, we can accommodate that. We like to pay them a salary when they first start so they have something to show for their hard work,” he said.
Liberty’s John Mohnacheff said it is vital that brokerages pay their new brokers a salary.
According to Mr Mohnacheff, if the industry does not incentivise its new recruits, the third party channel runs the risk of becoming an ageing cottage industry.
“We have got to make mortgage broking sexy,” he said.
“If we want to attract young, smart, educated professionals, we have to spend money.
“As it stands, there is no appeal in being a mortgage broker. If you look at finance-related industries that have managed to recruit and retain good quality young players, like stock broking and insurance broking, they have one thing in common – they pay good salaries and offer new recruits the opportunity to earn good bonuses.
“If I have just finished university and am looking for a job, I am not going to enter into a profession where I don’t earn income straight away. At the end of the day, if we want this industry to grow and continue to be successful, we have to pay brokers.”
Mr Mohnacheff said it is only a matter of time before all brokerages are paying their new recruits a base salary.
Watch this space.
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