The big questions all brokers want to know the answers to...
Q. CAN I KEEP MY BRAND?
Jeff Chapman, national product and marketing manager, LJ Hooker Home Loans: It’s a negotiation. We sit down with someone and if they’ve already got a brand it’s only natural that we would need to support that. We have to acknowledge that they may have already built a business. Under LJ Hooker, we have an iron brand called Loan Plan, because a lot of our guys will drive leads out of Raine & Horne or Century 21 or financial planning groups, so they might not be able to use the LJ Hooker brand through those referral sources.
Mark Haron, director, Connective: We’ve always wanted to set the structure up so that Connective is a service provider. It’s a platform that allows mortgage brokers to bring their business in, use the services, get access to want they want and what they need, and go out and develop their businesses. They’re not tied in to us and they’re not locked in. They’ve got the freedom to manage and control the business.
Frank Paratore, CEO, Ballast: Ballast offers a choice on branding, whether it is retail or wholesale.
Phil Quin-Conroy, CEO, PLAN: Brokers have the choice. If they want to they can elect to operate under our licence.
Mark Hewitt, general manager, sales and operations, AFG: The AFG model is all about supporting our members trading under their own brand. For example, our SMART marketing suite is set up in such a way that all email communication we send to the end customer on behalf of the broker looks as though it is coming directly from the broker under their brand with their logo. Any replies then come straight back into the broker’s inbox.
Q. WHAT HAPPENS TO MY BOOK?
Brendan Wright, CEO, FAST: If they want to bring their trail book across they can, it depends on the other aggregator. We’re not precious about that. If brokers for whatever reason do decide to leave us, the trail book will stay with us. FAST is a financial institution that’s been in business for 157 years, so your trail is safe. We don’t transfer trail books but we give a commitment that we can continue to pay that trail month in month out. Importantly, 85 per cent of the time when brokers leave us, they’re exiting the industry, or they’re looking to retire so we do a lot of work around helping those brokers sell their book and get good value for it because it just makes sense. There are, in FAST, many brokers looking to acquire books that are within the FAST group – it just makes sense.
Michael Russell, CEO, Mortgage Choice: In almost all cases, their loan books will remain with their previous aggregator – but subject to their aggregator agreement, they would hope to leave with the entitlement to their trail commission. This assumes of course they have not sold their business/book to a third party.
Phil Quin-Conroy, CEO, PLAN: If a broker does leave us, then we continue to pay their share of the revenue through them based on the arrangements they had when they left. There’s low barriers to exit, which hopefully lowers the barriers to entry. For us, it’s about winning business based on merit, and holding on to and continuing long-standing relationships because we’ve got an incentive to continue to deliver rather than locking brokers in or penalising them heavily if they leave. We think that philosophy is a very important one.
Stephen Moore, CEO, Choice: It’s about understanding the individual’s circumstances. As a principal, if you have an existing business then it’s a pretty seamless transfer in from our perspective.
Q. IS THERE A PARTICULAR TYPE OF BROKER MORE SUITED TO YOUR GROUP?
BW, FAST: Typically most of the brokers that join us are established brokers. They’ll come from other aggregators and they’ll want to join us because we can offer something that they’re not getting from someone else and it’s in line with their strategy. If they’re new to the industry they’ve typically been business owners in the past with some sort of financial services background, so they’re not starting from scratch. They know how to either run a business or understand financial services.
MR, Mortgage Choice: Our proposition is designed to attract sales-orientated people who are passionate about providing an awesome customer experience – people who value and recognise the tangible and intangible benefits associated with our brand.
Tim Brown CEO, Vow Financial: We bring on more new brokers to the market than we have our existing brokers recruit. We’re currently recruiting 30 new brokers a month, 20 of those are new to the industry.
Q. IS LEAD GENERATION SOMETHING BROKERS CAN EXPECT IF THEY JOIN YOUR GROUP?
JC, LJ Hooker Home Loans: Australia has got a large number of mortgage brokers so there’s stronger competition for leads than there’s ever been. What we’re finding is that there are more and more loan writers who are not ready to run their own business but they want to come into a successful business which already has lead generation. A lot of aggregators are offering very similar operational support; you have to have that point of differentiation.
MR, Mortgage Choice: Leads are of course a significant tangible benefit provided by our brand, as is the brand recognition which helps foster referral business opportunities. Ideally, we want our brokers spending their time writing loans and not searching for loans.
Q. WHAT IS YOUR COMMISSION STRUCTURE?
James Symond, Aussie: We have three distinct distribution channels and within those distribution channels the commission a broker receives is based around what support Aussie gives. For example, a broker that comes in new to the industry who receives Aussie leads, intense Aussie support, long-term mentoring, and with all those trimmings of support, obviously they would be paid the leanest commission because that support costs money. It goes right through to our retail channel and then through to our wholesale channel, the National Mortgage Brokers. This is basically a platform provider like all other aggregators that provide support and technology as best as they can and obviously that’s reflective of a very high commission rate.
BW, FAST: We, of course, have a transparent fee service because we generally take the time to understand what the broker is doing in their business and then structure a fee accordingly so we don’t take any of their commission. That’s not just unique to FAST, but also very unique to the industry. There’s only one or two others that do something like that.
JC, LJ Hooker Home Loans: We sub-aggregate through PLAN, which means we’ve got a very strong commission schedule with them. Because we build volumes for PLAN as a group, we pass those savings down to members. For example, if someone was going to PLAN direct as an individual broker they might negotiate a 90/10 split. Through LJ Hooker they might be able to do a 95/5 split. It’s the same thing IGA do on the grocery front – they go around to the little independents because they can’t compete with Coles or Woolies.
Frank Paratore, CEO, Ballast: In addition to Ballast’s comprehensive service offering, it also boasts one of the most flexible commercial structures in the industry. Ballast offers a choice on fee structure – flat-fee or percentage split.
Paul Liccione, general manager sales and distribution, eChoice: It’s a flexible model, because we need to understand each broker’s business. The most important thing is that their model is making them money. We’re not an expense, we’re an investment. If you spend $500 or $5,000, we’ve got to return that tenfold. We’re not providing a platform at a cost – we’re providing an engine that the broker, their back office, and their call centre can access – it belongs to them.
PQC, PLAN: Our pricing models involve a very competitive commission split arrangement and the commission split is based on the total volume of settlements right across residential, commercial and asset finance. The split increases obviously for larger businesses. An important point to make about our remuneration structure as well is that our commission split pricing is fully inclusive so all of the services we deliver – whether it be technology, marketing, support, training etc – it’s fully included in that split. Everything is included other than the licensing offer that we deliver if a broker elects to operate under our licence. We charge them a separate fee for that, but the core aggregation services are fully included in that commission split that we agree on with businesses.
TB, Vow Financial: One of the things about Vow is when we merged the three small groups to form Vow – which was the mortgage professionals, the brokerage and national broker group – each of them offered differing commission structures. One offered a flat fee, one offered a transaction fee and one offered a percentage model. What we did was we built this new commission system to cater for that and then thought, ‘Well, why don’t we take it to the market and offer that as a competitive advantage’, and that’s what we’ve done. We actually go to a broker and ask which one they would like to go under and we allow them to transition from one model to another with no switching cost, hence why our retentions are so good.
HE, AFG: Our commission-sharing model is based on mutual benefit. It incentivises us to work closely with our brokers and invest in our offering with the joint goals of growing the broker’s business.
Q. WHAT IS ONE OF YOUR GROUP’S KEY SELLING POINTS?
JS, Aussie: I have people in my mobile channel, earning themselves many hundreds of thousands of dollars a year. I have people in my retail channel earning themselves hundreds of thousands of dollars a year and I have people in our wholesale channel, NMB, earning many hundreds of thousands of dollars a year.
MH, Connective: We’ve seen some of our bigger groups do capital raisings and the aggregator agreement has been no impediment for them. One’s gone off and wrote $6 million. They don’t have to come to us and seek our permission to do that. They involve us in the discussion but none of the people have ever seen that as a liability because they’ve got this agreement. We’ll provide a hell of a lot of overlay of support services from the marketing services – that’s something that a lot of our brokers have taken up with us – like websites, social media content, SMS and email campaign programs that we’ll help run for them, and certainly one of the biggest areas, compliance. The compliance support is something a lot of our brokers come to us for and we receive information and feedback on it. We relish that because we need to have that dialogue with them, whether they’re credit reps or got their own licence.
JC, LJ Hooker Home Loans: Our PR team will help you build your profile in the local industry.
TB, Vow Financial: We recently completed a broker survey and we had a net promoter score of 92 per cent, so 92 per cent of our brokers said they would refer a broker to Vow which I think says a lot for the business in service, in culture, in diversification, in our commission differentiation – all those things add up. It’s not just one thing; it’s always a number of things that make you a leading aggregator.
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