While switching aggregators has its benefits, brokers must first ask themselves if the reward is worth the effort
There are a number of reasons why brokers switch aggregators, including financial factors such as commissions, timely payments and security of their trail book.
In addition, brokers can often feel as though they lack on-the-ground support from their aggregator, forcing them to look for greener pastures.
“Inefficient BDM relationships is another issue that can force many brokers to look around,” PLAN’s chief executive Trevor Scott says.
“When brokers don’t receive the business support they think they deserve, they start wondering whether or not their aggregator has the capacity and the capability to grow with their business.”
Mr Scott says other reasons brokers may look to switch include a lack of “buying power for value added services, punitive fixed-term contracts and an aggregator not being relevant to the current market, such as having outdated software and manual commission payments.”
But while there are many reasons for brokers to switch aggregators, it is not a simple process. It is time consuming, confusing and often very tedious. Moreover, switching can prove very disruptive to a business.
As such, before any moves are made, brokers must seriously consider whether or not a move will benefit them, their business and their bottom line in the long run.
Choice’s chief executive Stephen Moore says it is essential for brokers to look carefully at the “underlying financials of the provider” before making any decisions.
“Are you confident they can invest ongoing in staffing, technology and business support?” he asks.
“Also ask yourself: ‘What is their track record to date? Do they have a financially viable business into the future?’
“It is always important to remember that a decision on choosing an aggregator is a decision on where you invest your most important business asset – your trail book.”
Mr Moore says it is also important for brokers to consider what support they will receive from their new aggregation partner.
“Are they a true business partner or just out to make a quick buck from you?” he asks.
The aggregator a broker chooses needs to offer a meaningful and long lasting partnership that will ultimately help them grow and strengthen their business.
“Brokers should stress test [their] offering and look beyond the sales pitch,” Mr Moore says.
“Don’t be scared to ask for financials, and you should be sceptical if an organisation is not being transparent about them. It is vital your partner can prove that they will be able to make an investment in ongoing support and technological improvements.
“Most importantly, never forget the phrase ‘you get what you pay for’.” Before brokers “stress test” potential new aggregation partners, they must first determine whether or not switching is the right decision for them.
But how does a broker know whether or not the move is right for them?
Mr Moore says the only way a broker can truly determine whether or not switching aggregators is a sound business strategy is to create a list of pros and cons.
“It is easy for brokers to become complacent, so I encourage them to do their research and ensure that their current aggregator is meeting all of their needs,” he says.
Identifying the pros
To identify the positives associated with switching aggregators, brokers must determine exactly what it is they want and need from their aggregation partner.
What kind of support do you expect from your aggregator? Do you want them to help you with recruitment? Do you want them to help with marketing? Do you want them to provide you with a highly evolved software platform that takes the hassle out of filling in loan applications?
Perhaps you want a specific commission split, or you want access to wide range of lenders to help you write more diversified business?
Once brokers have identified what they want from an aggregator, they should ask themselves whether or not their current partner is meeting all of those needs.
If a broker’s aggregator is failing to meet their newly outlined needs, it is clear to see what the positives associated with switching aggregators are.
From there, it is a good idea for brokers to meet and chat with others who have recently switched aggregators. Through these discussions, brokers will be able to identify any negatives associated with switching.
Finsure’s managing director, John Kolenda, says it is also important for brokers to review their current business contract when evaluating whether or not it is the right time for them to switch.
“Throughout my time in the industry I have come across a number of broker aggregator agreements that are quite complicated and can negatively impact a broker who decides to leave. As such, this should be taken into consideration before making the switch,” he explains.
“That said, if you can clearly see that changing aggregators will help you and your business, then the reward is certainly worth the effort.”
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