In an increasingly competitive market, aggregators and broking groups are racing hard to be in pole position for brokers’ business. To understand the driving force behind brokers’ choices on aggregator groups, Momentum Intelligence, in partnership with The Adviser, surveyed brokers on what is needed for a group to motor ahead and what can be left in the pit stop. Annie Kane takes a look under the hood.
The importance of a broker’s satisfaction with a broking group came to a head earlier this year when the Sydney Morning Herald and the ABC’s 7:30 program suggested that Mortgage Choice’s franchise system — which was introduced 25 years ago when the group was established by multimillionaire brothers Peter and Rodney Higgins — was in need of an update.
Mortgage Choice responded to the reports acknowledging that the balance between services offered and remuneration “needed adjusting” to encourage franchisees to invest in their businesses. As such, the group is undertaking a review of its franchisee remuneration structure, with a view of implementing a “more competitive” model.
Speaking following the media reports, Mortgage Choice CEO Susan Mitchell said: “We acknowledge that our model is outdated, it needs to be more flexible, it needs to be less volatile in the way it pays our franchisees.”
She continued: “Our business was started as a full-service model. All the services that were needed to help a broker start their own business, providing brand, marketing, IT, compliance, training and all those sorts of things.
“Over the years, since the introduction of the Mortgage Choice model, there have been other models that have been introduced — aggregator models — that pay out a higher proportion of income but don’t offer the same level of service. So, what’s happened is, I believe, our balance between remuneration and provision of service has gotten out of kilter, so we just need to address that balance between remuneration and service provision.”
Indeed, the importance of striking the right balance between what a broking group or aggregator provides and the commission they pay is crucial. According to the 2018 Momentum Intelligence Broker Group of Choice: Switching Aggregators report, run in partnership with The Adviser, commission structure is the number one factor that would make brokers leave their current group (41.4 per cent).
The Broker Group of Choice: Switching Aggregators 2018 report looks at the relationship between brokers and their group (whether an aggregator or branded group) and paints a picture of where these groups are succeeding, where there is room for improvement and what brokers think about the group as a whole.
Conducted during April and May 2018 across a range of sources including The Adviser’s database, the quantitative research asked participants to complete a self-administered questionnaire via an online survey portal. This year, there was a total usable sample of 468 brokers.
34.8% of brokers say they are “very satisfied” with their current aggregator group
While the majority of surveyed brokers appear to be satisfied with their aggregators/broker groups (62 per cent were either “satisfied” or “very satisfied” with their current group), there is a substantial proportion (22 per cent) who are dissatisfied and considering other options.
The report found that broker satisfaction tends to decrease over time, with nearly a third of brokers who have been with their groups for four or more years being dissatisfied with their current group, while brokers with more years under the belt are also less satisfied with their group than their less experienced counterparts.
46.8% of brokers say that they are “very satisfied” with their new aggregator after making the switch
Perhaps unsurprisingly, brokers who settle more than $4 million a month are the most satisfied with their aggregator.
The report also found that more than half of broker respondents (52 per cent) have switched group at least once, but that just under 10 per cent of those that had switched were either dissatisfied or very dissatisfied with the new group once they did.
Asking brokers to rate their current aggregator on a number of key operating areas, the research found that the groups excelled at three areas: compliance assistance, choice of lending panel and culture. Forty-five per cent of brokers gave their group 5 out of 5 for helping with the legal side of things, lending panel was given full marks in 42 per cent of cases and culture came in third with 41 per cent.
More than half of all surveyed brokers scored their group with a rating of 4 or higher for each area. The highest weighted average, however, was for lending panel, followed by compliance assistance and then commission.
Marketing support and business support were the two areas in which broker groups could improve; a quarter or more scored their aggregator/group with a rating of 1 or 2 out of 5 for these two attributes.
It is clear that a number of brokers are looking for a change of scenery, with a third of brokers indicating that they were planning to switch in the foreseeable future, half of which were planning to do so in the next two to three months.
When considering switching groups, brokers rated software and technology (74 per cent) and trail portability (73 per cent) as “very important” factors to consider, with commission coming in as third most important at 64 per cent.
At the opposite end, brokers placed little importance on areas outside of their core business. Offerings such as white label, risk or wealth products were found to have very little effect on the brokers’ consideration to move group. More than a fifth of surveyed brokers rated these as having “minor” or “no importance” in the switching decision.
Overall, software and technology and trail portability were also the key reasons for brokers leaving their previous groups, indicating that these factors should not be taken lightly.
However, when asked to indicate the factors that would make them most likely to leave their current group, the respondents identified commission structure (41.4 per cent) and software/ technology (41 per cent) as the two key factors. Notably, brokers were equally divided between the type of financial agreement they would prefer in a group, with 33 per cent opting for a commission split and 34 per cent preferring a fee-based agreement.
This report makes it clear that while brokers are generally satisfied, they are looking for a broker group that has a strong technology platform with trail portability wrapped up with a foundation of a positive culture. And, given the ongoing reviews into culture, although there are hassles in switching broker groups, many brokers are looking to take the leap in the near future.
“Brand engagement and a company that lives by its values is extremely important to me. I want to be proud of the company I represent and believe that its vision and values should be in line with my own.”
“I believe culture comes from the top, and I could not be prouder to have Sam White as our CEO. He is passionate about our industry, extremely approachable and spends a significant amount of time investing in his people.”
“I think the biggest challenge many brokers face is trying to find quality clients as it’s getting more difficult for clients to qualify than they did a few years ago. Trying to get these clients is difficult.”
“Biggest issue with all aggregator software is an inability to deal with anything other than vanilla loan lodgements. I have many clients that do commercial and residential loans and this is poorly handled by all software models.”
“Need more support for regional brokers. All PD days are held in the city, which makes it difficult for remote brokers to attend... We never see any of them in regional areas.”
AFG invests in the best people, platforms, systems and tools to remain an innovative leader in the delivery of high-quality, resilient and agile technologies to fuel the business growth of AFG and our brokers. As the housing market tightens, brokers are looking for other ways to build their business and provide a holistic service to their clients. We have built an industry-first platform, AFG Business, that demystifies SME lending for resi brokers. It is backed by a new accreditation process that is as quick and simple as the platform itself and comes with in-built training materials, sales tools and a dedicated commercial help desk for support. – David Bailey, CEO
John [Symond] and I have always said that culture eats strategy for breakfast. We believe that the most significant thing that great companies have is this thing called culture. For 26 years, Aussie has provided an amazing culture. I think that everything we do starts and finishes with culture. It is one thing to say that you have this great brand and deep support structure and sophisticated software, which we do, but it has to be a cocktail that combines to create this fantastic culture. At Aussie, I believe — and I think our results and position within the community show — that we have one hell of a positive culture. – James Symond, CEO
When Connective was formed in 2003, we set about creating a business model that meant it was possible for every broker to get a fairer deal. One that was based on a transparent partnership that gave brokers a greater share of their hard work while also providing an outstanding service. Some 15 years down the track, we still pride ourselves on being a long-term, valued and trusted partner to our brokers. We believe every broker has benefitted in some way from what we have done. – Glenn Lees, CEO
Choice is one of the most established aggregators in the market with a long and rich history of supporting brokers to achieve their business potential. We bring a deep understanding of brokers’ businesses to the table and we constantly invest in training and services to help brokers achieve their growth aspirations. One thing that unites Choice brokers is an appetite for growth, with a recognition that you will achieve a better outcome by forging a genuine partnership with your aggregator and its network of members. We pride ourselves on having a culture of knowledge sharing, and one part of our proposition we are perhaps most proud of is our peer-to-peer learning program. – Stephen Moore, CEO
FAST has an unrivalled legacy in business and commercial finance and we are committed to and passionate about the support we bring on this front. We have been empowering and encouraging brokers to focus on backing businesses and enabling their customers to achieve home ownership or investment goals since our inception over 18 years ago. The result of this is that more than 60 per cent of FAST brokers now offer more than one type of lending to their clients, including more than $7 billion in commercial and business lending annually — equating to more than a third (36.6 per cent) of all commercial loans originated by brokers in Australia. – Brendan Wright, CEO
At Loan Market, we are extremely proud of our customer satisfaction ratings (measured by Net Promoter Score) where our customers consistently rate our brokers with an NPS score of over 80 (on a scale of -100 to +100). The banks are at an average of -10. We are proud of the brokers who choose to be a part of our group, of the culture we have, and we are proud to be a 100 per cent family-owned and operated business. We believe that our business model creates an environment for broker businesses to thrive, having the freedom to run their business like an entrepreneur but also feel supported across all areas, including marketing, compliance framework, PD events, IT and software. – Sam White, executive chairman
At PLAN Australia, we are proud of our partnership with our members and their success. Second to that is our ongoing commitment and contribution to the advancement of our industry. We believe in the very important role the broking industry plays for all Australians and believe there is real opportunity for us to come together to enhance the value customers gain from brokers and increase the knowledge which brokers gain from each other. We are proud of our investment in support that arms our brokers for the future and of the role we have played in supporting the industry through regulatory change and consultation. – Anja Pannek, CEO
As one of Australia’s leading franchisors for over 25 years, we pride ourselves on the strength of our community of franchisees that actively help and support each other. The quality of our training, compliance support and IT systems, which provide brokers with the framework to build and run successful businesses, is second to none. Our coaching across loan submissions, business planning and management, and sales and marketing is highly valuable to franchisees, especially [the new ones]. We also have a full financial services offering that enables our franchisees to help more customers with more of their needs while diversifying their revenue streams. – Susan Mitchell, CEO
We pride ourselves on being nimble enough to change quickly on what our brokers need, being open and transparent on what we’re doing as a business and within the industry, having full access to very experienced and dynamic sales teams nationally [compared to] our competition, and our recruitment and retention of quality brokers. Our lender partners recognise our very high level of applications to conversion rates [compared to] our competition, and we have two dedicated salespeople supporting our network with education and training in the commercial and equipment finance area. – Leith Wickstein, state manager, NSW
Annie Kane is the editor of The Adviser magazine, Australia’s leading magazine for mortgage brokers. As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also the host of the Elite Broker podcast and regulator contributor to the Mortgage Business Uncut podcast.
Before joining The Adviser team at Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.
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