Broker reveals why he started charging a fee for service and how this has strengthened his business
John Manciameli (pictured) has seen plenty of change in his 18 years as a broker. After the royal commission into banking, he decided to make a change of his own and start charging a fee for service in order to improve the viability of his business. The results surprised him.
“I was initially frightened like everyone possibly would be,” he said. “But I bit the bullet, and I was shocked. I could not believe how many people said, ‘yeah, no problem’.”
When he started as a broker, it took about six to 10 hours to take a home loan from initial consultation right through to settlement. In the current environment, it takes closer to 24 hours, he said.
“When the royal commission into banking hit, I could see that the workload had increased dramatically,” he said. “It meant I had to start employing resources and rather than taking on a fixed overhead like employing a permanent full time loan administrator, I thought I’d outsource the loan admin and just pass on the cost. I’m charging anywhere between $550 and $770.
“I say to clients, my time is still at no cost to you, but I recruit a parabroker and a loan admin officer per client and I pass on the cost to you. The benefit is that you get three people working on your deal and I can continue to answer the phone calls and not be on hold to banks, so you’re just going to get a much better service.”
While he has lost some genuine prospects because of this, he has also won business, while filtering out the customers who were liable to “shop him.”
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“I saved myself countless hundreds of hours on people who weren’t serious and conversely I’m able to increase my service levels because I’ve got the support to help get the loan through,” he said. “My clients are calling me and I’m answering the phone now. I’ve had lots of people tell me ‘John, this broker I’m dealing with doesn’t return my calls, can you help me?’”
Often when he tells these clients there will be a cost, they answer:
“That’s fine John, we just want someone to do the job. We understand that you don’t work for free,” he said.
Although he does get some resistance from clients who point out that other brokers don’t charge a fee for service, he reminds them of the hours of unpaid work involved in broking that simply doesn’t occur in other related industries such as accounting or property law.
He and his wife also run a builder broking business where they help clients find the right building company for their home construction needs. He said a person working at a building company recently told him that he had spent 18 months as a broker before getting a job with the company.
“It broke my heart because he said, ‘I tried 18 months, I wrote $10 million in pre-approvals, I was so busy, and yet, I couldn’t make a living’,” said Manciameli. “It just further cemented the fact that he wasn’t being remunerated for his time.
“I wonder how many of us in the industry are writing pre-approvals that go nowhere to the point where people are exiting.”
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He said it was time that brokers started valuing themselves.
“I think the industry has got to wake up to itself and say, ‘we are not free. We do offer an incredible service, but times have changed, it’s a lot harder, there’s so much more work involved’,” he said.
For those considering a similar path, he offered the following advice.
“Just start, don’t be afraid because when you start valuing yourself, you’ll be pleasantly surprised how many people will respect you for it,” he said. “I have won business from people saying, ‘you’re the only broker who is charging money, you must be good’.”
