Brokers love to complain about aggregators - but what are the alternatives? And are they any better?
Brokers love to complain about aggregators - but what are the alternatives? And are they any better?
We talk to three brokers who shunned the traditional route to get their thoughts.
The franchise:
Cathy Anderson opened up the Smartline Blackwood office eight years ago, and has since gone on to become the franchise’s number one broker and AMA Broker of the Year for the past two years.
One of the key draw-cards to taking the franchise option was her desire to be a part of developing a brand, says Anderson.
“Smartline was not that well-known when I started with them, so I feel I’ve been able to contribute to the growth of that brand and being a part of making sure that brand is solid and ethical.”
Now working under a strong brand name, Anderson says she is able to leverage off Smartline’s solid reputation to gain traction with lenders.
“I may be exactly the same type of broker and have the same skills in selling a loan but because of who I am and because of the group I’m with my loans are processed faster and I have more success for my clients.
“I think that’s something brokers really need to sit down and look at closely because if you’re not aligned with the right people that is a reflection on you and it’s a disservice to your clients.”
This is particularly important for new-to-industry brokers, says Anderson, as is the high level of support they receive through the franchise.
“I think joining with a franchise group your hand will be held more so you’ll be able to work through whether mortgage broking is right for you, whereas if you join an aggregator group it’s more ‘here we are here’s some money go out and have a play and we hope you’ll do well’.”
Compliance, the bane of many brokers, is also made easier through the franchise, says Anderson, as is CRM and IT.
“It’s a massive distraction for people running small businesses, so to have the assistance and so much of the legwork done on that and so much of the weight taken away from you it lets you focus on what you’re actually good at doing.”
Anderson does admit that the financial reward offered to her through some franchise groups was higher than she currently receives, but stresses that she is still rewarded highly for what she does and “not everything is about money”.
“Some of the aggregator groups go over to some really fantastic places too,” she laughs. “Smartline is a little bit more conservative in that respect.”
The ‘supergroup’:
As a new-to-industry broker, Adrian Willenberg of Broker Intelligence says joining an aggregator directly wasn’t an option. With Master Broker Group, a sub-aggregator or ‘supergroup’ run by top brokers Andrew Tan and Mario Borg, Willenberg says he found support and guidance to help him find his feet in the industry.
“We get constant support, in the form of one-on-one sessions, and also regular workshops. We get templates to follow, advice with marketing, and they take a genuine interest in my business,” says Willenberg.
The sub-aggregator model allows him to access the benefits of Finsure, the company’s head aggregator, in terms of CRM and other support, as well as more personalised coaching from Master Broker Group.
A strong commission structure and the ability to build his business as he sees fit are also a strong selling points, says Willenberg.
Willenberg says the main challenge of his business model is the lack of aggregator-generated leads, although he says this option is available through Master Broker Group and Finsure if he decided it was necessary.
“For me I didn’t want to risk having to give up a large part of commission from my own self-generated leads as I realise that once momentum kicks in, my database will refer and that’s when the true pay off will be… my own brand, my own customers, my own trail book, a saleable asset, and best of all highest commissions where my hard work is properly remunerated.”
Willenberg suggests joining a sub-aggregator would be a good option for experienced brokers who would like support and guidance in fine-tuning their business and improving efficiency.
“Mortgage broking can be a very lonely business. Joining a group like MBG makes you feel part of the family. You feel that you are in business for yourself, but not by yourself.”
Going off-panel:
While Independent Mortgage Planners aggregates with PLAN, director Craig Morgan says his business model allows him the freedom to go off-the-panel.
Independent Mortgage Planners charges a fee to clients, but then rebates commissions in full, meaning brokers can deal with lenders that don’t offer a commission or that don’t traditionally deal with brokers. The brokerage also operates under its own credit license, and as such brokers are not restricted to lenders on PLANs aggregation panel.
“If a client comes to us and engages our services and the best outcome for them is a lender that doesn’t pay commission then I’m quite happy to engage that lender… I can go down to an institution that doesn’t even have a third party channel because I don’t need payment from them.”
Because of the rebate model, it does often work out in the client’s best interests to work with a lender that offers a high commission, but Morgan says the key is the scope of options his brokers can access is wider.
“It’s just the same as you going to your accountant, your doctor, your lawyer. You pay them a fee for the service that they provide; you don’t go to them because they can only access certain drugs and the doctor down the road can only access certain other drugs.
“You go to your doctor because you feel that that doctor is good at their job and you’ve got rapport with them and you feel confident that doctor can prescribe anything that is appropriate to your circumstances.”
Morgan admits this model does come with its own challenges, including clients’ reluctance to pay upfront, misunderstanding from other brokers, and the forfeiting of commissions and the all-important trail book.
“It’s a real cultural shift to say I won’t have any commission, I won’t have a trail book, I won’t have that nice, supposedly capital cash cow that can be sold down the track or lived off for a number of years.
“Serious players who understand our model have said to us when people figure this out we should have one of the biggest businesses going and we should have this massive trail book… but the problem is we don’t own the trail book and we give it away.”
Finding appropriate software is also a difficulty, as Morgan says no aggregator software currently allows brokers to model the effects of rebating commissions.
On the flipside, Morgan says acting under an aggregator but working off-panel allows access to all the support offered by PLAN, while still maintaining independence and ensuring no conflict of interest.
“I think a model like this can be too easily damaged under something like a franchise so it’s really the only way to do it… The real upside is that it should be much easier for you to provide on every single loan file you’ve done to say you acted in the client’s best interests, your preliminary assessments should be squeaky clean.”
Does your brokerage operate without an aggregator? Would you consider an alternative option? Share your thoughts below.
