The challenge of setting up your own brokerage

When Stephen Kerr (pictured) and his business partner Daniel Watson, started putting together plans for their own mortgage and insurance brokerage, the timing wasn’t the best.

With the war in Ukraine and the mini-budget hammering the mortgage market, they might have wished for an easier business environment in which to launch.

But director Kerr believed if they could make it work during challenging times, then they would thrive when normality resumed – and so, Kerr & Watson was born.

Here, he guides Mortgage Introducer through the step-by-step journey of setting up your own firm.

The start

There were clearly many things to consider when initially designing the company, starting with the name, Kerr said.

“We felt that once we picked this, it would be easier to picture our colours, branding and message,” he shared.

Thinking of names, Kerr said, was not difficult - the only problem was, if they were any good, they had already been used multiple times.

“Initially we were reluctant to use our surnames, believing it can seem egotistical in some cases; however, the more we thought about it, we realised that is not true and putting your name to your business gives an extra degree of accountability,” Kerr explained.

Bespoke, service-driven mortgage and insurance advice was the offering, Kerr said, rather than becoming a volume broker.

Knowing this, Kerr said, enabled the co-founders to start to put together a marketing plan.

Network or direct authorisation

Another big decision, Kerr said, was whether to work under a network or chose the harder route, direct authorisation from the Financial Conduct Authority (FCA).

“We chose direct authorisation; this was not an easy decision as I know the value that networks can bring, having worked under them at my previous employment,” Kerr said.

Kerr added that while networks do a great job in removing some of the burden from you, he felt more control over the processes and systems used was needed.

“We joined the queue for FCA authorisation in June last year; it is a daunting process as unless you have done it before, you do not know what to expect,” he said.

Having been told to expect between a six to 12 month wait for sign off, the partners enlisted Simply Biz, the firm’s compliance consultants, to assist with the application, which made the process more palatable, he said.

Part of this process, Kerr elaborated, required providing a lot of information on his background within the industry, and detailed projections of the company over the coming years.

“About three months into the queue, I went to a conference where a leading industry speaker was on stage; his advice was ‘if you are thinking of going directly authorised at the moment, do not bother’,” Kerr said.

This particular leading industry speaker, Kerr said, was referring to the current backlog of applications.

“We were finally signed off in mid-January this year which worked out well; in reflection, the direct authorisation process was not as bad as expected with Simply Biz to hand, but long periods of waiting for answers did cause some anxiety,” Kerr added.

Motivation

Both Kerr and Watson both left secure jobs that they enjoyed, to embark on a more unpredictable journey.

“The motivation is getting to shape the business the way that we want it, working with clients and introducers that value a bespoke service,” he said.

However, Kerr said having your own firm came with its challenges. For example, he said, when you advising at an established firm, it might be that your job is focused solely on that area, with others taking care of admin, case tracking, marketing, bookkeeping, HR, compliance and more.

When you are building the business from scratch, you need to wear a lot more hats, so learning quickly, being resourceful and adaptable was very important.

Taking all of this into account, Kerr expressed that he was very glad that he decided to set up the business and leave his previous job behind.

“It would have been hard to go to industry events and see other new brokerages beginning to prosper, knowing that we did not have the confidence to back ourselves; you only live once, so we look forward to the journey ahead,” Kerr said.

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