Spotlight: Mark Haron

iConnect Financial is a branded retail model for mortgage brokers.

It’s basically aggregating a group of brokers under one brand, which gives the brand a lot more presence and creates the opportunity for brokers to hopefully generate a lot more business.

It ensures a certain level of service every time a customer uses the brand by using the same systems and processes across the iConnect group, which is very useful for brokers – a lot of them look forward to that level of support.

The other part of having a number of brokers working under one brand is the opportunity to market it, and our initial focus will be to do that digitally through various online mediums.

Another key component will be taking some of the marketing collateral that we already have and embedding it into iConnect brokers’ businesses, and teaching them how to be more effective in marketing to their existing client base.

Why did Connective decide to introduce a retail offering?

It’s always been part of our growth strategy to have a branded offering for brokers alongside our wholesale offering.

The main reason for that is we’ve been told by a number of brokers that they want to be part of a single branded offering, and there are a lot of new-to-industry brokers who need a model that offers good training and support mechanisms to get them up and running, and ultimately make them successful a lot more quickly.

Will it be a franchise model and compete with the likes of Aussie and Mortgage Choice?

It certainly will be a franchise model.

Generally speaking, franchisees don’t usually switch from one franchise to another, and if you decide to leave, there’s a lot of non-compete requirements, so in terms of competing with the likes of Aussie, Mortgage Choice and, to an extent, Smartline, it will be more to do with recruiting new-to-industry brokers looking for a franchise model.

The big differentiator like we have done in wholesale aggregation is around the fairness of our agreement, the terms and conditions of our agreement, and our fee structure.

We’ve got to do something different – if we just go out there and offer the same agreement terms and pricing as Aussie or Mortgage Choice, why would anyone join iConnect Financial when they’ve already got the brand presence?

We think there’s an opportunity for a different offering in the market, and play a little differently in that respect.

Do iConnect Financial brokers receive any additional benefits to those brokers who only use Connective as their aggregator?

They do, from the point of view that they have a single brand, which gives them access to all of the information and marketing under iConnect Financial.

There will be a higher level of business support around practice managers that will be specific to iConnect down the track, but by the same token, brokers will be paying for that – it’s a much higher fee structure to use iConnect to get access to those things.

The majority of Connective brokers don’t need that – they’re fairly self-motivated, are very good at running their own business and have a very disparate business model.

This is a retail offering that allows brokers to be better at what they’re doing under a branded proposition.

 The beautiful thing about it is that we’ve launched it internally to our existing brokers first, and we’ve even had to limit the internal rollout simply because we don’t want to start with too big a group.

A lot of the things that we learn from iConnect Financial can also be applied to our wholesale offering in terms of our Mercury platform digital marketing and lead generation.

For example, we’ll have an integrated Salesforce-Mercury structure that we’ll be developing through iConnect that can be applied to the wholesale model.

What we do at iConnect Financial will lift the overall quality of our wholesale offering.

What is the commission model for iConnect Financial brokers?

We haven’t settled on it completely at this stage. What we’ve done for now is leave everyone on their current plans, and when we’ve ironed everything out and launched to the wider market early in the new year, we’ll move iConnect brokers to around an 80/20 commission split model.

That’s what we’re aiming for, but we’ve first got to work out the effectiveness of some of the lead generation activities.

Will Connective's white-label offering come into play in the retail channel?

Absolutely.It will continue to be available through iConnect.

At some point, we will look to redevelop Connective Home Loans into an iConnect-specific product line, and we’ll roll that out not just across home loans, but across a whole range of products including credit cards and personal lending.

What has the response been like from your broker partners so far?

It’s been tremendous. We’ve been pleasantly overwhelmed by how many Connective brokers are interested in this model, which is really encouraging.

Off the back of some Connective brokers attending workshops as an expression of interest, we’ve had a significant number who have signed up.

There’s a sense of pride and working towards a common goal with the branded model – brokers don’t want to let the team down.

How many iConnect Financial brokers do you expect to have in the next 12 months?

I’d say we should have close to 150 iConnect brokers by the end of 2016, and should have close to 40 franchisees.

We’ll continue to work with these franchisees to perfect the model so that when we go to the broader market around March or April next year, we can also take in a lot of the Connective brokers that do wish to transition across to the iConnect model.

Some brokers who use Connective as their aggregator but choose not to operate under the iConnect Financial brand may feel that they now are in direct competition with Connective. What is your response to that?

It’s no different to offerings already in the marketplace that a lot of aggregators have like Choice, Loan Market and AFG to a certain extent.

We’re not the broker – we’re just providing a branded aggregation offer.

If there’s an iConnect broker in the same suburb as a broker who uses Connective’s wholesale offering, then yes, those two will be competing against each other, but they’re probably competing against another half-a-dozen brokers in that space too from Aussie or Mortgage Choice – that is the market.

We won’t be competing against them – it will be the brokers providing services in the same area that will be. 

Is the traditional mortgage aggregation model becoming uneconomical?

No, that certainly hasn’t been our experience.

We’ve been going from strength to strength, but a lot of that comes down to scale – we’re in a position where we’re growing our broker numbers quite significantly, which enables us to become more profitable.

On a smaller level, I think it does get harder to have those economies of scale, but I still think the wholesale model is very operational. However, in that model you’re charging a small monthly fee, and you’ve got to have a lot of brokers to make the model viable.

We’re fortunate enough to have our own proprietary system which keeps costs down, but there are some medium to large aggregators out there who have to rent their own software platforms, and that adds a huge additional cost.

Most of the time they pass it on to their brokers, and that’s all part of the cost equation that a broker has to consider when looking to work with those types of aggregators.