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In order to keep young recruits in the industry, principals need to discard the commission-only structure and instead use a salary-based remuneration system, according to the Young Broker of the Year.
“When I started out, I was thrown into the industry with limited assistance, on a commission-only base,”
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Anthony Alabakov, who was ranked number one in the Young Broker of the Year 2012 ranking, told The Adviser.
“I struggled for the first two years. I only wrote $6 million. I had to move back home.”
Mr Alabakov, of Mortgage Freedom, has taken his experience and developed a “DIY traineeship” in his business for new recruits.
“With new brokers, traditionally the expectation is that they should be writing loans on day one and bringing new business into the office straight away; this is an unrealistic expectation,” he said. “Principals need to be realistic, they need stepping stones for new recruits.
“I have my staff start out in an admin role on a salary to learn the back-end, to pick up the credit policy and procedures and then when they are ready they are moved into a broker role.”
This progression will occur according to the person, said Mr Alabakov.
“The traineeship revolves around understanding your staff's goals and objectives; this is something I discuss as part of their KPIs,” he said.
“Just recently I found out that one of our PAs wanted to become a broker in three years, so we put into place goals for him to reach to get there.”
So far, two members of Mr Alabokov’s business have successfully graduated from back-end office staff and have become successful brokers, one of whom wrote $30 million in his first year.
“It has worked for us and I realise it won’t work for everyone, but it is a great way to keep brokers in the industry because at the moment we have an ageing industry,” he said.
According to Phil Naylor, CEO of the Mortgage & Finance Association of Australia, only six per cent of the industry are under 30 years of age.
Mr Naylor told The Adviser that this type of salary-based traineeship has merit, though not all broker principals will be able to offer it to their recruits.
“In theory it is a good idea and it is something that some brokers are already doing,” he said.
“[However,] many of our members are one-person businesses so they do not have the funds to afford to pay staff a salary.”
Mr Naylor said this is why the association has lobbied the government for support for trainees in the financial sector.
“We can see that there is an issue there and that is why we are speaking with the government,” he said.
“It is early but the government seem interested.”
