Broker workloads increasing during COVID-19 pandemic

To understand the impact of the virus on small businesses – including the broking industry – The Adviser’s sister title, My Business, commissioned Momentum Intelligence to undertake an ongoing survey of a cross section of Australian business owners and employees.

The COVID-19 Business Confidence Survey encouraged participants across a range of Momentum Media’s professional services titles (accounting, aviation, defence, financial services, law, mortgage and finance broking, and real estate) to take part in an online questionnaire between 2 April-22 April.

A total of 6,740 responses were received, and the results have been evenly weighted across each industry.

The survey results include 629 responses for the mortgage and finance, which provides a robust sample size for this analysis.

Across all industries surveyed, over 50 per cent of all businesses said they have already seen negative impacts on their revenue to date, while 66 per cent said they expected revenue to decrease over the next three months. Those that had already seen revenue take a hit were much more likely to say that they expected this trend to continue, with 88 per cent of those already affected expecting it to continue until the end of the financial year.

Given the ban on travel and auctions, it is perhaps unsurprising that the aviation and real estate industries were found to be the worst affected sectors – with 60 per cent of respondents indicating that their revenue has decreased and will decrease further.

Brokers working more but seeing less revenue

Looking at the broking industry, less than 10 per cent of respondents said that revenue had increased – or would increase – during the pandemic.

Instead, 44 per cent of brokers said revenue had dropped since COVID-19, while 69 per cent said they expect it will decrease in future. This future concern for revenue rose to 87 per cent for those already impacted.

More concerningly, the report shows that, despite the drop in revenue, brokers had not seen a correlating drop in workload or working hours.

For example, while a third (33 per cent) of broking businesses said workload had reduced due to COVID-19 – and 28 per cent said they thought it would reduce over the next three months – a greater proportion reported an increase in workload (37 per cent) or were forecasting workload to increase (31 per cent).

Moreover, nearly three-quarters (72 per cent) of brokers were still working similar hours (if not more) and only a fifth expected their hours to reduce in the next quarter.

A fifth of broker respondents revealed that they had taken steps to reduce labour costs since the outbreak, with 21 per cent reducing employee hours. However, across all industries surveyed – the broking industry had the largest proportion of businesses that had not changed labour costs (75 per cent remaining the same)

The fact that revenue has dropped while working hours are increasing could be due to the fact that brokers are writing fewer loans for home buyers (given the reduced number of properties on market and cooling lender appetites) and spending more time helping borrowers access financial support packages (and therefore aren’t being paid a commission).

Speaking to The Adviser about the figures, the head of strategy at Momentum Intelligence, Michael Johnson, commented: “The mortgage and finance broking industry is being hit as a flow-on from the reduced activity in the housing market, which is also evident in the results from real estate professionals. Sixty-nine per cent of brokers expect their revenue to decrease over the next three months.”

Indeed, brokers told Momentum Intelligence that they were concerned for their future revenue.

One broker responding to the survey commented: “Home buying has stopped, which is a huge hit to mortgage brokers. Refinancing is available, for now, but once values start to drop, this too will become very difficult.

“So, the two key revenue streams will be dry, making for very tough times ahead.”

Another outlined that as commissions are only paid once loans settle (usually taking several months), the impact of the changes won’t be felt until the three months’ time: “With the way that our commission structures and pipelines work, it will be harder at the end of the [three months] than at the start,” he said.

This was echoed by another broker: “OK for the moment as work in progress finalise, but pipeline is not reloading.”

Brokers looking on the bright side

However, while there are concerns for future revenue amid the COVID-19 pandemic, nearly three-quarters (73 per cent of brokers) said they were in a positive mental state.

Several brokers said they viewed the pandemic as an opportunity to showcase how brokers can help Australians with their finances when they need it more.

One broker said: “As we strive to ensure our brokers are supported to the full extent, we are also looking for opportunities to ensure our processes are as efficient as possible and ensure that we are focusing on ways to growth this difficult time and come out on the other side as a far stronger brokerage and organisation as a whole.”

Another said: “For us, it’s about being on the front foot with all clients, letting them know we are here and also offering repayment health check to see if we can save them any money or assist if suffering from any hardships.”

One broker told Momentum Intelligence: “The industry response has been really strong and supportive. A very good thing.”

In fact, across all seven industries surveyed, the majority of respondents said their mental health was in a positive state despite the significant social and economic disruptions – with the defence industry coming out top with 76 per cent.

More to come.

The dynamic COVID-19 Business Confidence Survey aims to serve as a barometer of how businesses and working Australians are adapting to the changed working and social environment throughout the COVID-19 pandemic.

By surveying industry participants over time, the report will help map attitudes, confidence and business activities as they evolve by revealing which industries and professions are adapting most effectively to the “new normal”.

The first instalment of the survey report is expected to be released next week.