While running a business is no easy feat, prior preparation prevents poor performance, as the old adage goes. Given the economy is firmly out of the record low interest rate environment and Australians begin to come to grips with the higher cost of living, the time is ripe for brokers to upskill and propel their brokerages while attracting new clients. This feature takes a dive into what is needed to build a thriving business
With almost 70 per cent of Australian borrowers turning to mortgage brokers for credit advice and recognition and trust in the third-party channel remaining high, it’s clear that mortgage broking remains a highly sought-after career choice for a variety of people, particularly given the flexible work options available.
The 2022 Consumer Access to Mortgages Report released by Momentum Intelligence, which included a survey of 450 consumers, found that 65 per cent of consumers used a mortgage broker, compared to 35 per cent who approached a lender directly.
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In addition, of those who used a broker 86 per cent reported feeling satisfied and would use one again.
With high levels of trust in the third-party channel and more people turning to mortgage broking as a career of choice, building a successful brokerage and standing out in the crowd is essential.
Taking the leap
Before a new broker begins to write loans, they need to have completed the industry requirement of a certificate IV in finance and mortgage broking, get insurances, find a mentor, decide on an aggregator or association to join, as well as become a member of the Australian Financial Complaints Authority (AFCA).
Once the accreditations are underway, one of the first steps to building a brokerage is to determine what your skill set is, what your niches are and what your end financial goal is.
Aussie franchisee Sandra Sanches, in Epping, Victoria, moved from a PAYG position after it was made redundant to become a mortgage broker and said the first couple of years were the “toughest years” of her life both “emotionally and financially”.
“For what it’s worth I’m so glad I stuck it out,” Ms Sanches said.
“Leaving a PAYG job and becoming self-employed is not as simple as picking a business name and aggregator — this is a life-changing experience.” The process, she explains, requires a lot of planning and preparation.
“Some key steps for me were to firstly determine if I was ready for it. I developed a robust business plan with the help and guidance of my mentor and figured out my finances to ensure I could stay afloat during the first 12–24 months of brokering.
“Realistically, I knew that I would not be trading profitably in the first 12 months and I had to be sure I had savings to cover my usual outgoings as well as the new operational expenses.”
Given the challenges in the early years of establishing a brokerage, industry associations and aggregators have been working tirelessly to increase support to new brokers to ensure success.
Ms Sanches said her aggregator, Aussie Home Loans, had been “phenomenal” from the get-go by providing training and ongoing support.
Preparation and planning
While most people can appreciate planning for future growth is important, many fail to develop a thorough business plan that helps provide clarity and direction.
A good place to start is to set your business objectives: what do you want your brokerage to do? How will you attract, convert and maintain business? What culture do you want to achieve?
Then find best practice brokerages you most aspire to be like and map out strategies to achieve your goals and plan for the different risks and factors that may affect your success.
Branch principal and mortgage broker Violetta Trajcevski at Yellow Brick Road said she decided to open a franchise in inner Melbourne to be part of a large network while having the autonomy to run her own business.
“I valued an established brand, systems, technology, compliance and marketing support so that I could focus on what I do best — assisting clients,” Ms Trajcevski said.
In addition, she said having a good operations system in place to track clients and generate leads is a must.
Ms Trajcevski said having a good operating system can help create efficiencies as clients can log into the portal and enter all their information, goals, requirements, preferences and supporting documents, which avoids duplication of data entry.
“We use Salestrekker as our operating system to track all client’s details (database), maintain workflows from lead generation and welcome letter, all the way through to application lodgement and settlement,” Ms Trajcevski said.
“All compliance is also integrated into the system as well as automated emails/SMS updates sent to clients at every stage [as well as] digital signatures.”
Generating leads
Above all, in order to have a successful brokerage you need clients and one widely recognised method to achieving that, is to lock in referral partnerships. From accountants to real estate agents and sports clubs, having businesses backing you is paramount.
Finni Mortgages’ chief executive Paul Glossop said referral partnerships are a “two-way street”, explaining that the relationship needs to be nurtured.
“For me, it’s a way to build a business and your reputation as long as it’s done correctly,” he told The Adviser.
However, to form fruitful referral partnerships with financial advisers, brokers must understand their core business and service offerings and have a targeted approach to finding referrals, Mr Glossop pointed out.
“If you as a broker work specifically in investment property or refinance, you can target financial advisers who only include property investment as part of their wealth creation plans for their clients,” Mr Glossop said.
“Start with knowing who your key clients are and what your avatar is, and then explore which financial advisers or other referral partners are going to suit you.”
CEO financial services and Mortgage Choice, REA Group’s Anthony Waldron, said building a customer base and marketing are also some of the top struggles for newcomers.
Mr Waldron said dedicated teams at Mortgage Choice help franchises “get on the tools” as soon as they’re ready, providing learning and development as well as providing brokers access to a team of credit coaches for ongoing support with systems and lending scenarios.
In addition, most aggregators have access to mentors to help new franchisees create and deliver their marketing and business plans.
While it is an industry requirement, finding the right mentor for you is equally important; someone with experience, who will hold you accountable, challenge your thinking and provide tools and training to help you navigate the small-business ownership.
MS TRAJCEVSKI’S TOOLBOX FOR ACHIEVING SUCCESS…
- Prepare a business plan, budgets and forecasts and regularly review these.
- Have adequate cash flow available (at least one year of overheads and income in the bank as a buffer).
- Continually work on your pipeline at least three to five months ahead and set aside time every week to touch base, nurture relationships with existing referrals and to seek out new referral networks.
- Professional development and networking via industry events as well as getting involved in the local community.
- Personal development, take time to work on your mindset and learn strategies/tools and help you stay in peak state mentally.
- Stay active, eat well and spend time with family and friends outside of business.
