Top 25 Brokerages 2012

In this year’s Top 25 Brokerages report, all of the players that made the list managed to significantly increase their volumes when compared with last year’s performance.

In addition, they all grew their loan books.

At a time when the banks have become a lot more competitive on rate and hungrier for business, mortgage brokers have not only been able to maintain market share but also to grow it, with even greater growth expected by year’s end.

According to the latest JP Morgan Fujitsu Report, mortgage brokers currently account for 43 per cent of all loans written – and this percentage is expected to hit 50 per cent before the end of December.

Over the last 12 months, and with the introduction of NCCP licensing, the broker proposition has gone from strength to strength in the eyes of consumers.

Not only has the industry managed to seize a greater slice of the mortgage market, but Australia’s boutique players have also managed to build up their loan books – significantly in many cases.

This year, The Adviser had more boutique brokerages enter the ranking than ever before, highlighting the growth of these players over the past 12 months.

While there are still plenty of challenges ahead, especially as Europe continues to plunge further into recession, it is refreshing to see Australia’s brokerages are optimistic – not just about the past year but also about the year ahead.

METHODOLOGY
In ranking Australia’s Top 25 Brokerages, The Adviser applied a stringent technical assessment process to ensure all participating brokerage groups were considered on a level footing.

To be eligible for consideration, the brokerage had to have at least three brokers all operating under the same brand.

These brokerages were then invited to complete an online survey, data from which were then compiled and assessed against pre-determined criteria, including loan book size, loan volumes, numbers of loans written, business growth and broker productivity.

In addition, for the second consecutive year, The Adviser measured each of the brokerages’ other volumes including insurance, personal loans and commercial lending.

The brokerages were then ranked from 1 to 25 based on a comparative assessment of these key indicators.

SIZE DOES MATTER
As in previous years, size – whether it be loan volumes, loan book or number of loans written – was a key factor in determining this year’s leading brokerages.

Aussie and Mortgage Choice are, without question, the two largest brokerages.

Aussie is far and away the largest brokerage in terms of staff numbers, with the company boasting 690 brokers and more than 180 other employees including IT, senior management and marketing staff.

But while Aussie is the largest by broker numbers, the company does not boast the best broker productivity numbers.

With slightly fewer than 500 brokers, Mortgage Choice writes, on average, $18 million per broker – significantly more than the $14 million settled by Aussie’s brokers.

Today, Mortgage Choice boasts the biggest loan book of all the brokerages – just above $43 billion.

With this in mind, it is clear to see why Mortgage Choice narrowly beat Aussie to the coveted number one spot for the fourth consecutive year.

And while Mortgage Choice has cemented its place as the number one brokerage for the past few years, it will be interesting to see if the company can win five years in a row as Aussie has made it very clear it will be stepping up its game even more over the coming 12 months.

BEST OF THE REST
While Aussie and Mortgage Choice have once again reaffirmed their leading position, there was exceptional representation from the other camps.

Over 40 brokerages entered the ranking this year, the largest number of participants since the ranking was launched back in 2009.

Moreover, each of the smaller brokerages managed to perform incredibly well, highlighting the strength and resilience of the third party distribution channel.

First time entrants included Independent Home Loans, Australian Property Finance and KeyInvest Lending Services, and their strong performances show there is fierce competition between Australia’s smaller players.

In addition, these smaller brokerage groups, on average, have better quality loan writers when considered on broker productivity.

Iwision Finance’s brokers, for example, wrote around $30 million each compared to Aussie Home Loans’ $14 million per broker.

The story was much the same for Tiffen & Co brokers, who wrote more than $20 million each, while the Rate Detective’s brokers settled approximately $29 million each.

Their excellent productivity helped catapult some of the nation’s smaller players into the top 10, allowing them to go head to head with the big boys.

But while these smaller groups have performed remarkably well in the current environment and without the backing of a national brand, they will struggle to make the top five unless they grow significantly in size.

Independent Home Loans would certainly be one brokerage to watch.

In the past four years, the brokerage has gone from being a sole operator to having more than eight brokers and a loan book of more than $300 million.

The company’s managing director, James Pibworth, says the brokerage has no plans to slow down any time soon either, and it hopes to grow to 20 brokers by year’s end.

All of Australia’s top performing brokerages share traits that underlie their success, as The Adviser reveals

THE THREAT of a global recession has not stopped Australia’s brokerages from hitting significant milestones.

All of this year’s entrants performed remarkably well, given the uncertain economic environment.

In fact, collective loan volumes for 2011 easily outstripped the achievements of previous years.

Better yet, this was achieved by a smaller number of brokers. The implementation of licensing and NCCP regulation has significantly reduced the number of brokers in the industry.

Mortgage Choice alone has seen its broker numbers slip by almost 100 in less than two years.

Despite this, all of the Top 25 brokerages have managed to lift their game in the past 12 months and by all accounts will continue to improve as consumer confidence begins to return.

In analysing this year’s ranking, it was clear that the top performers all share common traits which have ensured their business success.

From the ability to market effectively to retaining clients long term, all of the brokerages know exactly what to do to be successful.

In this report, The Adviser identifies some of the key attributes of Australia’s Top 25.

EFFECTIVE LEAD GENERATION
One thing each of the Top 25 Brokerages does successfully is lead generation.

Arguably the most important component of any broking business, there are many ways to generate leads, as House and Home Loans/Rate Detective will testify.

According to the brokerage’s managing director, Rael Bricker, the company uses a variety of methods and mediums to generate leads.

“We have a really strong online presence through our website, The Rate Detective,” Mr Bricker says. “That generates us a lot of business – in fact, I would say up to 35 per cent of all our business comes through our website.”

But while the website has paid dividends for the brokerage, it is not the only method House and Home Loans uses to generate business.

The company also has strategic relationships in place with several property buyers. “We pay these referral partners part of our upfront commission,” Mr Bricker says.

“While we don’t pay all of our referral partners, including our real estate agents, we see merit in paying our property buyers because they not only refer us a lot of business, but quality business as well.”

The strategic relationships provide the brokerage with more than 20 per cent of its business, Mr Bricker adds.

The remaining 50 per cent of business leads is generated via organic means (client referrals, repeat business) or from other professional referrers.

“Our real estate agents are great and do provide us with a lot of business,” he says. “That said, nothing is quite as satisfying as receiving a lead from an existing client.”

But how does Mr Bricker ensure his existing clients refer him business down the track?

“While a lot of people will tell you if you do the right thing by the client they will be happy to pass on your name to family and friends, I also like to ask for referrals from my clients. At the bottom of every email, our signatures ask for referrals. This direct call to action has proven very effective.”

RELIABLE CLIENT RETENTION
In the same way that effective lead generation is important to a broker’s bottom line, client retention is also crucial.

“Sticky clients will provide brokers with both repeat and referral business,” says Smartline’s managing director, Chris Acret, adding that this is the reason why the company employs a range of client retention techniques.

According to Mr Acret, these techniques range from sending monthly newsletters to birthday and Christmas cards.

“At Smartline, we understand that the more you touch a client before, during and post-settlement, the more likely you are to retain them long term,” he says.

“We provide all of our brokers with a highly sophisticated CRM system that can automatically send newsletters and birthday messages to a broker’s client.”

Every client receives a monthly newsletter designed as a personal email from the broker.

“‘Hi all’ emails and newsletters don’t have the same cut-through as personalised contact,” Mr Acret says, “which is why we tell all our brokers to pick up the phone and call their clients on a regular basis. Nothing beats a personal phone call, even if it is just to say hello.

“While putting your client in the right product the first time will help with client retention, it pays to stay in touch with your clients through a variety of mediums.”

SOLID PRODUCTIVITY
A good CRM system won’t just improve a brokerage’s client retention rate; it will also help improve productivity.

According to Bernie Lewis’ Stefan Lipkiewicz, a vast majority of brokers spend their time working “in the business” (on administration tasks) rather than “on the business” (generating leads).

In fact, in 2009, after a thorough analysis of its business, the company found the average broker was spending 45 per cent to 50 per cent of their time on administrative duties such as paperwork and follow-up calls.

Excluding travel and professional development, this left brokers with only 27 per cent of their time to meet new clients, offer advice and develop the business.

To combat this problem, Mr Lipkiewicz set about devising a strategy that would allow Bernie Lewis brokers to spend more time ‘broking’ and less time filing paperwork.

“We decided to implement a dedicated client service team who would take responsibility for processing the deals,” he explains. “They enter them into the system, process them, liaise with banks and drive them through to settlement.”

Brokers at Bernie Lewis now spend 60 per cent of their time advising and meeting clients, while time spent on administration has decreased to between 10 and 15 per cent.

“As a result, our average adviser is far more productive, writing far more business and generating far more revenue,” Mr Lipkiewicz says.

Better yet, Mr Lipkiewicz says the new program is helping brokers to smile. “One adviser said our customer service team was better at getting deals through than their BDM,” he laughs.

CREATIVE DIVERSIFICATION
Just as a higher level of productivity can significantly improve a broker’s bottom line, so too can diversification.

Diversification allows brokers to earn additional revenue from each and every client by providing them with a variety of services. It can also help brokers create stickier clients.

“The more services a broker offers a client, the stickier the client and the happier the client,” Oxygen’s general manager James Green says.

Oxygen Home Loans has a corporate affiliation with McGrath Estate Agents and, according to Oxygen’s latest research, borrowers who used the services of a McGrath estate agent and an Oxygen broker were happier than those who just used a McGrath estate agent.

“If our clients are happy, we are happy,” he says. “At the end of the day, we pride ourselves on being the best one stop shop for borrowers. We want to solve all of their financial needs under the one roof, which is why we recently launched a new financial planning business.”

The business, now 12 months old, allows brokers to refer their clients on to professional financial planners.

“It has really improved our brokers’ service proposition. Today, borrowers want to go to the one place and have all their needs met. With our diversification strategy now firmly in place, we believe we do just that.”

EXPERIENCE
While some brokerages rely on diversification to deliver bottom line benefits, one brokerage says it is good old fashioned experience that helps them achieve success.

The Loan Arranger’s owner, Steve Marshall, says years of experience is what helps him and his company move forward each and every year.

“We are able to generate leads from our existing client database. They come back to us time and time again because they know we have the knowledge and the experience to push them down the right path,” he says.

“At the end of the day, buying a home is the biggest financial commitment a person can make – and one of the biggest emotional decisions they will make in their life, so they want to deal with someone that can give them trusted advice. We provide that.”

Mr Marshall says the key to success as a brokerage is providing sound advice and good service – first time, every time.

“While our experience helps attract borrowers to our business, it is our excellent service and advice that keeps them coming back time and time again,” he says.

“It is also that service and advice that encourages them to pass our details on to their friends and family.”

TRAINING AND EDUCATION
Experience has proven crucial to The Loan Arranger’s success, but unfortunately not every brokerage has the same level of experience to fall back on.

This is where training and education come in.

Loan Market Group is one brokerage that knows first hand just how beneficial a good training program can be to a company’s bottom line.

The brokerage’s national sales director, Mark De Martino, says the company’s various training and education programs have paid dividends as brokers are taught how to make the most of every opportunity.

“At Loan Market Group, we offer brokers fortnightly ‘acceleration training’ to help them take their business to the next level,” he says. “In addition, we offer weekly online training sessions, monthly sales meetings and regular PD days.

“In recent months, we have also engaged the services of a life coach who can help our brokers achieve a good work-life balance.”

On top of all this, the brokerage has also created a training program specifically for new recruits.

According to Mr De Martino, the Loan Market Broker Academy is an A to Z of mortgage broking, with the manager/mentor ratio always kept below 1 to 5.

“This allows Loan Market [Broker] Academy training managers to fully focus on assuring mentees have the best possible chance of success,” he says.

The course begins with two weeks’ full-time attendance, taking the participants through their Certificate IV in Financial Services/Mortgage Broking, delivered by certified trainers who are also qualified brokers.  

During the third week, participants will have completed their accreditation with all of Loan Market’s lender panel.

Following these three weeks, Academy members begin converting their learned content into practical application. The emphasis is on making the participants apply practically in the real sales environment what has been learned in a classroom situation, identifying the different skill sets required.  

Training encompasses basic sales, NCCP compliance as well as skills in interviewing, communication and negotiation.

“Trainees are taken through a number of practice scenarios, from the initial phone call to after settlement of the loan, to make sure they are completely comfortable with the whole process before sitting down with a real customer,” Mr De Martino says.

“We want all of our Academy participants to have a wide knowledge of the industry and how it sits within the wider property market and related industries.

“Help is also provided by extensive marketing assistance and training so that they can develop their own business identity and create a real asset for themselves,” he says.

“At Loan Market, we develop various training and education courses because we believe education is critical to a broker’s success, and we want to give our members every chance of success.”