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Jessica Darnbrough
More than 75 per cent of brokers expect to grow their revenue this financial year, thanks to sound referrals from existing clients and professional partners.
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According to the Macquarie Practice Consulting 2012 Mortgage Broking Benchmarking Report, now in its second year, referral relationships are now more important than ever as they help brokers grow their loan book in a soft property market.
The report further demonstrated the importance of referral relationships by revealing the close link between formal referral arrangements and profitability, with firms that have joint venture arrangements, an ownership stake in a referral partner, or a documented, formal arrangement, typically having higher average profits (between $103,000 and $188,000) compared to those with loose or informal arrangements (averaging profits of $70,000).
Macquarie Practice Consulting’s associate director Fiona Mackenzie said the focus on referrals among many brokers will support future growth and success across the industry.
“The majority of brokers recognise the role that referrals play in supporting their business, which is an important first step towards maximising referral opportunities and realising the significant benefits that these opportunities can bring,” she said.
"The next step is to assess your existing and potential referral partners to ensure they are the right fit for your business. You need to ask yourself if you connect well on a personal level and whether your offering fits strategically with their business model and client base. To formalise the relationship, you need to invest time in preparing your pitch, but when you meet with your potential referral partner, it is just as important to listen and ask questions. These relationships take time and energy to create and maintain, so you need to be prepared to commit wholeheartedly.”
The report also revealed that the biggest challenge within a broking business is attracting enough new clients, with 58 per cent of brokers stating that this issue is likely to impact them in the next 12 months.
In addition, 68 per cent of brokers said the soft property market concerned them, as did future commission levels and reduced investor confidence.
But despite these challenges, the majority of brokers are continuing to see bright times ahead, with 73 per cent feeling positive about the future.
