Divided we fall, branded we stand

Backing from a well-recognised group can come in many forms – including training and development, receiving a consistent stream of leads, as well as invaluable processes and systems to facilitate ongoing success.

To get a better understanding of Australia’s key franchises, The Adviser spoke with five branded groups to look at growth on a macro level, and also gained some insight from brokers who are reaping the benefits of aligning themselves with these industry leaders.

Teach a man to fish and he’ll eat for a lifetime

Many brokers want the freedom to operate independently, but they do not have the capability to compete against more established brokers – and joining a branded group can help level the playing field for entrepreneurial brokers.

Yellow Brick Road chief executive Matt Lawler says brokers who come on board are given the resources and support to build their own business while operating under a well-recognised banner.

“We believe in not just helping our network become a good mortgage broker or financial adviser, but we teach entrants to become successful business proprietors,” Mr Lawler says. “We pride ourselves on helping take an average mortgage broker and teaching them how to leverage the brand, become the known local expert, develop networks, attract clients and attract good staff.”

Matt Dimos, from Yellow Brick Road Drummoyne, joined the group after operating an independent business for two years. As an independent operator, he lacked the resources and reputation to expand his company further, and Mr Dimos turned to Yellow Brick Road.

“My business was growing and I needed to start employing people, but I actually found it very difficult and had a lot of challenges employing people for an independent brand in this industry,” he explains. “I couldn’t find an administrator that was up to scratch and I couldn’t find a broker that was willing to go on a structure that I wanted, so I found attracting the right people really difficult.

“I also wanted the business to be a bit more scalable, a bit more autonomous and self-sufficient, which I didn’t have the skill set to do. When I saw Yellow Brick Road branches turning over $1.2 to $1.3 million a year in revenue and you’ve got these principals who are not as client facing as most other mortgage brokers, it’s clear they’ve got the business to a point where you’re not so much giving yourself a job, but running a business. That was the critical difference between my business before Yellow Brick Road and my business now – I wanted something that I could actually run as a business and get some efficiency.”

According to Mr Dimos, joining a branded group has given his business consistency and structure he could not achieve independently.

“Before, my business was settling $4 million one month and $1 million the next with irregularity, so it has brought me a lot of consistency and a lot of structure. The marketing team gives you structured marketing plans each month. All of these things that force you to be consistent with everything – your marketing, your compliance, your legal – all of that stuff that gets put in the back pocket when you’re busy and forgotten about until you’re quiet again. You actually stay consistent with all that stuff because you’ve got someone giving you advice on what you can do and it’s all very easy.”

We all need somebody to lean on

There’s an old African proverb that says, “If you want to go quickly, go alone. If you want to go far, go together.” The support and guidance of a branded group can help brokers achieve success and longevity in even the most volatile market conditions.

National recruitment manager for Smartline, Matt Fitzpatrick says the organisation has spent the past 12 to 18 months focusing on its first-year program for induction and support.

“We’ve restructured things to make sure we’ve got a dedicated on-boarding manager who really works with the new recruits to get all of their documentation together, help them with all of their information and franchise agreements, but also all their compliance requirements… their MFAA, their PI insurance, their lender accreditation and all those sorts of things.

“We then have a one-week induction course here in Sydney and, post-induction, we’ve got a couple of programs running – we have a business coach who actually works with all of our new inductees to get them up and running and that’s a six-month program that we work with. Over that six-month period they also work very closely with the state manager in each of the states to basically work through their development program.”

Margaret Godfrey from Smartline Newcastle says the support brokers receive from the group is invaluable and ongoing, with everyone in the group a mere phone call away and always willing to help.

“Even the people who work close to me in Newcastle, we don’t compete with each other,” she says. “If you’ve got something that’s a bit outside the box or tricky, you can ring almost anybody in Smartline and they would quite willingly help you with what you need. And if you’re going away then people are always happy to support you while you’re on leave.”

Ms Godfrey says Smartline is open to ideas and suggestions from anyone within the business, which also facilitates collaboration across the various offices.

“If somebody in the group has a good idea, it’s not something that is kept to themselves, but there are mechanisms within the group to facilitate the sharing of that information and discussion about what’s worked and what hasn’t,” she says.

Reece Hogan, from Mortgage Choice in Perth’s northern suburbs, says the group also has a support system in place that sees franchisees working with – instead of against – each other.

“There are two franchisees named Graeme Broad and Tim Kerin who work in an office in Kingsley, which is in my territory,” he says. “They kindly said to me one day, ‘We know what it’s like when you’re starting out. We know what it’s like when you’ve got a home office. We know it can be a bit lonely. Why don’t you come into our office once a week and just immerse yourself in the atmosphere and environment of working with a number of different mortgage brokers?’

“Every Tuesday I go into their office and it’s been absolutely sensational just to be there and listen to the different conversations. I can’t thank them enough for their generosity because, technically, we’re competitors since we’re working the same territory, but they’ve opened up their arms and allowed me in.”

Education is a lifelong process

Industry standards in training and education can vary between different brokers; however, branded groups help to create consistency across franchises while offering ongoing mentoring and support for brokers.

Chief executive of Mortgage Choice, John Flavell says the business has extensive training and education programs to maintain consistent quality in all its brokers.

“All of Mortgage Choice’s new recruits are required to undertake our two-week non-face-to-face training and induction program, which covers extensive Mortgage Choice and industry content,” he says.

“Following the successful completion of our two-week face-to-face induction program, all loan writers move into a Level One Accreditation program, which aims to raise the quality and conversion rates of brokers in their first year.

“As part of the program, all new franchisees and loan writers are required to submit their initial loans to an experienced learning and development consultant who checks all pre-lodged loan submissions to ensure they are compliant and meet internal quality standards. The new franchisee/loan writer will be coached in relation to the submission quality and be required to amend accordingly before submitting to the lender. The new franchisee/loan writer must obtain six quality and compliant submissions before being able to submit any loan applications directly to lenders.”

According to Mr Flavell, all loan writers are then provided with easy access to additional training programs such as e-learning courses, internal GoToTraining webinars, regular PD days, state and national conferences, lender forums, business development workshops and sales programs.

“In addition to these learning opportunities is Accelerate, Mortgage Choice’s entrant mentor and development program,” Mr Flavell says. “This two-year program incorporates several delivery mediums and a variety of on-the-job observation and mentoring activities.”

Lynda Harris, general manager of people and culture at Aussie Home Loans, says the group has learning and development consultants in each state, while the induction program is run by existing Aussie brokers who have years of hands-on experience behind them.

“These brokers are some of the best in the business and, quite literally, talk about the customer they saw last night and real life scenarios to help educate our new recruits,” she says.

“New brokers, or those without our minimum qualification, start with our three-week Cert IV in Mortgage Broking, which is presented in a practitioner’s context with real life experiences and learnings integrated into course content, ensuring relevance and engagement.”

Aussie brokers then move on to a structured two-year accredited mentoring program.

“This is part of our ongoing commitment to ensure Aussie brokers receive the best support to enable business success. The program is flexible to cater for our geographically-dispersed brokers and includes a mix of face-to-face, online, in-the-field and group workshops and learning. We also develop the skills of our franchisees so they too can mentor and support the loan writers in their stores.”

Creating a vast range of opportunities

Branded groups offer brokers opportunities that would otherwise be inaccessible to them. Ms Harris says Aussie offers a wide range of business opportunities to brokers due to the group’s diversified distribution strategy.

“You can be a mobile Aussie broker and receive customer enquiries, or you can be a senior Aussie broker and self-generate your customers,” she explains. “You can become a loan writer and contract to a franchisee store, or apply for a store and become a franchisee yourself, get the customer enquiries from the area and really become part of the community. Or you can take the independent route with nMB.

“They are all great businesses, but like choosing between a branded or non- branded group, it comes down to the individual. We have varied pathways for a business owner who wants to succeed in this industry, and that’s one of Aussie’s real strengths.”

Ms Harris says Aussie’s other strength is diversity in the talent it attracts. Recently, record levels of female brokers were recruited into the group, particularly within the retail channel.

“Nationally, 38 per cent of new Aussie loan writers and franchisees recruited in FY15 were women, with numbers as high as 44 per cent in New South Wales and 45 per cent in Queensland,” she says. “We have a goal of achieving 50 per cent in FY17.”

A friend with leads is a friend indeed

A major asset that branded groups offer brokers is leads. However, national recruitment and business development manager for LJ Hooker, Rebecca Tait, says the ability to build and nurture relationships is what converts leads into loans.

“We want brokers to have, or establish upfront, a strong team around them,” she says. “We help with that but we’re into lead production and our real estate network is looking for professional finance partners who can build relationships, and who have a strong knowledge of finance structure and products. Also, potential referral partners are now seeing the value of building relationships with mortgage professionals – but they only want to trust their clients with the best people.”

David O’Callaghan, from LJ Hooker Home Loans in south-east Melbourne, says leads play a big role in his partnership with the group, but the bigger picture is all about building relationships.

“Being part of the same brand really helps, and the processes and cultural links help drive engagement, but you need to work hard,” he says.

“Attending open homes and being part of the team really opens up connections and opportunities. A number of successful agencies are also into property development and investment seminars so being invited along also helps build up opportunities and leads. You need to work closely with your offices to gain their trust and have them feel comfortable in referring leads to your franchise. It is an excellent lead source and is successful once both sides understand that we are all working together to support and grow the brand.”

According to Mr O’Callaghan, it can be challenging quantifying the amount of leads that actually convert into loan applications since the process can take months.

“Of the settled loans, I would say that around 60 per cent have come from the real estate side,” he says. “It has been great to help kickstart the business and I can see how the model will help me grow and build a team around me.”

Executive chairman of Loan Market, Sam White, says the group’s recruitment is primarily fuelled by the lead generation growth achieved through Ray White.

“As the market becomes more competitive, leads are becoming more valuable to a broker’s business and through tools such as eBroker, our lead management app, and an increase in education through the Loan Market Way and our ‘Real Estate Ready’ training course, we’re seeing stronger partnerships and more qualified leads coming out of Ray White. As an example, in Victoria alone, we tripled the number of leads coming out of Ray White in the last six months of 2015.”

Even brokers who did not join branded groups solely for leads found themselves benefiting from the steady stream of leads that came their way.

“I didn’t want a branded model specifically for the leads,” Mr Dimos, from Yellow Brick Road Drummoyne, says. “That being said, the leads for me have all been the cream on top. Any lead that comes in is great, extra business that I wouldn’t have normally written. I feel like it’s almost a free gig – the business that I’m getting through Yellow Brick Road, I feel like it almost pays for itself.”

Tell them the price, son

All the support, resources and brand recognition that brokers get from branded groups does come at a cost, but this can be nominal for those who put in the work. Mr Hogan says Mortgage Choice’s commission structure works on a sliding scale. “There are different levels you can get to and, depending on what level you’re at and the amount of loans you’re writing a month, the more profitable you can be as a business,” he says.

“I feel that, while you’ve got to give a bit back, you also get more back in return because without them, I wouldn’t get the head office leads, and I’ve been able to write business from many of those head office leads.”

According to Mr Hogan, many franchisees may be cynical of head office leads because they may get a few tyre kickers who aren’t ready to sign.

“I’ve been very fortunate with my head office leads to have quite a good success rate. I know when I first started researching the gig, the KPI that I was led to believe existed was that of every three leads, one of them would turn into a deal. I haven’t looked at my numbers, but I would say I’m probably tracking at about half of my leads that are coming through are turning into a deal.

“That said, they don’t all turn into a deal straightaway. Out of all the head office leads that I’ve had, I think there are only three or four of them that are never going to happen. The rest are either a deal now or in 12-18 months, and I’m very diligent in staying close and helping them with a savings plan or whatever you need to do to get them across the line at some point down the track. When I say 50 per cent, I’m probably including those deals that haven’t come to fruition yet, but definitely will become deals at some point in the future.”

Mr Dimos says Yellow Brick Road’s commission model is different from that of other companies, and costs are cheaper than most would anticipate.

“Most branded models in the industry are really expensive with start-up costs around $40,000-$50,000 and ongoing commission splits around 50 per cent, sometimes more,” he says.

“I assumed, wrongly so, that Yellow Brick Road is the same. With Yellow Brick Road, there’s no huge start-up cost, except for setting up an office. There’s no huge franchise fee. Also, ongoing, if you’re doing great volume, it’s as little as 15 per cent. It’s actually quite reasonable and I think that the leads that I get actually pay for all that anyway.”

Q&A: MAKING THE MOST OF IT

Aussie Neutral Bay franchisees Domenic Andreone (DA), Catherine Dodd (CD), and Alex Kardasis (AK)

Q. When you became brokers, was Aussie your first broking position?

DA: Yes, for all of us. I joined in September 2002 when Aussie first became a mortgage broker. Catherine and Alex joined soon after that.

CD: At the time I also looked at other aggregator models but I felt that the Aussie brand was one that I really felt comfortable with and would be proud to be aligned with.

Q. What motivated the decision to go from mobile to retail?

DA: We had all built successful mobile businesses but the move to retail was really done to improve our service proposition to our customers. As the industry has matured and compliance has become increasingly paramount, we wanted to have a team of people to help us continue to provide a truly professional service offering.

We now have three staff as well as three brokers with over 10 years’ experience each. We have developed systems and processes to ensure the customer experience is consistent, professional, efficient and stress-free.

We also wanted to plant roots in our local community and be a part of the area’s growth and success. Having a store gives us the platform to do so, and also gives our customers a really positive, professional office environment in which to come and meet with us.

CD: An added benefit is being able to use our time much more effectively – less time spent on the road in traffic and more time in front of our clients. The flow-on effect of this means we are all working towards a more balanced lifestyle. The great thing about Aussie is that they help and support its brokers to transition between channels if that’s what you want to do.

Q. Has a retail presence increased the amount of business you’re writing?

CD: Absolutely! We think that our corner position, being on one of the busiest roads leading into the city has helped. We often have people say that they have noticed the store when passing by. We have also done local area marketing to let our community know that we are here and inviting them to drop in.

Q. How much foot traffic does your shopfront generate?

CD: Walk-in traffic has gradually been building, and now eight months in we are seeing a steady stream of enquiries from people passing by and direct phone calls on a daily basis. What is also increasing at a rapid pace is the amount of online enquires coming in – more and more people are using this as their first point of contact and we are able to respond really quickly – in fact Domenic called a client just the other day who had made an online enquiry as he walked past the store and he was absolutely amazed that he had been contacted before he reached the end of the street!

Q. If you weren’t with Aussie, how difficult would it be to be a retail broker with the same shopfront in the same area?

AK: If you are relying on foot traffic and walk-ins to generate business, then having a well-known brand is crucial. With Aussie, we got a great head start in the fact that it’s one of the most well-known and trusted brands in Australia, and certainly the best-known mortgage broker in the country.

Q. What support does Aussie offer you in terms of your retail channel and how does this differ from the support you received as a mobile broker?

AK: Business development and marketing support has always been great with Aussie whether you are a mobile broker or have a store. Of course, a store has different needs from those of a mobile broker and Aussie has recognised that very early and provide dedicated management support to its mobile and retail channels. But the support is pretty consistent, and of a high quality, across both channels.