Login
ISCOVER
With regulation fast approaching, change is in the air. But many brokers are failing to proactively plan for it.
By: Jeff Zulman
Chief executive officer
Vow Financial
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
My first introduction to a good independent mortgage broker was about eight years ago - as a consumer. I always pride myself on my ability to find the best deal and was looking for funding to buy an investment property. 
Why, as someone with experience in the financial service industry, would I bother to engage an outsider?
It was almost as an afterthought that I engaged a mortgage broker. But, still not ready to let go, I also looked for a loan myself.
It was no contest. This small brokerage firm, headed by a self-made woman, found a far better package than I did - and it cost me nothing. She was professional in every sense of the word; she knew all the angles to reduce paperwork and red tape. From the beginning to end, her service could not be faulted.
So, when I entered the industry, I naturally assumed that all mortgage brokers were practical, positive and professional (the three ‘Ps' ). Today, my personal experience remains the yardstick by which I measure this highly competitive industry.
Today, at Vow Financial, we have nearly 900 brokers on our books. As I travel around the country speaking to them I have discovered that some resemble my model broker.
Although brokers know the industry is undergoing massive change in the aftermath of commission cuts and selective volume - based accreditation hurdles, most remain optimistic. But many still fail to recognise that there are five ‘Ps' and have failed to proactively plan for these changes.
The top performers are brokers who see the new regulatory regime as an opportunity - not a threat. They are embracing the need for professional training and appreciate that this knowledge, when coupled with a broader suite of products, can create a client for life - not just one transaction and then a name in a database.
In the same vein, they see IT as a tool to enhance their relationships with their clients - they are constantly looking for better ways to communicate with them. It's not only the relationships they have with their clients that they nurture; it's also with their aggregator and lenders. At the same time, they maintain the personal touch: it's still a people business.
It's my observation that these brokers, in the very real sense of the word, are entrepreneurs. They accept that the mortgage broking business today is more challenging, more competitive, but at the same time, offers great rewards - professionally and financially to a 5P broker.
It would be nice to think all brokers fell into this category; but life is not like that.
The analogy I use is a barbell. At one end are those brokers striving to improve their businesses by continual improvement and proactive trial and error; at the other end are those who only deal with a handful of lenders and are simply hanging on to their trails and commissions, watching their businesses slowly contract. Sadly, some at this end will jump off and part of our role is to help them leave the industry financially secure, and with dignity.
The lack of competition among lenders obviously concerns brokers; they constantly raise the issue, saying the last time they saw such a concentration of lending power in the hands of the Big Four was during the recession "we had to have" in the early 1990s.
At the same time they understand the industry works in cycles; today's bust is tomorrow's boom.
They are seeing - and are excited by - the gradual re-emergence of second tier lenders and white label mortgage managers.
Competition is still a shadow of what it was pre the GFC, but that said, more competitive lending options continue to come back on to the market.
Better service from the major lenders will hopefully go hand in glove with increased competition. It's the same old story: in the past 2 or so years, as business flowed to the Big Four, service levels fell. At the very least it took the banks time to boost their staffing levels to meet increased demand.
Among the practical and positive brokers there's a real sense that the worst is behind them. They recognise that if they could survive the past 2 years then they can survive anything, and they are now on the cusp of growth in an exciting, divergent marketplace.
