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Strong referral partnerships – and understanding the importance of relationships – have been the building blocks of broker David Johnson’s success, The Adviser’s Belinda Luc reports
With just three years’ broking experience under his belt, David Johnson has already cemented his place as one of Australia’s top mortgage brokers.
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The manager of Chumley & Pigwig, which opened its doors in Bondi Junction in May 2008, joined the mortgage broking industry in late 2006. Within a year he was writing just under $5 million in loans each month.
“My first job was with Scope Lending which had Will Davies and Will Foster as principals,” Mr Johnson says. “I learnt a lot from both of them.”
Importantly, he learnt the value of good referral relationships – particularly with financial planners, who have proven to be a reliable and lucrative source of business. “They [Davies and Foster] had a very structured approach, with lots of focus around planning and individual and group goals,” says Mr Johnson.
“We used to analyse where our leads had come from every quarter as a part of the goal setting for the next part of the year. It soon became obvious that financial planners were one of the most valuable sources of referrals.”
Mr Johnson says the relationships he cemented with various financial planners during his time at Scope Lending paved the way for his initial business success with his own venture, Chumley & Pigwig.
“My conversion rates on the leads I received from my financial planners were extremely high,” he says,
“Even though it was 2008 and the heart of the global financial crisis, my referral partner was still able to refer around $20 million over the year, nearly half my volume.”
Encouraged by his early success, Mr Johnson initiated a strategic business plan to support his target of writing more than $60 million in loans each year – with a bigger target of $90 million next financial year.
“I decided to form at least one solid referral partnership every three months during the financial year,” he says, a target he is well on track to achieving. “I have already formed two new agreements and a third is currently in discussion.”
Mr Johnson also knows the value good support staff can play to meet his goals, saying brokers should consider hiring support staff “as soon as they can afford it”.
He says his current service manager helps provide a level of customer service he could not single-handedly provide.
“My service manager has been in the industry for seven years and knows a lot more than I do when it comes to building relationships, which is the way I like it,” he says. “Having an experienced client service manager allows me to get on with other aspects of the business, like writing loans.”
INVESTING IN THE FUTURE
Business is currently booming for Chumley & Pigwig – so much so that Mr Johnson recently appointed a new loan writer to help meet capacity. By the end of the year he is hoping to add another two loan writers and a second client manager to his staff.
Already 2010 is shaping up to be a busy year, with Mr Johnson targeting the real estate market in particular for opportunities.
“I think 2010 will be the most exciting year I have seen in the industry, with massive business opportunities for higher volume writers and some new entries in the market,” he says.
“There is a growing confidence in the broking industry and I believe it will continue to grow in 2010.”
But diversification is not currently on his agenda. Mr Johnson says while many brokers are moving into financial planning, he has no plans to join them.
“Although many brokers seem to be going down the path of providing financial planning [services] I would say that is a path best taken by a very established broker with very strong client referrals,” he says.
“My business is still new and I know most financial planners are not keen to refer their clients to a broker who does what they do.”
Ultimately, Mr Johnson says client referrals are a broker’s best form of advertising – and can make or break a business.
“Brokers should invest a substantial amount of time in maintaining their existing client base as they hold the answer to repeat business and referrals.”
And he says brokers should never under-estimate the importance of relationships.
“Clients, referrers, business development managers, assessors... Treat them all like top clients.”
