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Large aggregation groups have the volume, scale and presence to give brokers what they want - but can that size leave you lost in the crowd?
Economies of scale offer benefits in the broking world just as they do in nearly every other industry.
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Larger aggregation groups see a greater total volume of loans written for their lenders – and they are rewarded for this.
It’s not unusual for lenders to target larger groups with special offers based on volumes and conversion rates, which can translate into better deals for brokers.
Not only that, but lenders also tend to offer the larger groups more support. Tim Brown, CEO of Vow Financial, says this means less obvious advantages are available to brokers, such as better quality functions and training days.
“Often I think sponsorship from those lenders tends to be [of] higher [value], so the functions that the larger aggregators can put on tend to be better equipped and with better speakers,” he says.
Size also means larger groups can generate more revenue, which Mr Brown says is reinvested in supporting brokers.
“I think there is no doubt that as you grow and get more resources it gives you the ability to give your brokers more choice,” he says. “For example, we recently promoted one of our BDMs to a broker development position so his full-time role now is working with our brokers on trying to design and identify areas of development within the network that would help them to build their business.
“We couldn’t have done that if we weren’t the size we are,” he says.
Brendan Wright, chief executive officer at FAST, says it’s important to understand that larger groups offer a different kind of support from that offered by the smaller ones. According to Mr Wright, most of FAST’s brokers are independent and wants to do things their way.
“The type of broker that would aggregate with us is someone who is confident, business-minded and wants some flexibility to run their own business,” he says.
“They could already be established in broking or finance or they could be someone who’s a little bit younger and savvy and independent and looking to grow their business – someone that already has strong business acumen.”
Larger groups tend to attract brokers looking to expand their offering from purely residential finance into areas such as commercial and asset finance. It means they need a different type of support from many other brokers – and these aggregators need to offer a different type of service.
But just because a majority of their partners are independent brokers doesn’t mean large aggregators can just sit back and let the fees roll in. They still need to identify and provide the services that their brokers want.
“What is crucial for us at FAST, being a large aggregator, is that we are still highly passionate and highly focused about the service proposition that we provide,” says Mr Wright.
For example, FAST doesn’t provide leads because typically the group’s brokers tend not to need them and they want their aggregator to focus on other areas. Larger groups tend to focus on helping their broker partners to execute specific strategies and FAST has developed a two-tier broker support network to allow the aggregator to do this, Mr Wright says.
“Our brokers are independent – for want of a better word,” he says. “They are business owners, they have successful businesses and create their own leads. They are looking to us as an aggregator to help them execute on specific strategies, not provide them with leads.
“We have dedicated partnership managers who have a portfolio of brokers they service out on the line and they are supported by partnership support officers – in other words, brokers have two points of contact at FAST to help them do whatever it is they need to do to be successful in their business,” Mr Wright says.
