Broker versus broker

MOST BROKERS are well-practised in explaining the benefits of the third party channel to potential clients, and in laying out the advantages over going to a branch of the bank.

But while keen to promote their channel and the benefits of the industry as a whole, they would still rather win business than have a borrower go down the road to a competing broker.

So, what happens when a potential borrower is visiting several brokers before making a decision?

How do you win their business and convince them you are the one who can best take care of their financial needs?

If it becomes a case of broker versus broker, how do you come out on top?

SELLING EFFECTIVELY 

FrontRunner Consulting’s Doug Mathlin says brokers are salespeople and they need to remember to sell themselves – and the broker/client relationship – to would-be borrowers.

They should tell borrowers about their business, but then follow up with a question: ‘What are you looking for from your broker? What is important to you about the broker?’

“Get the client to articulate what they’re looking for,” he says.

According to Mr Mathlin, if a borrower is visiting several brokers, it’s quite possible they’re feeling overwhelmed and uncertain.

“The situation isn’t uncommon,” he explains.

“The client probably isn’t saying it out loud, but they might be thinking, ‘I don’t really understand the industry or what’s better about one broker compared to another’.

“The broker needs to really pick up on that and say, ‘Let’s understand exactly what it is that you’re looking for’. They can then say, ‘Well, this is what I do. This is how I can help you.’”

Matthew Rogers, principal of Aussie Newtown in Sydney, has both won business from other brokers and lost business at the last minute. Borrowers’ decisions often come down to personality, he says.

“It’s not always based on your business proposition,” he says. “If a borrower likes you, then they want to do business with you as an individual.”

Factors such as responsiveness, service and general approach can therefore easily affect a borrower’s decision.

Mr Mathlin says it’s important to remember that statements such as, ‘I will provide great service’ can be redundant – many borrowers in this situation don’t really know what they’re looking for and might not know what ‘service’ from a broker means.

Instead, they need to prove their worth through action.

“I think a lot of brokers in the early stages of their career think they’re selling home loans,” he says, “but let’s face it: if a borrower goes to a broker, they’ve already decided they need to borrow money or refinance, or whatever it is that they’re after.

“The broker needs to sell the notion of a long-term relationship.”

Rebecca Franklin, principal property and finance specialist at Unique Finance & Property Solutions, says she has seen an increase in the number of borrowers who switch brokers.

In the past 12 months, more borrowers who are dissatisfied with their current broker have been coming to her.

According to Ms Franklin, too many brokers are pushing one product or lender, forcing borrowers to play brokers off against one another to get a result.
“We’ve seen a lot of brokers pushing the one product, because they’re comfortable with that lender or they need to write a certain number of loans to keep their accreditation,” she says.

“People are coming to us second because they’re thinking there must be other options out there.”

Once Ms Franklin meets these borrowers herself, however, she wins their business based on her experience, the brokerage’s breadth of lenders and the promise of dealing with the one person throughout the process.

“The lender is the last thing we talk about,” she says. “The borrower’s goals are the first thing, and then what their needs are as far as the product goes.

“We talk about extras and features and the product and then we say, ‘Well, based on all of that, these are your three options’.”

RACE TO THE BOTTOM
Another reason borrowers might check out several brokers first is to secure the lowest possible interest rate, spurred on by a belief that rate is the most important part of a transaction.

Brokers need to avoid trying to compete in this area, Mr Mathlin says.

“There is absolutely no point in a broker going into a bidding war on price. Brokers don’t control price and most loans that are sold are variable rate loans – which means they will inevitably go up, and they will go down,” he says. “So, if you’re hanging your hat on selling rate and having the cheapest rate, you’ll only be as good to that client as the next rate movement.”

Steering clear of rates-based marketing is even more important now that the banks have broken ranks with the Reserve Bank of Australia (RBA).

“You’ve got ‘Lender A’ and ‘Lender B’, he says. “‘Lender A’ might be cheaper this year, but history says [their rate] will go up at some point.”

It’s easy to be led down this path, especially if the borrower has made it clear they’re looking for rate and rate only.

“Let’s face it: clients are rate-driven,” Mr Mathlin says. “You can’t get away from rate commentary in the media and so you have to cater to it, to an extent. But then you should have a script that says, ‘Rates are going to go up and rates are going to go down, but the most important thing for me is to get you the right product for now and for your long-term future. What else is important about this transaction to you other than rate?’’’

In most cases, according to Mr Mathlin, “the client will do business with the broker that they think knows them best”.

“A loan is a long-term investment, so they’re probably going to go with the person who understands the here-and-now as well as the future,” he says.

CASE STUDY: LOSING THE BUSINESS
Aussie Newtown principal, Matthew Rogers, says it’s important to learn from the experience if you lose out to another broker.

Mr Rogers recently got a loan to formal approval for a client, but was pipped to the post last minute by another broker offering a cheaper rate.

“The client was making enquiries elsewhere from the beginning. I knew from the outset. He was upfront.”

Despite the good deal and formal approval that Mr Rogers had secured, the client was contacted by the other broker who offered a cheaper rate.

“The other broker actually took longer to get back to the client, so there was a rate-drop in between my offer and when the other broker offered the cheaper rate,” he says.

“The other broker was a bit slower, so they got the benefit of the rate drop.”

Mr Rogers says the client was doing themselves a disservice by basing the decision on rate, and not giving him a chance to do a comparison and explain the process properly.

With the client unwilling to offer Mr Rogers feedback, he went back to the file and looked at the personality factors which may have played a part in the decision.

“It’s important to try and get feedback so you know what happened,” he says.

“We basically all have the same lenders, same rates and same products, so it’s more important to think about how you sell yourself”.

BROKER BATTLEGROUND: TOP TIPS TO WIN BUSINESS
If you find yourself pitted against another broker, there are several things you can do to win the borrower’s business.

ASK QUESTIONS: Borrowers are likely to do business with the broker they feel knows them best. So by asking questions about their wider financial situation, their life and their circumstances, you’re not only doing your job more effectively, you’re also convincing them you’re interested, thorough and knowledgeable.

FIND OUT WHAT’S IMPORTANT: Know what the borrower is looking for from their loan and from their broker. Borrowers might not be fully aware of the extent of the broker proposition, so it’s important to have this conversation with a borrower who is considering several brokers.

GET TESTIMONIALS: One of your greatest selling points is your stable of existing customers (provided you’ve done a good job). FrontRunner Consulting’s Doug Mathlin says that as long as the testimonials are genuine – and you didn’t write them yourself – then they are an excellent way to calm a borrower’s nerves and show them what you can do.

DON’T HANG YOUR HAT ON RATE: “There is absolutely no point in a broker getting into a bidding war on price,” says Mr Mathlin. Rates will go up and rates will go down, so if you’re always trying to sell the best rate, “you’ll only be as good to that client as the next rate movement.”