BUILDINGbusiness
Going for broker
Peter Brodnicki asks if a mortgage broker can increase your profits.
I
f it’s done properly, with the right support, structure and technology, bringing a good broker into your office to offer on-site mortgage expertise and advice can be a lucrative addition to your business. But firstly, you need to be sure it’s right for your business. Understanding how much activity is required to provide
sufficient opportunities to fill an adviser’s diary is a crucial starting point, as is the commitment of the business owner to ensure staff embrace the service and that financial services are fully integrated into the business’s proposition. With financial services, there is a tendency to believe that if you have a good adviser the income will come in. Not true. Good quality staff are essential, but even the best brokers will fail if the business is not driven from the top. To be able to support a full time adviser, an estate agency
needs to generate around 25 sales agreed each month, with sufficient opportunities to book 30+ appointments into the adviser’s diary. With this level of activity, it is not uncommon to have 400-500 opportunities for mortgage appointments – less than seven per cent will give you the appointments required. The answer is simple, if you don’t ask you don’t get, but the numbers don’t work if you choose who you ask. If you cannot commit to
will be specifically recruited for that type of position. If you can support a dedicated adviser you need to make sure
that they deal only with your leads if you are keeping them busy, and that they get paid the same for your leads as other business they may be doing, for example, their own clients. It is not unusual for an adviser to receive more commission on a non estate agency-related sale. This can cause a conflict of interest and mistrust if the estate agency cannot easily track all clients referred. When considering which business to introduce to, also look at
If you can support a dedicated adviser you need to make sure that they deal only with your leads; if of course you are keeping them busy.
generating 30+ appointments per month then an in-house adviser is not the right route to take. They are no more likely to generate their own appointments than your valuers will theirs, and in fact data protection prevents them cold calling your applicants, vendors and purchasers. Most advisers’ strength is often not prospecting anyway, so you
need to feed them appointments and leads and for their employer to handle all administration. If you have the estate agency activity levels required to support in-house advisers and are prepared to back them fully, the first decision to make is whether you want to run your own FS arm or introduce to a local firm. Given that few agencies would set up their own FS proposition in the current climate, I will focus on introducing to a local firm. Choosing the right firm is crucial — and most will say they
have an adviser already available. If that is the case it is because the adviser does not have enough leads and the firm is looking for a top-up source. Also, being a dedicated estate agency-based adviser is very different to any other adviser role, so usually an adviser
46 JUNE 2010 PROPERTYdrum
the support they will provide to your business: training for staff; marketing activity to support lead generation; what management information you will receive to track leads and receive updates on mortgages relating to your sales; what reports you receive on pipeline and due commission. Few businesses will make the investment in supporting their advisers in estate agency businesses and so despite your activity levels, results can vary. When negotiating commission
terms, it is often best to agree a fixed amount per mortgage without clawback of commission applying. One broker may achieve a case value of, say, £1,200 whereas another may only achieve £600. If you have negotiated a
commission deal, you are reliant on the adviser’s ability not just as a mortgage adviser, but also in his/her ability to sell protection and buildings and contents,
which makes up over half the potential income. Also, when a business provides you with, say, 25 per cent commission, what is it 25 per cent of? Some firms receive more commission than others, while others include some income but not necessarily all. Always speak to other agents the broker has worked with, to ask their opinion and ask for examples of the adviser’s average case value so that you understand from the outset what you are typically getting a percentage of, if the business does not offer a fixed fee option. You will no doubt be canvassed regularly by firms and I hope
I have helped in providing some direction of the killer questions to ask them! It may seem a minefield, but it’s worth doing the research and getting the decision right.
Peter Brodnicki, is CEO of Mortgage Advice Bureau
www.mab.org.uk
www.propertydrum.com/articles/mortgagebrokers What’s your opinion of this case? Log on and share your views.
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