cover Brokers on aggregators The relationship between brokers and aggregators has matured in step with the evolution of the mortgage industry. But just how well is the aggregation sector serving brokers needs? Find out in MPA s first-ever survey of brokers on aggregators 64 www.mortgagemagazine.com.au
Brokers may well be likened to oxpeckers. Now, before readers take insult, first consider the relationship between these gregarious birds and the rhinoceros. Oxpeckers eat the ticks on the rhino and also warn the bulky beasts of danger. In return, the rhino offers a steady supply of meals and enjoys the advantage of an extra set of eyes, thereby increasing its odds of survival. It is a symbiotic relationship not unlike the one brokers share with aggregators. And while some may argue it is mutually beneficial, there is no denying it is a necessity. Consolidation Aggregators have become an essential aspect of the mortgage industry. They serve as a conduit to lenders, who for reasons of cost efficiency require minimum mortgage volumes. [There s] little choice for a sole operator, said Warren Bund, manager of Australian Mortgage Express Home Loans. Most lenders prefer to deal with aggregators. One-man operations would be hard pressed to generate a sufficient amount of business as required by each lender. Without aggregators, brokers do not stand a chance of offering their clients the wide variety of products necessary to compete in the market. You just have to [work with an aggregator] unless you re writing over $1m per month with one particular lender, said Les Watkins, director of Australian Mortgage Wise. The result, of course, is forced consolidation, much to the benefit of lenders who find it much easier to deal with a handful of aggregators, rather than a multitude of individual brokers. And while it may be true that brokers have little choice in aligning with an aggregator, the arrangement is not without benefit. Friends with benefits The big three advantages that brokers stand to gain from their relationship with aggregators are technology, training and broker support. But just how well are aggregators performing in these areas? MPA surveyed almost 300 brokers to find out. Brokers were asked to rate the quality of their aggregator s lending panel, IT and broker systems, backoffice support, commission payment regularity, training and education, marketing support, business development managers and overall service to brokers, and then to give their aggregator an overall rating. In total, 39 aggregators were rated. While all responses were taken into consideration in determining the average rankings of aggregators on criteria, MPA only broke down the results of individual aggregators who received 10 or more responses from their brokers. www.mortgagemagazine.com.au 65
cover Brokers were also asked to make additional comments on the criteria, but also what persuaded them that they needed an aggregator, why they aligned with their current aggregator, what areas aggregators could improve upon, if they have switched aggregators and, if so, why. Evaluating the data In evaluating the data, one must take into account that survey respondents comments are influenced by their own needs. Some brokers want more support, while others resent too much interference in their own operation. John Swanson s comments on FAST were echoed by several other brokers. They re targeted at experienced brokers who don t need to be mollycoddled, said the director of All Finance in Melbourne. Another broker said he joined Aussie because it had a fair trading policy, good training, good initial support and seemed like a good place to start [for someone] with little experience in finance. The size of the aggregator was also a big point of difference for brokers. Some Overall aggregator results specifically chose to align themselves with large aggregators, as they felt that would give them greater access to lenders. Several brokers with AFG felt its size commanded greater respect from lenders, which in turn reflected well on their own business. Others stated they specifically joined smaller aggregators to get something that is intangible, the personal touch. Costa Sfetsos, director of Symbiance Financial Services P/L, joined The Mortgage Professionals because it was more family-based and friendly as opposed to [having a] corporate feel and look. No aggregator is going to be all things to everyone. The key lesson in this is to look at what matters most to you and your business. More experienced brokers may consider training and education to be a lower priority than commission splits, while other brokers may rank marketing support as their top priority in the light of their current needs. MPA asked brokers to rate their current aggregator on a scale of 1 (lowest) to 5 (highest) on the following criteria: Quality of lending panel: 4.39 IT and broker systems: 3.60 Back-office support: 3.57 Commission payment regularity: 4.17 Training and education: 3.66 Marketing support: 2.90 Quality of BDMs: 3.61 Overall quality of service to brokers: 3.68 Overall rating: 3.74 The results of this survey indicate what each aggregator does best. Results Overall, brokers reported being satisfied with their aggregator. On a scale of 1 (lowest) to 5 (highest), overall quality of service to brokers was pegged at 3.68, while the overall rating for aggregators was 3.74. Most telling, however, is the score aggregators received in the individual categories. Quality of lending panel Aggregators scored 4.39 on the quality of their lending panel, with FAST narrowly edging out The Brokerage for highest broker satisfaction. One broker who reported that FAST had more than enough lenders also stated that he initially chose the company because it had close to the lowest cost at the time and they offered a training facility where I could meet lenders on a regular basis. Loankit also received good reviews. [Loankit has] access to all majors and most non-bank and nonconforming lenders, plus mortgage managers, all supported by BDMs who focus on building strong, quality-based relationships and neverending assistance, said Lyndon Kirkpatrick, business manager of NCH Loans Australia. But it seems that big lending panels are not always better. One emoca broker commented: We don t have the largest panel, but we have enough diversity that very rarely can another aggregator offer better results. A few brokers across the board, however, did voice support for more commercial and non-conforming lenders. Brokers also noted the absence of niche products, such as 106% loans. IT support IT and broker systems received one of the lowest scores of all the criteria 66 www.mortgagemagazine.com.au
cover Individual aggregator results National Brokers Group Percentage of brokers who responded: 6% Average time brokers spent with aggregator: 3 years Quality of lending panel: 4.64 IT and broker systems: 3.64 Back-office support: 4.00 Commission payment regularity: 4.21 Training and education: 4.43 Marketing support: 3.71 Quality of BDMs: 4.43 Overall quality of service to brokers: 4.21 Overall rating: 4.29 Since changing from my previous aggregator, I ve never looked back despite attractive offers from other aggregators, said David Butcher, principal of Mortgage Maze. NBG provides a personal touch to each of the brokers; it s like providing personal service to customers rather than business and money, said Van Lam, finance broker of iforest. MPA broke down the results for aggregators that received 10 or more survey responses AFG Percentage of brokers who responded: 15% Average time brokers spent with aggregator: 5 years Quality of lending panel: 4.48 IT and broker systems: 3.57 Back-office support: 3.27 Commission payment regularity: 3.93 Training and education: 3.66 Marketing support: 2.59 Quality of BDMs: 3.39 Overall quality of service to brokers: 3.34 Overall rating: 3.43 Overall, a good aggregator room for improvement but we wouldn t move. On the whole, happy, said Evelyn Crawford, director of Crawford Mortgage Services. I m very pleased with AFG. They re proactive and attend to my concerns, said one broker. Commission payment regularity While brokers jokingly commented that there are never enough commissions, most said they were satisfied with their aggregator. The average score in this category was 4.17. Regularity does not seem to be much of a problem, but accuracy was repeatedly brought up as lacking. One broker said that he did not like having to lodge claims for upfront commission payments. If a claim was missed, then the onus was on the broker to realise the mistake. They should be more proactive in finding owners for unclaimed payments, he said. The Brokerage received the highest praise in this category, scoring a perfect 5. This was underlined by the comment of one broker, who wrote that The Brokerage operates perfectly. Training and education Brokers gave aggregators an overall score of 3.66 in this area. Again, The Brokerage came out on top, edging out National Brokers Group. Brokers who were aligned with both aggregators commented on the regularity of training sessions and the range of topics presented at sessions. Brokers who voiced dissatisfaction with their aggregators often cited the need for online education opportunities to offset a lack of regionalbased opportunities. There were also calls for more general training in the areas of selling, closing and marketing, rather than lender-specific workshops. Other brokers commented that they either did not feel that they needed training, or did not think it was the aggregator s job to provide training. In such cases, brokers reported aligning with aggregators who might not provide much in this area, but charged lower fees. Marketing support Brokers ranked marketing support at 2.9 the lowest average score of 68 www.mortgagemagazine.com.au
PLAN Australia Percentage of brokers who responded: 13% Average time brokers spent with aggregator: 4 years Quality of lending panel: 4.37 IT and broker systems: 3.97 Back-office support: 3.55 Commission payment regularity: 4.39 Training and education: 3.53 Marketing support: 3.11 Quality of BDMs: 3.87 Overall quality of service to brokers: 3.82 Overall rating: 3.87 Great! I was with a smaller aggregator that provided higher commissions but no training, and felt I was prepared to pay for quality training and support, said Dave Alderdice, director of Smart Lending Solutions (Qld) Pty Ltd. PLAN is a stable, ethical and dynamic company, but it will be interesting to see what long-term effect the new owners [Challenger] will have on the company, as well as the industry as a whole, one broker said. Choice Aggregation Services Percentage of brokers who responded: 14% Average time brokers spent with aggregator: 3 years Quality of lending panel: 4.35 IT and broker systems: 3.90 Back-office support: 3.40 Commission payment regularity: 3.98 Training and education: 3.73 Marketing support: 2.73 Quality of BDMs: 3.38 Overall quality of service to brokers: 3.50 Overall rating: 3.63 Best in business and we know most others, said Marco Meloni, principal of Choice Home Loans. We found that out of the five aggregators we approached upon entering the industry, Choice were the best in all respects, said one broker. Only minor glitches regarding commission payments stop this from getting five out of five. If they paid twice per month, I d be bored, because I d have nothing to complain about, said one broker. Cont p70 any category in the survey. Responses to this section ran the whole gamut. Some brokers posted comments such as support?? or almost non-existent, while others reported having everything they could possibly need. Many brokers felt that marketing was not an aggregator s responsibility. These brokers said that a better commission split made up for any sacrifices made in this area. David Suthaharan, director of Choose Your Finance Group, reported a positive experience with National Mortgage Brokers (nmb). I look after my own marketing. However, I ve had the option to utilise one of nmb s director s massive expertise and knowledge, which has helped shape my local marketing. Still to this day I m able to run ideas past any of the team who give due diligence to my annoying questions. Sandra Abela, a mortgage broker with Choice Home Loans, said this of Choice Aggregation Services: A wealth of information is provided to assist in expanding our business. Best customer care program available priceless. But it was Loankit that received the highest rating from its brokers, with a score of 4.6. Lyndon Kirkpatrick, business owner of NCH Loans Australia, said: Loankit excels again in the arena of marketing and support. At the click of a button, professional templates can be retrieved and instantly sent to clients, allowing brokers to answer their own electronic communicative needs without investing time or recurrent effort when liaising with prospective and existing clients, he said. In addition to this, brokers can upload their own templates, change existing template wordings and adjust templates in order to personalise and tailor their communications whenever necessary. Loankit also facilitates brokers with monthly marketing e-mails and newsletters, providing all graphics, wording and research, again allowing www.mortgagemagazine.com.au 69
cover From p69 FAST Percentage of brokers who responded: 12% Average time brokers spent with aggregator: 3 1 / 2 years Quality of lending panel: 4.70 IT and broker systems: 3.09 Back-office support: 3.00 Commission payment regularity: 3.97 Training and education: 3.36 Individual aggregator results MPA broke down the results for aggregators that received 10 or more survey responses: Loankit Percentage of brokers who responded: 4% Average time brokers spent with aggregator: 2 years Quality of lending panel: 4.40 IT and broker systems: 4.60 Back-office support: 4.50 Commission payment regularity: 4.50 Training and education: 4.10 Marketing support: 4.60 Quality of BDMs: 4.30 Overall quality of service to brokers: 4.70 Overall rating: 4.70 Even if there was an aggregator with better systems, more lenders and more brokers onboard with more tools, I bet they would still come behind in terms of what it means to be supported. Other aggregators have all seemingly lost that personal service touch which goes a long way in such a fastpaced, technology-driven and volume-based world, said Lyndon Kirkpatrick, business owner of NCH Loans Australia. Kym and his team are fantastic, always helpful, available and patient. The systems he has put together demonstrate his thorough knowledge of the industry and his willingness to be business partners. We ve streamlined our business and become more professional and efficient since working with Loankit, said Dawn Rogers, AMC of First Light Finance/FNG Pty Ltd. Marketing support: 2.03 Quality of BDMs: 3.48 Overall quality of service to brokers: 3.48 Overall rating: 3.67 FAST suits our needs without any demands from them, said Matt Tuton, director of FutureProfit. It would be hard to move to another aggregator, said Jason Henry, director of Australian Home Loan Financial Services. Connective Percentage of brokers who responded: 4% Average time brokers spent with aggregator: 2 years Quality of lending panel: 4.73 IT and broker systems: 4.45 Back-office support: 4.45 Commission payment regularity: 4.73 Training and education: 3.91 Marketing support: 2.91 Quality of BDMs: 3.91 Overall quality of service to brokers: 4.36 Overall rating: 4.45 [The] commission process is terrific. Connective has an excellent website for tracking commissions and reports are excellent, including arrears and discharge reports, said one broker. The CRM system puts me in control of my data. The product information, comparisons and point of sale material are second to none, said Adrian Assauw, director of Mortgage Strategies. 70 www.mortgagemagazine.com.au
cover aggregators that had fewer than the requisite 10 respondents also received good feedback. They re the same as they ve been almost since I joined stable, Number one aggregator The Brokerage, a boutique aggregator, was established in March 2001 and is an independently owned and managed Australian company. Its broker network extends nationally. Survey respondents gave The Brokerage the highest score in overall ratings. The Brokerage Percentage of brokers who responded: 4% Average time brokers spent with aggregator: 3 years Quality of lending panel: 4.69 IT and broker systems: 4.15 Back-office support: 4.85 Commission payment regularity: 5.00 Training and education: 4.62 Marketing support: 3.62 Quality of BDMs: 4.62 Overall quality of service to brokers: 4.85 Overall rating: 4.77 intelligent and informed, said one broker of Lawfund (now rebranded as part of FirstFolio), who has been aligned with the aggregator for six years. Wouldn t even consider changing aggregators, even though some offer better commission splits, Peter Nash, director of Brisbane Waters Financial Services Pty Ltd. They re very reliable, always on time and [give] very fast service when it comes to assistance in any field. They re a fun team to be part of, are very understanding and helpful, Muzi Dandachli, finance consultant, The Finance Group Pty Limited. Switching The average length of time brokers recorded being with their current aggregator is three years. Of the 284 respondents, one-third had switched aggregators or were in the process of switching. While 15 respondents moved to a new aggregator because of a change in employment, the majority cited low commission structures and a lack of broker support as being the prime motivators for moving on. One broker observed: Yes [I switched], in order to obtain value for money. Initially, I was with one of the largest aggregators, but couldn t justify the commission split for the service that was promised but never delivered. Another broker said he ended his relationship with his former aggregator because it demanded too much. I don t like being told how to run my business, the broker said. Another quit working with his former aggregator because it was pushing a sales-driven, minimum-volume approach and targeting the lowest common denominator. They saw their members as salespeople not professionals encouraging sales practices more aligned to the real estate industry, rather than professionals such as accountants, financial planners and lawyers. As a result and partly due to their large number of members there were increasing incidents of broker malpractice arising, he added. Room for improvement Predictably, higher commission splits topped the list of broker complaints. This was especially true for more experienced brokers who did not feel that other services (such as marketing support and training/education) warranted higher fees. Brokers with larger books felt particularly cheated. It s terrible that they charge so much for so little return. Brokers are effectively penalised as their books increase, said one broker. 72 www.mortgagemagazine.com.au
cover Honourable mentions A number of aggregators received fewer than 10 responses from their brokers. Nonetheless, that does not mean they are not worthy of mention. Here are some comments MPA received: emoca Ray White is the most successful real estate company in Australia and New Zealand. To be tied in closely with such a large, recognisable brand is a huge advantage, said one survey respondent. The Mortgage Professionals People I know and can trust, said Michael Heckendorf, independent loan writer. National Mortgage Brokers Pty Ltd Although I ve never once considered any other aggregator, I ve been called by three other aggregators to discuss maybe switching. Each time they ve been told that the quality of service, availability of directors, professionalism and expertise I receive could never be matched and, until that changes, I m not interested in looking elsewhere, as I feel I pay a fair price for this within my commission structure. I can t recommend them enough, said Robert Trewin, managing director of Robert Trewin Mortgage Broking Pty Ltd. Oasis Aggregation Services I can t find any fault or any lack of service that a broker would require with OAS. They re a complete aggregation service and provide a broker with more tools than any other to ensure they re a success as a broker. Most importantly, the system is specifically designed for lead generation by referral, repeat and new business, said Michael Schulze, administration support for Mortgage Credit. Mortgage Choice I purchased a new franchise two years ago and have had nothing but support from the state head office to our marketing, IT, call centre and HO support. It s all there for the asking. I couldn t fault [any] area of the company, said one broker. How many survey respondents belonged to each aggregator? Various others 28% (including emoca, FirstRock Mortgage Centre Pty Ltd, Smartline, The Mortgage Professionals) 15% AFG 14% Choice Aggregation Services The Brokerage 4% 4% Connective PLAN Australia 13% 12% FAST National Brokers Group 6% 4% Loankit 74 www.mortgagemagazine.com.au