Bigger broker networks can compete with the big banks

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One broker is hoping that the larger networks forming in the channel will speak loudly and carry a bigger stick – especially to level the playing field against the five big banks.
“Hopefully the new, larger players will work together and have a louder voice with the associations and have greater influence politically,” says Mark Cashin, a broker with Dominion Lending Centres Central in Mississauga. “Currently brokers have numerous, soft voices. The banks have five loud voices. The consolidation model will bring a much-needed ‘Critical Mass’ to the broker channel.”
Cashin sees the Mortgage Architects takeover of Argentum Financial as only improving that clout – much like the DLC purchase of The Mortgage Centre on June 13. With larger networks, Cashin argues, brokers will be able to better compete against Canada’s major banks.
“There is more than enough business for the mortgage broker channel if the playing field is level, unfortunate that the playing field seems to keep tilting towards the banks favour,” Cashing told “Hopefully these mergers will help even the playing field.”
The purchase of Argentum by MA announced last week saw Argentum founder Albert Collu appointed as president of the new Mortgage Architects. Pacific Mortgage Group CEO Ron Swift said the incorporation of 500 Argentum agents into the MA fold will expose them to the sophisticated tools already available at the company.
More agents using better systems with the backing of a large company are just what the doctor ordered for a struggling broker industry, says Cashin.
“On the agent side, the critical mass will help the majors build better systems and support networks for the agents,” says Cashin. “The franchisors will have to up their game to attract the good agents and teams.”
  • @kiltedbroker on 2013-07-29 7:17:28 AM

    Not to begrudge any of the brokerages making great moves lately (I applaud consolidation), but I don't know... Is trying to carry a bigger stick to the fight really the answer?

    I will concede that it is one piece of the puzzle, but if we are putting our faith in the size of our network alone, don't we just become exactly like the banks we so despise?

    The problem with size is dead weight. A lot of bigger brokerages have accumulated a mass of bodies, 80% of which I would argue are of little value to their network.

    I would argue that systems don't build better agents, hiring better people does. What if we focused on increasing the size of our networks by recruiting, hiring and training great people instead of just hiring anyone with a pulse.

    What if the standard or quality of a brokerage was measured not by how many agents it had, but rather by the average production of each agent or the year over year increase in business per agent?

    We will never be able to compete with the Big 5 on size alone, so why not focus on what we can develop as a competitive advantage - Quality.

  • Ron Butler on 2013-07-29 10:13:49 AM

    Jackson makes a very good point. Focusing on expanding large teams of commission driven mortgage brokers / agents may turn out to be counter productive in a changing marketplace.

    He wisely voices the concern that concentrating on acquiring a large number of low production part time agents essentially to produce occasional deals may be less successful in an environment where underwriting rules change every day and rate competition requires expert salespeople to handle the objections.

  • DF on 2013-07-29 10:25:25 AM

    Lets face it, with only one major bank dealing with brokers, just how much of an impact will broker consolidation have.

    Consolidation does have its merits, but will not result in better deals or rates from the major Bank lenders except for their direct (the Bank's)clients, and if they swing their big stick hard enough, most brokers simply will not be able to compete. Lets face it, who provides most of the funding to the mono lines?

    Talk about being an insect on the back side of an elephant.

  • Paul Mangion on 2013-07-29 2:07:34 PM

    Last time I checked there were two major banks dealing with brokers.

  • Walid Hammami on 2013-07-29 8:59:14 PM

    Once your "franchise" reaches a certain volume you get a certain discount rate.
    Let's say you are with verico and your franchise is doing only 7 millions with a particular lender, chances are for that particular lender you won't qualify for the lowest rate.
    So how is the bigger network relevant for the rates ?
    A bigger network can provide a good CRM, lower monthly fees better lead generation from website because they they benefit from economies of scale. Other than that I don't see much coming from extra commissions. Once lenders increase commissions they will probably increase rates just to keep the same margin.
    I am probably missing something. Let me know.

  • BC Broker on 2013-07-31 1:07:50 PM

    A bigger network has only one benefit and that is brand recognition with the consumer - period. The reality for mortgage brokers is this - the banks, credit unions and trust companies all have a relationship with the consumer that is deeper and longer lasting that a mortgage broker can or will have. The consumer deals with these institutions for a large scope of services – banking, , credit cards, investments, insurance, mortgages, loans, etc. etc. What mortgage brokers don’t seem to understand is that dealing with a bank or credit union is a NECESSITY of life in Canada – like it or not… their core business drives our economy.

    Until the broker industry grows up nothing will change. Having bigger networks only consolidates the issues, it does not solve them, but it might be a step in the right direction provided that some other changes happen.

    If mortgage brokers want to get more market share then they need to do better at drawing the consumers eye for mortgages, and that means spending big dollars on marketing and advertising. It also means that the agents need to suck it up and stop placing unreasonable demands for commission splits. It is hard enough owning a brokerage with margins so narrow that the owner has to broker deals in order to survive as well as accept all of the legal liability and risk for the work that the agent does.

    Everyone in this industry needs to play ball – everyone needs to start thinking beyond the now. Brands and broker competing over the same small chunk of pie that the broker industry has, that same pie that we have been fighting over for years. If we do not change that then one day we will turn around and find out that we are an endangered species.

  • Paul Mangion on 2013-07-31 1:33:34 PM

    BC Broker is right. The biggest problem in the mortgage brokerage industry is the players themselves. Everybody is out for themselves and as we undercut each other we give the bank an opportunity to scoop more business. We need better agents with career goals and not more agents looking for quick and easy money with no regard for the fellow agents. Too many people are de-legitimizing this industry to the point that it is getting more and more difficult just to get the respect we deserve and recognition for our services. We need to clean house. Maybe a licensing regime with minimum standards. Little to no activity per licensing cycle means no renewal of your license or maybe probation. This way the useless agents can move on.

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