Broker-owner to broker-owners: Don't hold trailer fees hostage

Broker-owner to broker-owners: Don't hold trailer fees hostage

Broker-owner to broker-owners: Don

It’s wrongheaded and it has to stop, cautions one brokerage owner, calling on principal brokers across the country to abandon the practice of holding onto the trailer fees of departing agents.

“Retaining those trailer fees is like using a stick instead of a carrot to keep agents from leaving you,” Chad Robinson, of Verico Best Interest Mortgages in Ottawa, told MortgageBrokerNews.ca. “It’s a short-sighted approach that is doing nothing to encourage the maturation of the industry and to help protect the future revenue of mortgage professionals.”

The comment challenges status quo at most brokerages across the country, where principal brokers routinely hang onto all of the trailer fees earned by an agent once he or she leaves the firm. For the agents' part, many simply don't know about that particular clause in their contracts with brokerages, argued Robinson.

The practice effectively denies those agents years of residual income at the same time it encourages needless switching of clients in order to make back that money. Robinson is also concerned that it undermines retirement planning for those most commited to the industry.

Robinson is one of a growing number of broker-owners who have developed formal sharing agreements with departing agents that use funded volume numbers to determine exact splits.

They range from 50/50 to 85/15, and guarantee agents a minimum 50 per cent cut of those fee after leaving the brokerage.

Brokers have argued against that kind of arrangement, fearful it will encourage defections.

That just hasn’t been the case at Best Interest, said Robinson, pointing to his team of eight mortgage professionals and relatively high retention levels.

Ensuring agents have access to an uninterrupted cut of their trailer fees also promises to reduce mortgage fraud by fostering greater due diligence on their part, argues Robinson. But more than that, the sharing agreement just seems fair.

“My interpretation is if the agent hadn’t opted for that trailer fee in the first place, the brokerage wouldn’t have any of that income to draw on,” he told MortgageBrokerNews.ca. “And as for that stick, I think the relationship between agents and brokers should always be under constant review by both sides.”
 

18 Comments
  • Ottawa Agent 2012-04-11 4:46:51 AM
    It comes down to nothing but broker greed. On one hand the broker preaches professionalism and then the broker will rip off the agent because they chose to work elsewhere. If the current broker was doing a good job, the agent wouldn't leave. I am in a battle right now with my previous broker regarding the trailer fee's. I fully intend to take this to court if need be because it is over $10,000 a year in trailers. Plus I make sure every agent in Ottawa I talk to knows about how this broker operates. It has cost him numerous quality agents that have not wanted to work there becuase of his ripping agents off when they leave his agency for another agency. Hey brokers, agents talk and it will only come back to effect you in the end. Stupid business move holding onto trailers when an agent leaves.
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  • Bill Nugent 2012-04-11 4:51:31 AM
    One of the great things about the trailer fee it helps the industry to grow. If broker owners are not prepared to pass this on to the agents it will not take long for the lenders to take this away. It is part of there business plan on expanding ther loyalty from the agents. Our firm put it into our agreements with our agents from day one when we signed with DLC and will pass it along as we are legally able to.
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  • Peter BC broker 2012-04-11 4:59:29 AM
    I left Invis many years ago, some of the deals I set up with their white label "Industrial Alliance" were renewed, because the clients were not in a position to go elsewhere. I was told the trailer fees go back to the brokerage, so Invis was paid my full trailers and kept them.
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