Consumers to brokers: What do you do?

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Mortgage brokers have yet to clear the “biggest hurdle” standing in their way, according to the latest CAAMP-Maritz consumer survey, pointing to less than 10 per cent of respondents who really understand exactly what it is they do.

“It is very difficult to sell anything if consumers don’t understand the offering and this may be the biggest hurdle standing in the way of future success for Canada’s mortgage broker channel,” reads the report, based on consumer and broker surveys and released this week.

That may be an understatement.

In fact, the poll results indicate just 5 per cent have a full appreciation of the function of mortgage professionals, with only about a third of respondents indicating they have a good understanding.

“The importance of seeing these numbers increase cannot be overstated,” concludes Maritz, pointing to greater broker penetration among consumers who understand the services they bring to the table.

Broker market share is 50 per cent higher among the 40 per cent of consumers who have a full or good understanding of broker services. That translates into a market share of 32 per cent, compared with 21 per cent among those with a lesser understanding.

“When we asked non-broker customers why they did not consult with a broker, the top reason was loyalty to my bank, followed by four reasons relating to lack of awareness of broker services.”

The broker channel is expected to formally address its public awareness challenges in 2012, with growing support for a 1 bps fund.

“If every broker was to contribute one basis point that would equate to $5.5 million to $6 million a year,” Merix head Boris Boziche told brokers this fall, as part of “Winning the Rate Wars,” a webinar hosted by industry trainer Greg Williamson.

That “every broker” is the more than 15,000 mortgage professionals plying their trade across both regulated and unregulated Canadian jurisdictions. That “1 bp” would come off of each and every deal a broker submits and closes.

Those collective funds would get funnelled into a marketing campaign both paid by and focused on promoting mortgage brokers. That idea continues to gain traction as the industry grapples with increased competition from the banks and a slowing real estate market.

“I agree with Boris that mortgage brokers need to pay for this initiative,” said Williamson, head of 180 Degrees Coaching. “The great people at Dominion Lending pay to promote their brand nationally and I suspect they are happy with the results they are getting. We all pay to have the AMP designation promoted nationally why should we not promote the concept of using a mortgage broker and more importantly what we do.”

  • K.C Scherpenberg. on 2011-12-24 3:06:33 AM

    Amen and Merry Christmas! As brokers we MUST promote our trade. We always better the mortgage situation for any customer. It is a no brainer! Nobody will say NO to saving money!

  • Ad Lakhanpal, Mortgage Alliance on 2011-12-24 3:13:25 AM

    I agree that consumers need to be made aware of services a broker can provide. However, it will be difficult to get 15000 brokers to agree to contribute toward this initiative. Also, who will collect the money and design and administer the awareness campaign! This type of thing is best done through industry associations and it should be CAAMP who should take on the responsibility to enhance their promotional initiatives for AMP and include more elements pertaining to educating the public regarding the role of a broker.

  • Annoy on 2011-12-24 4:43:43 AM

    I am all for the 1bps plan! It would be great if the monolines matched the 1bps as well. By promoting brokers they will see benefit by more volume.
    Merry Christmas!

  • Angela Wong-Liao, Invis Inc on 2011-12-24 4:45:35 AM

    I agree with Ad Lakhanpal, CAAMP should take up the task for educating the general public about the role of a mortgage broker/agent when CAAMP is promoting AMP. I do not believe in cutting our commission for promoting our role, that is why we pay fees to CAAMP.

  • Ottawa Broker on 2011-12-24 10:56:08 AM

    CAAMP should be paying to promote the broker as part of the package we get for dues that are paid. As for a 1bp pool of funds for every deal, don't see it working. Some brokers/agents only do 7 million a year and others do 40 million a year. WHy should the larger brokers pay for more advertising than the smaller brokers? Who will mangae the fund? That will require a staff which will eat into the fund with salaries and office expenses. Don't see this coming together and honestly, i ahve never had an issue with my clients understanding what i do. I don't wait for clients to call me, I have a strong referral setup with realtors, lawyers, financial advisors and insurance agents. When clients get to me they are fully aware of what i do. Maybe to many brokers are sitting there waiting for the phone to ring rather than going out building their business. I would never agree to partake in a national advertising pool as I would have no control over how that money is spent. Would the small markets get as much advantage from this as the big metropolitan areas? I doubt it.

  • Robert Stanfield on 2011-12-24 10:58:05 AM

    The insurance brokers association advertises the benefits of an insurance broker all the time, why doesn't CAAMP?????????????????
    What would the lenders kick in???????????????

  • Ron Price DLC on 2011-12-29 2:21:58 AM

    I am encouraged with the groundswell of 'talk' within our industry in the past year and look forward to the day when consumers as a whole understand what we do as well as the benefits of choosing us vs the bank, benefits which are overwhelmingly strong. We have educated the public weekly for the past 10 years via advertorials, infomercials and success stories. Much of the info we share involves the experiences our new clients have with the banks, most of it bad, and with new products, info on the economy etc. I would like to say that any 'education' via new advertising our industry might do, must be to address the new collateral mortgage product that all banks have adopted. It is evil in that consumers are dupted into thinking that a collateral mortgage is good for them, without knowing about the many pitfalls that far far outweigh the benefits. In my view, this product gives the banks full control over the consumer, and it helps the banks retain the client even when the client wants to leave to go elsewhere. Ultimately this product will hurt the mortgage brokerage industry, and for this reason, I believe that this 'issue' should become part of our industry advertising campaign. We need to take on the banks, because I fully believe that if the pitfalls of collateral mortgages were fully understood by consumers, then they would avoid it and choose mortgage brokers instead. I see this as a huge issue, and a huge opportunity to become consumer advocates, and gain market share. We should not be afraid of the banks because we don't even need them as lenders because we have so many good (wonderful) mono line lenders who we should fully support.

  • Ron Butler on 2012-01-04 4:19:32 AM

    Reading these comments makes it clear why there will never be any national advertising fund. None of us can ever agree on anything.

    Many are opposed to sending 1.00% of their commissions. Come on........... 1.00% its just laughable.

    If we could even agree on the fund we would never agree on the content or who should administer it.

    Low barrier to entry in our industry creates an environment where many non-business people can either eke out a living and sometimes make great incomes. If we had the higher barriers that exist in say the General Insurance world I think we would see greater consensus.

  • Marcy Berg on 2012-01-04 5:14:39 AM

    I must be late to the party here but I thought that was the main reason to have CAAMP. I thought there job was to monitor and promote the industry. I would gladly give up my CAAMP fee and pay it to an organization to promote the industry.

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