Broker-run rate sites and better branding were just two suggestions the closing speaker at last week’s Mortgage Summit had for brokers looking to add value in an increasingly competitive market.
“I think we should have rate sites that are run by brokers,” said Gordon McCallum, broker and president of First Foundation Residential Mortgages. “We need new thinking. There are different and better ways to do business.”
McCallum, whose presentation was given with the same zeal as an evangelical preacher, told brokers that the mortgage industry needs to build the same worth and prestige of other professions.
“How many people are in school for business, then go to a firm and continue to study to become a chartered account?” he asks. “Who studies to be a mortgage broker? Why not? We make as much money as they (chartered accountants) do. We need to build value into our brokerages – we can do this.”
McCallum warned brokers against becoming stuck with preconceived thinking, urging them to look beyond just being mortgage brokers to offering a variety of products and becoming what he describes as the centre of influence.
“We need to look at related products, offering insurance in addition to mortgages,” he said, alluding to his own expanding business. “We should be the centre of influence – referring clients to a list of Realtors, a list of lawyers, a list of appraisers. We need to be the source for information for the client.”
McCallum addressed the grim fact many broker-owners face being unable to sell their brokerages, as the value of the brokerage disappears when the broker retires – suggesting mortgage brokers emulate the insurance broker model.
“Look at insurance brokerages,” he pointed out. “With only $1 million in annual revenue, you can sell an insurance brokerage for $3 million. And all you need is a license! We can’t do that! We need to better brand ourselves.”
What contributes to this lack of value, McCallum argued, is the tendency for brokers to try and do everything.
“There is a danger of doing too much – we need to specialize,” he says. “Not one of us is great at everything – we need to specialize, to hire people that excel at specific roles. Only that way can we build a business that holds value.”
Another challenge facing the industry is the high turnover rate of agents and brokers – something not unique to the mortgage broker industry.
“We do not need to copy realtors,” McCallum an audience of Summit delegates. “They have a worse turnover rate than (mortgage) brokers. We shouldn’t keep hiring more and more agents, because there is a diminishing economies of scale. Soon the numbers don’t make sense. Hire quality – the volume will come when you have the right people in place.”