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The Big Story: Network heads on consolidation

In the first part of CMP's Broker Roundtable series, our network heads discuss a hot button issue: Brokerage consolidation.

Video transcript below:

Justin Da Rosa, Mortgage Broker News
Justin Da Rosa:
 Hi, I’m Justin Da Rosa.  Getting two brokers to agree on any one issue can be difficult.  Now imagine four network heads.  Well today at CMP’s round table in Toronto, we have assembled four of them to discuss a variety of issues.  Now I hand it over to our moderator, Chris Karram.

Chris Karram, Financial Advisor, Verico Safebridge Financial Group
Chris Karram:
 In the last little while we have seen especially in 2013 there’s been a tremendous amount of consolidation, that the mortgage industry probably more than any industry right now in Canada has started to see these mergers and acquisitions taking place and there’s true consolidation.  And one of the things we want to try and figure out is, is that good for the industry or is that also good for the consumer.  So Albert now you are obviously involved, what do you think when it comes to the consolidation that’s taking place?

Albert Collu, President, Mortgage Architects
Albert Collu:
 Well I don’t know that I can know [our grounds] as being good for the consumer or good for the industry.  I can say that at least in my particular case it was good for my strategic plan.  I think I am going to see consolidation by virtue of a number of variables.  You know, one may be most obvious, we have got an environment of shrinking margins and as such you have to be a little more prudent and efficient within your business points.  That said, with our particular bringing together of the world’s Argentum and MA, it was really an opportunity to capital with global strategy because our strategy is a little bit is a tad unique compared to what’s out there, the consumer-broker-lender model, so we are trying to try to accomplish two things.  One just make sure we are effective operationally, by way of making sure that we have better economies of scale and then number two, just putting us in a better position to really [try for] some of those more key strategies that we have.

Mark Kerzner, President & COO, The Mortgage Group Canada
Mark Kerzner:
 My perception about the industry, I mean that’s very specific to your experience and that makes a lot of sense.  My impression is that there hasn’t been more consolidation necessarily in the last year, as it has in the last 15, more like Jordan Mortgages got together, you know 13 years ago before Mortgage Intelligence, MI joins within this.  The large networks are formed together aggregating a bunch of independent mortgage brokers from across the country and the trend is gone on and on and on.  I don’t know, so whether it’s good or bad.  What I believe is from a business sense, when it makes sense for parties to come together, there’s got to be value on both sides of the equation. 

Ron De Silva, CEO, RMAI Financial Group
Ron De Silva:
 There isn’t going to be a significant difference in what the consumer feels or what the broker agents feel, but in Albert’s case obviously it is very specifically based on a lender broker relationship, but across the board, I think this is just purely opportunities for certain organisations to get to certain critical mass where they may be in a position to leverage their size to get some other partner or lending partners to perhaps you know be a bit more flexible in how they look at the organisation and that might represent you know extra dollars, because of the mass and the power that that creates for, in leveraging their position with that leverage of those members, but in going down that path it appears to be what makes sense, other than that, it’s just a 20 billion club as I understand, but there is no value for the front end broker or the front end consumer, it’s only got to be the bottomline of the organisations.

Paul Therein, VP, Operations, Centum Financial Group
Paul Therein:
 I think you know anytime you have in any industry mergers and acquisitions, all of us [would think], it’s really important to understand that it’s complicated, I think with [sentiment] take a little bit different perspective, just simply because of our ownerships.  So you know we have Uniglobe Travel International and you have Century 21 and in both of those firms in the past 40 years, we have seen Uniglobe as an example as acquired some of the larger worldwide travel agents or travel companies and it gets really really complicated because in all of these industries it’s sales peoples and sales people don’t like to be sold.  

So you always have run off with it and that, but ultimately you make the decision based on what’s best for the business and so when you have two businesses combining as the best for the business, you account for things like run offs, it doesn’t impact the consumer, it does in some ways, but in most cases you can [accommodate] for that with different service levels and usually you don’t have two companies merging that are exactly the same, it’s where usually one offers something that the other doesn’t and if everything is perfect better value.
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