Broker extolls new model

Broker extolls new model

Broker extolls new model One broker is embracing a new model that he hopes will aid in retention and set him up for retirement; but is he forsaking the proud pillar of the industry: Independence?

“15 per cent of your clients come back to you (as a broker) but if you run an agency model, such as Meridian, they are your customers and they come back to you all the time,” Paul Bath, Meridian agency owner and independent broker told “When their mortgage is renewed, if they (may) come back with their kids and open trust accounts, they (may) come back for a variety of products, not just one.”

The model is new to Meridian – and new to the industry – and Bath, who has over 35 years of experience in the financial services industry, was the first broker to take ownership of his own branch. A broker for 25 years, Bath says he wanted to distinguish himself from his counterparts by offering a full suite of financial products. 

“The difference is we provide full banking services; we have an ABM machine, we provide chequing and savings accounts, just like any other bank or any other credit union would do,” Bath said. “Other mortgage brokers can’t provide banking services and they can’t provide commercial accounts, business accounts, tax free savings accounts; (my intention) was to have my own banking facility for my clients.”

Meridian recently came under fire when they offered an in-branch 2.99 per cent five year fixed rate to its clients; an offering that was not open to its broker lender partners. Bath, however, does not have that issue. Though the tradeoff is that he can’t offer other lenders’ mortgage products.

“What I do is I refer to another brokerage (if I can’t place a mortgage),” Bath said. “I won’t underwrite the mortgages here; my main focus is Meridian products but if I can’t do the deal I refer it to another mortgage broker.”

Still, he has some words of advice for brokers willing to give up their access to a wide lender pool in favour of offering Meridian’s products exclusively.

“They have to have banking experience, they have to like the idea of running their own shop which involves cheque cashing, all the banking things,” Bath said. “And it’s a good way to create a book of business – at the end of the day you get something that has value … it creates value down the road for when you want to retire.”
  • Kim Reddin 2014-03-12 11:59:05 AM
    To me this sounds as though you have left the Mortgage Brokerage business in favor of the banking business which is fine, but not a model I personally favor for my mortgage clients as the options are now limited to your suite of products. In fact that is why I choose the mortgage brokerage industry over the banking industry. It's all in personal preference I suppose.
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  • Okanagan Broker 2014-03-12 12:11:02 PM
    Have to agree with Kim, having been a banker for many, many years before becoming a broker myself, Paul is simply doing the reverse and heading back to the "banking" world. Nothing wrong with that if it provides him with the security that being a Mortgage Broker might not, but it's not for me. I wish him well and am curious to see how this model pans out....
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  • Ron Butler 2014-03-12 12:12:27 PM
    Paul raises some interesting points. A large independent brokerage might want to consider peeling off a shareholder to acquire this sort of franchise so there could be an exchange of product revenues.
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