Sale of broker book marks industry maturity

Sale of broker book marks industry maturity

The transfer of an established portfolio from one broker to another is offering encouragement to industry veterans convinced their years of service to the client have a significant and very tangible value.

“We bought the database,” said Mindy Small, one of two partners at Summerside Mortgages - The Mortgage Centre, in London, Ont. “I can’t say for how much, but we bought it last October, and while it’s early days, it is generating business for us and we are doing well with it.”

That book belonged to Joe Ornato, a mortgage agent both Summerside partners worked under. He transferred the database of about 2,000 names of past clients to them just before retiring. In addition to a lump sum, Ornato also receives a royalty for any new file based on his referral or one from a past client, said Small.

“We have our own client base,” she told, “and things are going quite well based on that, but it’s always nice to have a little bit more and that’s what Joe’s database has provided.”

It’s a relatively new strategy for mortgage brokers, although commonplace among their counterparts in insurance and financial advisory. It also speaks to the maturation of the industry and the inherent value of a broker’s book of names and the associated file information, in terms of generating future business, said Jim Tourloukis, top Ontario broker on this year’s CMP Top 50.

 “It’s what I plan to do when I retire,” the owner of Advent Mortgage Services in Unionville, Ont., told “Selling your database makes sense and it definitely has market value, especially if those client lists are based on corporate contracts and those contracts are also being transferred with the business, which is what I plan to do.”

Still, both he and Small suggest that the wholesale transfer of a veteran broker’s book to another may be challenged on several fronts.

“There’s value in the database as long as you handle that broker’s clients with the respect and the consideration that they received with their original broker, and what’s been key for us is that we worked with Joe for years and I have touched many of his clients,” said Small, who most draws on the Ornato database for refis and new purchases by past clients. “I don’t think you can come in and buy a business and take over the database without having established a relationship: Clients need to phone in and hear that new person’s voice a couple times to feel comfortable.”

  • Melody 2011-07-26 4:08:41 AM
    I truly admire a broker who has an established business with a database of clients he/she has serviced over many years. Not so sure selling the "list" is that simple. Think for a minute about Privacy Law and try on the perspective as a client of a mortgage broker. I would strongly advise the broker selling his "list" to get permission from their clients to transfer their information to the new brokerage. While you may think you "own the database", I would think the personal and confidential information of the clients trumps that, i.e. their privacy rights come first.
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  • Daryl French 2011-07-26 9:09:14 AM
    The value of a book of business can be dramatically increased if it is in a Customer Relationship Management (CRM) system that is keeping the agent connected to their past clients. Compare a 2000 contact data base that is set up on a GoMax CRM to that of a 2000 contact data base that is in a file cabinet or on XL spread sheets and I think you would have to agree that most people are going to value the GoMax option substantially higher.

    In GoMax it's as simple as starting a change over program that slowly introduces the new agent to the data base through regular correspondence just like this email. Soon clients see the new agents details displayed more and more prominently and the clients memory of the retiring agent fade away.

    Because the retiring agent planned ahead and invested in his business and set up his data base on a GoMax CRM, he can now afford to live in the life style those other agents just dream about!
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  • Sharnjit Gill 2011-07-29 3:06:11 AM
    I do not agree with Melody's comments about privacy - first to get the client's permission. Everyone knows when TD BANK TOOK OVER Laurentian Bank's mortgage portfolio in BC - and TD BANK also took over CITIZEN BANK OF CANADA whole business -the Banks simply informed the clients via a simple letter and no permission of the clients taken.
    The same rule applies when a broker sells his books on retirement or for any other reason.
    Do not get confused.
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