Author Archive

Mortgage broking is a weak-link business so act accordingly

Posted by Jan15, 2018 Comments Comments Off on Mortgage broking is a weak-link business so act accordingly

In December, I attended a Malcolm Gladwell conference (bestselling author of many books such as The Tipping Point and Outliers). I would like to share an important story with you that is very relevant to mortgage broking so bear with me.

He cited some research completed by two economists, Chris Anderson and‎ David Sally (The Numbers Game) where they analysed years of data from the Premier League (soccer) and worked out that if all of those clubs worked on upgrading their weakest players, rather than their strongest players, they would score more goals and win more games. A lot more – something like twice as many goals – but I didn’t write down the exact number.

This is because soccer is a weak-link game. That is, the ball is passed between players many times before any attempt to score is made. If one player makes a mistake and turns the ball over, the opposition then has a chance of scoring. In short, soccer is a “game of errors” i.e. the team that makes the least errors, wins.

In contrast, basketball is a strong-link game because one player can take the ball from the oppositions goal and score without needing much assistance from any of her teammates. Therefore, upgrading your strongest player in basketball has the greatest impact.

Interestingly, as a side note, most Premier League club owners have ignored this research. It has been suggested that this is because they are driven by the cachet that signing a high-profile player creates for them and their team.

I believe that mortgage broking is a weak-link game because you can do everything right except for one tiny error – such as an interest rate discount not being loaded correctly – and it ruins the client’s impression of your service. Consequently, the likelihood of enjoying repeat business and referrals from that client are greatly reduced. The lifetime value of a client that has a perfect experience and one that has a less-than-perfect experience is massively different – well over $20,000 in my experience.

Therefore, a mistake such as a lender not loading the correct discount – a mistake that’s arguably not even your fault – could cost you $20,000! Of course, we could bitch and moan that we shouldn’t be punished for a mistake that’s not our fault – but that will get us nowhere. Sometimes life’s not fair. From a client’s perspective, they want a perfect, error-free, hassle-free experience – so that’s what we need to deliver, or we risk losing them. Clients don’t care who’s responsible for the mistake – just whether they happen or not.

If you agree with me that we are in a weak-link business, then you must ensure you don’t have any weak team members. Your team members include:

  1. You;
  2. Any loan writers you employ;
  3. All admin staff, receptionist, anybody that answers the phone and anyone who has any contact with clients;
  4. The banks you recommend including the BDM’s; and
  5. Any conveyancers you recommend. In fact, any business you recommend.

Take a few minutes now and have a think about who is the weakest member on your team.

Replacing the weakest team member rather than hiring a super-star loan writer will probably have the greatest impact on your revenue in the long run.

 

Categories : Uncategorized
Comments Comments Off on Mortgage broking is a weak-link business so act accordingly

Top 3 things you should do in January to ensure 2018 is a successful year

Posted by Jan02, 2018 Comments Comments Off on Top 3 things you should do in January to ensure 2018 is a successful year

Hopefully, you have enjoyed that last week relaxing and recharging your batteries. But now that Christmas and New Year are behind us, your mind might start thinking about your business, clients and what you’d like to achieve in 2018.

January can be an unpredictable month volume wise, so it’s possible that you’ll have a bit of spare time. Perhaps some of that time can be invested in your business? In fact, I advise you to insert three 4-hour block into your calendar (I suggest one each on Wednesday 10th, 17th and 24th) and tackle the three tasks I discuss below. Go on. Do it now. Put it into your calendar.

Task 1: Focus on the 20%

Without a doubt, the best source of new business in 2018 will be referrals from existing clients and business partners. Typically, less than 20% of your clients will send you 80% of your referrals. Therefore, run a list of all the referrals you received during 2017 (I hope you record the source of a referral in your CRM? If not, start doing it!!!) and identify your top 10 to 20 referrers.

Once you have this list you need to speak to every one of these people (by phone or in person – emails are not effective enough) within the first 45 days of 2018 (i.e. by mid Feb). Reach out just to say hi, thank them for their support and remind them that you greatly appreciate their referrals, offer them something they would value (article, advice, invitation, etc), find a way to help them and so on.

You don’t have to beg for referrals, pay for them (i.e. offer incentives) or anything like that. You merely must maintain trust and likeability with these people and remind them that you exist. They will take care of the rest.

Mark in your calendar to contact these people again 2 more times during 2018 (i.e. again in April-May and Sept-Oct). Broking is a people business. You must invest time in cultivating these relationships.

Task 2: Save yourself 120 hours this year

What are the 5 most common questions or emails that your write to clients? Have a look back over your emails from 2017. I bet there’s a few topics/questions that you address a few times a week (on average). Questions like should a client fix their rate (pros and cons), what happens next i.e. once a client has agreed to lodge an app, a response to a new lead, a request from an existing client for a review of their rates and so on.

Identify these topics and write a template response for each of them. You can cut and paste bits from your previous responses to these questions. Then polish them up – here are two blogs that might help you do this: here and here.

Then save the 5 template emails in a word doc on your desktop (nice and easy to find) or in Dropbox. Alternatively, email the responses to yourself and save the email in a new folder in Outlook that you name “Templates”.

I estimate that we waste half an hour per day communicating answers to the same questions. Templating this will not only help you nail the response (i.e. communicate it perfectly) but could save you 120 hours over the next 12 months!

Task 3: Set your marketing calendar

Referrals are wonderful, but all businesses need to be prospecting for new clients. The key to marketing success is consistency i.e. the discipline to maintain the same messaging, regularly. The two biggest mistakes that brokers make are (1) they only start marketing when business slows down and/or (2) they change their messaging to attract short term business (e.g. a mortgage manager approaches you with a great solution for non-resident loans, so you start trying to sell/market this product – if it doesn’t suit your target then you are doing more harm than good).

The best way to achieve consistent messaging and regular marketing is prepare a marketing calendar. It is simple to do.

Take one sheet of A4 paper and write the months of the year on it excluding January (as its too late to plan anything for this month), combine June & July as one month (as I find most people are especially busy towards the end of financial year) and December (due to Christmas celebrations, etc.). Therefore, you should have 9 months to fill. Write down a marketing activity that you will do in each month. Some examples include:

  • Write a blog for your website – you should do this at least monthly.
  • Write a blog for another website – popular websites are always looking for good content and it exposes you to a whole new list of people. Contact these website in Jan so that you can scheduled in your blog.
  • Run a webinar. You can co-host it with a business partner such as an accountant, planner, buyers’ agent, etc.
  • Run a client seminar after work or a lunch/breakfast event in your office.
  • Mid-year share some tax planning ideas with your clients (via a blog, webinar, seminar, etc.).
  • Launch a podcast.
  • Invite top referrals/clients to a dinner, attraction, sporting event to as a thank you.
  • Write an eBook and email it to your clients – again, you can do this with an aligned business.
  • Send a direct mail to your clients inviting them to discuss their financial strategy with you.
  • Schedule a text message to clients if the RBA changes rates.

Once your marketing calendar is completed, insert reminders into your dairy i.e. when to start organising each marketing activity. Then stick the marketing calendar up on your desk as a daily reminder.

Word of warning: be balanced. Don’t plan to do too little but also don’t over-commit either as you’ll be setting yourself up to fail.

The beach or planning?

It is very tempting to spend any free time in January down at the beach. Whilst we all know that business planning is important and valuable, it’s not urgent – so it tends to get postponed. That’s why its so important that you block out your diary now – its only three 4-hour blocks – and it probably won’t even take you that long. I know from my own experience that these tasks are incredibly valuable. Good luck!

 

Categories : Uncategorized
Comments Comments Off on Top 3 things you should do in January to ensure 2018 is a successful year

Whoever creates the transaction is in control

Posted by Apr04, 2017 Comments Comments Off on Whoever creates the transaction is in control

Are you an order taker or order maker? Put differently, do you spend most of your day taking instructions from clients or giving them to your clients?

The latter is more enjoyable. When you are an order maker you can spend all your time and energy on making sure you deliver the best advice and maximum value to your client. However, as an order taker your primary focus is typically on winning (or retaining) the client so you get paid.

Also, order makers have more control over their destiny. They can choose which clients they deal with, what type of business they do, set the standard for the quality of advice they give, etc.

The best way to become an order maker is to be in control of the transaction. And the best way to be in control is to create the transaction. Consider two very different client scenarios:

(A)  An existing client approaches you after been offered a lower rate by a lender that’s not on your panel and wants you to match it; versus
(B)  You approach an existing client to better understand their wealth accumulation plans and discover that investing in a property is a very suitable strategy for them to consider.

In situation A, the client is in control. Therefore, you (the broker) are nothing more than a sales person, that is easily dispensable. However, in situation B, you are well on the way of becoming a trusted advisor. Someone of value. Someone that is respected and appreciated. Someone that is quickly becoming indispensable.

A variation to situation A is you proactively calling an existing client and offering them a lower rate. This is exactly what order makers do.

Question for you…

Review a list of last month’s loan lodgements and ask yourself how many of the transactions did you create/initiate?

I propose that you should spend at least 5 hours per week (one hour per day) creating transactions for existing clients. Some activates you can undertake include:

  • Write a blog that shares an idea about how to build wealth, a case study of a successful client or a question they should be pondering
  • Arrange a phone call or meeting with a client and ask them what their wealth accumulation strategy is. Team up with a commission-free, independent financial planner that you can call upon if/when the client needs more advice. Virtually all clients want to be told/shown what to do and not have to work it out themselves.
  • Proactively review your clients’ mortgages and submit for an additional pricing discretion with their existing lender, if necessary.
  • In everything you do, position yourself as a valuable resource of knowledge and contacts – so clients will call on you if they have a problem, question or issue.

 

Categories : Uncategorized
Comments Comments Off on Whoever creates the transaction is in control

Keep doing the hard work of raising the bar

Posted by Dec15, 2016 Comments Comments Off on Keep doing the hard work of raising the bar

There are three categories of brokers:

  1. Order takers – these brokers are selling a commoditised product. That is, their service offering is mostly based around the promise of saving time and getting the lowest interest rate. They spend all their time chasing transactions, not relationships.
  2. Commoditisation fighters – these brokers understand that competing on interest rates is a race to the bottom. They realise that they must offer their clients more value. Spend time and effort building trust and a personal relationship with their clients. And help them get closer to achieving their goals.
  3. The Top – these brokers are true champions – offering something so unique that they will almost never by commoditised. One such broker (in my opinion) is Chris Bates. I follow him on LinkedIn (see his posts here). He’s doing the hard work of trying to find way to help his clients daily. Endeavouring to ask his clients better questions. thought provoking questions.

FinTech is likely to dramatically change the financial services industry including the mortgage broking industry. If you are an Order Taker, your job will be replaced by a computer soon enough (although the good news is that I doubt many Order Takers would read a blog like this). Once the Order Takers are gone it will make it harder for the Commoditisation Fighters to earn a living. However, The Top will almost never lose their power.

That is why brokers like us do the hard work to raise the bar each and every day. Putting our clients best interest first. Focusing on solving their problems and adding as much value as we cane. Becoming a valuable resource. Keep up the difficult work on your ascent to The Top. It worth the investment.

This post was inspired by a recent blog by Seth Godin.

Categories : Uncategorized
Comments Comments Off on Keep doing the hard work of raising the bar

How to deal with a bad day as a broker

Posted by Nov22, 2016 Comments Comments Off on How to deal with a bad day as a broker

I recently read this blog by Seth Godin and it was a good description of what it feels like to build a broking business. It can be a hard slog at times and some days you just need to hang in there. For example, yesterday a lender clawed back commission on a $2.5 million loan we settled 355 days ago. Ouch! That hurts. The deal took a bit of time win. The client asked heaps of questions. It wasn’t a straight forward deal. And now I’ve lost money. Looking back, the client wasn’t right for us but I’m not sure that there was anything we could have done to avoid this satiation (they were referred by a good client). That’s just the way business rolls sometimes. Life isn’t always fair.

What’s important is that we, as brokers that are trying to build a business that we are proud of, just focus on those daily activities that are necessary and, over time, that generate a tremendous amount of long-term value. We will have some bad days. Some clients will take advantage of us. Sometimes we’ll do a lot of work for very little reward. That’s just how it is. But we must stay focused on what we are trying to achieve – that is, doing work that we are proud of. Don’t let the “wrong” people or the random “unfairness” of life demotivate or deter you from doing the good work that the vast majority of your clients value.

In my business, these activities include:

  • Proactively telephoning existing clients to ensure they are happy and to explore if there’s anything we can do to help them achieve their financial goals. Not to try and sell them something but to really help them
  • Random acts of kindness e.g. sending a hand-written thank you card to a client thanking them for their business and ongoing loyalty
  • Helping a client resolve a banking issue, complete a switch or negotiate a better interest rate discount
  • Writing a blog that shares ideas with clients about how to build wealth, save money, feel more financial secure and so on.

All these activities do not generate any immediate revenue. However, all of them do, over time, help to build a very successful broking business.

Our long-term success depends on our discipline to do these simple activities on a daily basis. As author Jim Collins says, “the signature of mediocrity is chronic inconsistency.” Completing the above activities occasionally (not consistently) creates virtually zero value.

From a practical perspective, I understand that it’s really hard to do these things because it’s so easy to get distracted by more urgent activities and issues. We all rush to the urgent at the expense of the important. The solution is about creating habits. What you need to do is try really hard to do something every day for 4 weeks and its likely you’ll get close to creating a new habit. Once you have created a habit, it should be a lot easier.

When business is slow, do your daily activities. When you are flat-out, do your daily activities. When a mean client refinances within the first 12 months, do your daily activities. And when everything going perfectly, do your daily activities.

Keep up the hard work. Out industry needs people like you.

 

Categories : Uncategorized
Comments Comments Off on How to deal with a bad day as a broker
Page 1 of 1812345...10...Last »