No one will value your time until you do. Is your time really free?

Posted by Jan31, 2015 Comments Comments Off
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I’d bet that you hate it when a client doesn’t value or appreciate your time, right? Time wasters, people that bleed you for your knowledge and advice, procrastinators – there’s lots of examples of clients that don’t value their broker’s time. But there’s something you can do about it.

A broker told me a really interesting story this week. This broker was doing a loan for his cousin. Once the loan settled, his cousin approached him and asked “what’s your fee? How much do I owe you? I’m really happy with your work and I want to pay you.” Of course the broker said that there’s no fee because he earns a commission. The cousin insisted and so did the broker. No fee was paid. About 6 months later the broker was doing a second transaction for the cousin. This time around the cousin became very demanding and largely un-appreciating of the broker’s time. I wonder if this would have happened if the broker had have charged a fee in the beginning? Probably not.

I believe that fees are a necessity in business if you want your clients to truly value your service. Mortgage broking has evolved into much more than just comparing rates and filling out forms. Without a client having to dip into their pocket, they really just don’t and won’t truly value your time and advice partly because you obviously don’t (otherwise you would charge a fee). So my advice to you is design a valuable service that you can charge a fee for and try and sell it to every client. Maybe your basic service can still be at no charge but if they want the value adding stuff, they need to pay. If you are not confident, set the fee low (but not too low) and then raise it as your confidence grows. The more you charge, the more value the clients will see. And ironically the more referrals you’ll get too.

The clients that take up a fee-based service will almost always be more loyal and more profitable (and less rate sensitive). The clients that don’t take up the service probably won’t be good clients anyway. Introducing a fee will allow clients to essentially “self-select” i.e. do something that then tells you if they will be good, loyal, long-term clients or not. You then know which clients to invest time into.

The additional revenue is good but not really the main reason. The predominant reason for charging a fee in my opinion is to attract clients that truly value your advice and relationship. A great broker can make their clients wealthy and we need to teach our clients to value that (and most importantly, value it ourselves).

Any questions or comments email me: stuart at brokerrevolution dot com dot au.

Comments:

Dave Evans wrote: Then the $64,000 question is – how much should a broker charge? I agree with your article. Since is moved into broking (my own company) from mobile lending from a bank – I visit people who just want info for free and how I should structure my loans and then they just go back to their bank, and I waste $50 in petrol and my time. So how much is acceptable to charge?

Stuart’s response: Hi Dave, thanks for your question – it’s a good one. I think you have a few options. You could charge a commitment fee (say $200-$700) which is payable for you to come and see clients and provide credit advice. Perhaps if they settle a loan within 3-6 months of you seeing them you might offer a full or partial refund of the fee? This will be a good “qualifier” – to ensure they are serious and appreciate your time/advice. In addition to this, you might charge an addition fee for more complex advice (i.e. advice that related to property invest/strategy for example – i.e. the value added stuff that us brokers usually talk to clients about that isn’t directly related to loans but helps the client make smart decisions and build wealth). You might provide some cash projections (from some property software) and RP Data reports, etc. Some brokers charge $300 to $800 for this service. You are then positioning yourself as more than just a mortgage broker. I don’t think the size of the fee matters that much… a few hundred dollars will be enough to force the client to appreciate your time/value. Of course, just make sure you are suitably qualified and/or experienced and have true and honest value to share with clients.

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