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So called ‘brokers by night’ are being painted as industry villains. But are part-timers really sucking the professionalism out of the broking? Andrea Lavigne investigates.

When did ‘part-time’ become a dirty word?

The mortgage industry is undergoing an extreme makeover, but in its quest to eliminate rogues and cowboys, a growing desire to shut down the services of part-time brokers has also been revealed.

But should part-timers be lumped in with the few bad apples that are spoiling the barrel?

The debate has been explosive.

Arguments for and against the continued existence of part-time brokers raged on Brokernews after a web story featured comments from Citibank’s Peter Hayward which backed part-time brokers on the basis that they were “professional”.

“It's not about whether you are part-time or full-time, but whether you are professional or not,” he told Brokernews.

“If you maintain professional standards, keep your business in good order, follow the CPD regime, attend training sessions and provide excellent service, then who cares if you are full-time or part-time,” he added.

A few days later Brokernews ran a story with comments from MFAA CEO Phil Naylor, who echoed Hayward’s support of part-timers agreeing that they had a place in the industry so long as they had a “professional mentality”.

But not all brokers felt the same way.

Some full-timers argued that the part-timers are responsible for slowing lender approval times by submitting incomplete applications, that ‘part-time professional’ is an oxymoron, and that part-time brokers can’t possibly give their clients the attention needed, which in turn tarnishes the whole industry.

Others likened part-time brokers to part-time doctors – if you wouldn’t trust your health to someone who ‘dabbled’ in medicine between playing golf and gardening, why would you entrust a part-time broker to handle the single biggest purchase of your life?

MPA decided to ask a few part-timers, as well as other industry players what the future holds for these industry members.

Broker by night

Who are these part-time brokers? Many throw around the phrase ‘cab driver by day, broker by night’ but clearly that’s not the entire picture.

The MFAA says about 20% of its membership derive their primary source of income from outside mortgage broking.

“That might mean they are a financial planner that does broking, or an accountant that does broking,” says Phil Naylor, adding that the MFAA doesn’t focus on how many hours a broker commits to the job, but whether broking is their sole focus.

So it’s difficult to say how many brokers out there are working part-time – the classification also includes new moms, caregivers for someone else in the family, or those simply transitioning into retirement.

It’s difficult to define “full-time” in this industry. Most brokers are working well outside the usual “nine to five, Monday to Friday” grind of corporate culture. So is someone giving two customers, 10 hours of their time a week considered a part-timer broker; versus someone giving 10 customers, 50 hours a week? In both cases, the customers are receiving the same amount of attention.

And settlement volumes are not great measurements of “full-time” brokers either. Daniel Thorpe, managing director of Thorpe Financial Services, and a part-timer, says he’s putting up monthly numbers that rival anyone in the industry.

PLAN is currently undergoing an assessment of its membership to determine the number of part-time brokers it is carrying.

PLAN CEO Ray Hair says the internal analysis will examine the characteristics of part-time brokers or ‘lifestyle’ brokers.

“In particular we are looking to confirm or debunk the theory that part-time brokers have poorer conversion results and/or quality of applications,” he said.

Going forward, Hair says PLAN has a significant number of individual brokers and “we want to support them appropriately in the current industry debate”.

He adds that there are many reasons why broker may be working part-time.

“Working mothers is an important segment that PLAN Australia fully supports, we know a number of our successful brokers re-entered the industry on a part time or gradual basis.”

Broker moms

Mortgage broking has long been considered an option for women looking to juggle a career with kids.

Kylie Platt, director of The Local Loan Company in Perth, started out as a part-time broker 10 years ago and has watched her business grow in step with her children.

“I didn’t really know what to expect when I got into the industry. But I needed a part-time flexible position because I had small children,” she says.

While it took some planning, she says she was able to balance being a mom and being a broker.

“The debate is: can you be professional and be part-time? And I would say absolutely. Professional is defined by your clients. If I’m putting up good quality submissions, and my clients and the lenders are happy, then I’ve done a professional job.”

While she’s confident in her abilities, Platt admits she struggled with other people’s perceptions about part-timers until she realised that it’s really her clients’ opinions that count most.

Now that her kids are older, she turned her full attention to broking and is building up her already successful business.

“It’s been my [crusade] for such a long time. Sometimes I think there are some real gems out there that over time will become brilliant brokers.”

But Platt confirms new lender re-accreditation policies will make it difficult for part-time brokers going forward.

“It’s going to make it harder on those guys, but they may be the very brokers who are putting up good quality deals.”

Broking and… 

Peter Rohr started in the mortgage industry two and a half years ago, but continues to run a small family publishing business.

He agrees that the re-accreditation policies will make it harder for part-time brokers.

“I can see some brokers placing a deal just to keep their accreditation rather than what is best for the client. I haven’t seen the stats that say it’s the part-timers that are pulling these numbers down. I’ve heard full-time brokers say it’s good because it’s a clean-out of the system – making it more professional. But what about the part-time brokers that are placing quality deals? They are getting a raw deal.”

Rohr says part-time brokers are unfairly blamed for the ills that exist in the industry, while in reality many have the time to put together good quality applications.

“Part-time brokers make sure that everything is in its place. Even if it takes a little longer sometimes to get the information together – they don’t run on auto and miss ticking a box here or there,” he says.

Rohr does have an advantage in partner Michelle Coleman, one of the country’s top female brokers. Coleman, who recently gave birth to their daughter Ava, has acted as mentor for Rohr.

“The software provided helps, as do BDMs, but support and mentorship is paramount. I don’t know how anyone could start as a part-time broker (not within a broker organisation/company) and have enough knowledge to provide sufficient support to clients – especially when it comes to structuring a loan and the pros and cons that come with different options. The minimum requirements to become a broker don’t give enough practical requirements/support/tests,” he says.

Lifestyle broker
Daniel Thorpe worked in banking for a long time before he transitioned into mortgage broking. While he spent several years as a full-timer, he moved to part-time hours seven years ago.

Now he deals with two to four customers a week and says they get his full-time attention and “superb service”.

“I compare that to a broker who does 40 deals a month and they couldn’t possibly be doing that.”

A major argument made by full-time brokers is that part-time brokers aren’t able to offer the same level of service to their customers, because they’re not working a full day.

But Thorpe argues he’s available when his customers need him.

“I think this is the basic answer to the whole debate between full-time, part-time – I give my customers full-time service, but I handle less customers overall.”

Even though he’s handling fewer customers, Thorpe says he’s still pulling full-time numbers.

“I have never failed to do less than $1m a month – part-time.”

As for keeping up with industry changes, the Melbourne broker says he has no problem attending lender workshops and maintaining his CPD points.

He also agrees lender re-accreditation will affect part-timers, but he’s got a solution for his customers. Should he lose a particular accreditation and one of his customers looks to be a good fit with that lender, Thorpe says he’s happy to refer him to another broker that he has ties with. It’s a practice he already employs.

Industry bodies

Like Naylor, FBAA president Peter White says there’s a place for part-timers as long as they can maintain the standards of professionalism.

But he says the future of part-timers in the industry is shaky.

“I actually feel it’s going to be very difficult to be a part-time broker in the future. That’s not saying that I don’t think they should be there, I just think it’s going to be difficult to comply.

“I reckon doing it part-time would be damn hard. Just the complexities of the market and the demands and needs are really going to force people to make a decision one way or another.”

The current re-accreditation policies being implemented by banks will affect part-timers, he adds.

“I think you can see that – maybe the banks are trying to push it that way – to force the part-time person out … If the banks are saying there’s a problem, then maybe there is?”

The FBAA doesn’t currently have any stats on the number of part-timers in its membership.

Aggregators

CEO Steve Lambert says National Brokers Group keeps stats on its part-time brokers – the majority of which are accountants, financial planners or other related professionals that write loans as part of their core business.

While Lambert says he believes there is a place for such part-time professionals, accreditation restrictions will be force many to re-evaluate their distribution of work.

“This may mean they push into the brokerage area further or move away from direct writing to an arrangement with a broker,” he says.

Lambert acknowledges that some part-timers may be submitting incomplete applications; however, he suggests that the vast majority of members are submitting quality deals.

“National Brokers Group is always working with the members to provide training and support along with the assistance of lender partners to ensure the conversion rate of loans is maintained at a high level,” he adds.

Like Lambert, CEO Paul Gollan says there’s a place for part-timers. Australian Mortgage Brokers insists new brokers make a full-time commitment to their business, but Gollan says a handful have chosen to cut back to part-time hours to take care of kids, sick family members or purely for lifestyle reasons.

“The important thing is they attend PD Days, stay up to date with product changes and adhere to our strict compliance requirements,” he says.

Gollan suggests it’s probably easier for professionals such as financial planners or accountants to do broking on the side.

“Brokers can spend up to 50% of their time generating leads, so professionals such as financial planners and accountants in my view have the advantage in this area. They already have the clients so to speak. These professionals are well placed when it comes to compliance, but once again minimum volume hurdles will mean they have fewer options available.”

Finconnect’s general manager Tanya Sale takes a contrary view to the continued presence of part-timers.

“We’re trying to clean up this industry and we’re trying to say to the general public and the government that we’re a professional industry. And if they’re going to take us seriously I don’t think there’s a place for part-timers.”

While finconnect’s members are accountants, financial planners or other finance professionals that also do broking, Sale says the company doesn’t count any part-timers among its members.

The debate over the continued presence of part-timers in the industry is somewhat moot, as lenders are pushing them out regardless of the industry’s preference, she says.

“The banks are putting up volume requirements and submission quality/conversion metrics and they’re saying if you can’t provide so many loans per month than you really don’t know about the products … So we don’t have to worry about pushing our part-time brokers out because the banks will do it for us.”

Part of me says it’s a good thing – I can understand why the banks are doing this. The re-accrediation will have an impact overall, writers will choose three or four lenders and that’s what they’ll push to their clientele, whereas before we had more of a range.