The Vow CEO on his business’ growth and how they’re preparing for the future
Vow Financial has seen some significant developments of late. In May, it was announced the aggregator would be acquired by Yellow Brick Road, adding $18.5bn worth of mortgages and more than 700 brokers to YBR’s books. On top of this, the aggregator smashed its previous records with May settlements. But Vow CEO Tim Brown said the company is still keeping an eye on the future.
Even in the wake of the YBR merger, Brown said the company was still looking to grow. He said Vow had continued to bring on new brokers.
“We’ve been recruiting pretty heavily for a long time now. People like the Vow proposition, which is about choice in the sense of commission rate and diversification opportunities. We don’t push people into one commission structure. They can choose the one that suits their business at the time and move into another as the business gets bigger. That way they can stick with us as their business evolves and continues to grow,” he said.
The attractiveness of the proposition can be seen in the aggregator’s improved settlement numbers. Brown pointed to the company’s increased settlements, and said much of the improvement was due to new recruits.
“We’re up 42% on the same time last year. Now, 18–19% of that is the market, but the rest is new growth. When you can double the market, you’re travelling pretty well,” Brown said.
It’s not uncommon for aggregators to crow about new growth. What Brown said sets Vow apart is that the majority of this new growth is coming not from brokers shifting from one aggregator to another, but from brokers entirely new to the industry.
“Part of our recruitment strategy is to invest in training and development. Out of 15 to 16 people we’re recruiting every month, 10 of them are new to the industry and the remaining five or six are existing brokers coming across from another aggregator,” Brown said.
This is rare in an industry that has struggled to onboard new recruits. The relatively high barriers to entry for mortgage broking – combined with the lack of guaranteed income – can make it a tough sell for young talent seeking a career in financial services. But Brown said the company’s broker network was well suited to foster new entrants to the industry.
“I think it’s having businesses that can provide for new recruits. There are a number of large businesses existing within the Vow network that can bring on and provide for new brokers. Of those 10 new-to-industry brokers, eight of them probably go to existing businesses that are continuing to grow and prosper in this environment. Our big groups are getting bigger,” he said.
The growth the aggregator is seeing is not for lack of competition in the aggregation sector, Brown said. He argued that aggregators were still competing fiercely for brokers, and that brokers have become – if anything – even more discerning about who they choose to align themselves with.
“Competition between aggregators is as intense as it’s ever been. Brokers are now seeing through some of the discount offers out there, and they want value for money,” he said.
Delivering value for money doesn’t necessarily mean cut-rate pricing, Brown said. It means offering services that add value to brokers’ businesses, and then delivering on those services.
“We’re not the cheapest, but we’re not the dearest either. We charge for services, and the services brokers choose to take on are up to the broker. That’s where brokers are becoming more discerning, because they’ve been promised the world in the past and nothing has been delivered. You’ve got to have the ability to deliver on what you’re saying, and be able to demonstrate that,” he said.
One of the services Brown said brokers find valuable is the company’s diversification offering.
“Our diversification model resonates with a lot of brokers. They know they need to do it, and they appreciate having the options we do. They can do general insurance, commercial, property, financial planning; there are four or five they can pick and choose to diversify into,” he said.
Brown said the company would look to add to these services in the future. Looking at the coming six to 12 months, Brown said Vow had more initiatives in store.
“We’ve got a number of strategies we’ve got in place. No doubt, we will introduce a white label. I’ve held off on introducing a white label because all the white label products I’ve seen have looked like everyone else’s. Now we feel we have a point of differentiation,” he said.
Brown said the aggregator would also expand its current insurance offering, and he said they would announce key appointments to ignite growth in other areas of the business.
“We’ve recruited someone to head up our wealth division, and he comes from a financial planning background. We’re also looking to bring someone on to run Vow Commercial, which will be a big investment because we see this as a major growth area for aggregators,” he said.
As the company looks to position itself for the future, Brown urged brokers to do the same. He argued that, while the Australian economy has been relatively buoyant, an eventual recession was “inevitable”. Keeping this in mind, he said brokers should look to insulate their businesses from such shocks.
“In any business, you’ve got to recession-proof yourself. There will be a time when business slows, and the best time to structure for that is in the good times. It’s no use doing it in the bad times because it’s too late.”
This feature is from Australian Broker issue #11.13
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