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‘Scandalous’ practice ripping off new brokers, industry head claims

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Australian Broker | 11 Jun 2014, 08:03 AM Agree 0
New brokers are being ripped off by so-called ‘mentors’ charging exorbitant fees but delivering little, claims the head of a professional association
  • BJ | 11 Jun 2014, 09:10 AM Agree 0
    Any surprises here!
    Those that can do and those that cannot will teach, umm I mean mentor!
  • BradQ | 11 Jun 2014, 09:13 AM Agree 0
    I couldn't agree more.... new brokers shouldn't be pillaged of their income, just to start in the industry. Its hard enough as it is, starting out with no income for 3, 6 or even 12 months... If you are new to the industry, look for somewhere that you can be trained and mentored without having to pay such fees. They are out there!
  • Regional Broker | 11 Jun 2014, 09:21 AM Agree 0
    This has to stop , the MFAA needs to set up a fee structure for new entrants that is fair and regulated .
  • not so old broker | 11 Jun 2014, 09:33 AM Agree 0
    Peter White seems intent on bringing the whole industry into disrepute by espousing outmoded philosophies that have not changed since the 'good old days' of high commissions, no responsibilities and little skill. Does he get the backing of his Board for broadcasting such troglodytic, un-researched and vitriolic diatribes?
    Catch up with a changing world Mr White - if you want the industry to step up then this mentorship process is the finance industry's equivalent of an apprenticeship.
  • Kath | 11 Jun 2014, 09:35 AM Agree 0
    As a new broker, I have heard some horror stories from others that I did my Cert IV and Diploma with.

    Most aren't even in the industry any more. They had to pay a $5000 up front fee, 50% of their commission and all their trail!

    Some brokers are mentors just to build up their trail books. Its terrible and its no wonder that we have a older/aging industry - it is too hard to get started and succeed!
  • Tony Broker | 11 Jun 2014, 09:51 AM Agree 0
    How many brokers have Warned or Banned Mr White by the FBAA ????
  • Lets think about this | 11 Jun 2014, 09:53 AM Agree 0
    Not so old broker
    You seem to have quite a lot to say against Peter White yet you wont state who you are or your cause on this. Each time Peter has something of value to add to the Industry you seem to add a comment that is personally attacking him. I do not see this with any of the comments that the MFAA make!

    If you read the whole article you will see it isn't about Mr White or his position with the FBAA he is infact speaking from an industry point where new brokers are being put into a position where older more experienced brokers seem to be feeding from them.

    Do the maths here with experienced mentors charging crazy amounts i.e $20k + per year some are also taking a % of the upfront and trail where are the morals and standards of the Industry going.

    Should we not be encouraging new blood rather than showing them how we pray on them and there lack of experience. It wasn't done in our day so why should we do this to them now.

    If you look up the ASIC regulation for being Mentored nowhere is it descriptive as to what a mentor should or shouldn't be doing other than checking each loan application. So if you think that $20k + per year is a fair fee for this I think it may be you that has his head in the sand and not wanting to really see the rort that is going on out there by some very greedy mentors.

    Good Work Peter for bringing this to light in the Industry! We know it Is something that needs to be done we all know we need mentors but there has to be a level of morals added to the equation.
  • Sticky Tape | 11 Jun 2014, 10:11 AM Agree 0
    No surprises that some are charging those sort of fees. It is becoming the world as we know it.

    I do NOT condone them, but on the other side there needs to be something fair and equable between mentor and mentee. Only those 2 parties can decide what is fair for each of them respectively.

    If a mentee finds it too much from the start, find another mentor (yes, it is harder in regional areas etc), but the decision still rests with each individual. They are supposed to be intelligent adults.

    Myself, I won't be a mentor. Too much time, cost and effort for an unknown quantity, no matter how good a mentor you are.

    Kath's example of someone being charged a $5,000 upfront fee and 50% commission and all trail, probably fair for the first 12 months, then charge 30% & 50% for next 12 months.

    The problem I see with it all is that after 2 years there is no guarantee the mentee will stay working for you, and that afterall, that is potentially what you want by being a mentor.

    I would, obviously, after the 2 years offer normal splits and then after 5 years they get the initial $5,000 back.

    To me, they would be minimums if I was to do it. Some will find that fair, some will not. Again, it is an individual decision.

    The role of the MFAA & FBAA, to my mind, should be ensuring the mentees are happy with their arrangement with the mentor or helping them shop around for good mentors or giving guidelines on reasonable fees and allowing them to then make their own decision.

  • Incognito | 11 Jun 2014, 10:14 AM Agree 0
    I have mentored several people.

    It's draining but worthwhile - and everyone needs a leg up at the start.

    In return I ask them for $400 + GST from each of their first 10 settlements.

    It's probably a bit cheap but it keeps me sharp.

    And they might make great partners down the track
    • Derek | 13 Oct 2016, 10:25 PM Agree 0
      Don't suppose you are in Brisbane.
      I have a friend who would jump at those fees.
      Cheers
  • wilko | 11 Jun 2014, 10:28 AM Agree 0
    I think the criticism of Peter White is justified. Where is the aggregator in all of this? It is not an issue if you find a mentor who is charging appropriately or an aggregator who offers it for free.

    The aggregator should have their recommended mentors they want mentoring their new brokers lined up at reasonable rates.

    Why has the FBAA missed the boat on this? At least the MFAA recommended a standard and interestingly I did look up the ASIC website and they refer to the MFAA guidelines as the industry recommended standard.

    Not acting on this is not an excuse for the FBAA to poke holes in something that is important for the industry. They should have been involved at the start.

    Find an aggregator that provides it for free or at a reduced cost. There are plenty out there for the new to industry brokers which just shows that most are not doing their homework when entering the industry and not demanding fair price for service.

    If the FBAA really wants to help then suggest a better process or put together a better program instead of always trying to have an "all care, no responsibility" approach.

    Sick of the pointscoring FBAA.
  • Dave Robinson | 11 Jun 2014, 10:36 AM Agree 0
    I am lead to beleive that there are aggregators that point new entrants to these "mentors". These aggregators are FBAA members. I would suggest that perhaps our industry bodies need to start from the top and work their way down. Mr White I look forward to the email to ALL FBAA members explaining that this is against your code of conduct and providing the opportunity to report members guilty of such practice. Actions following words are by far the best policy.
  • Melo | 11 Jun 2014, 11:04 AM Agree 0
    Peter White ,stop bull manure and show the supposed facts.
    If someone paid $38K to be mentored ,they must be expecting an even big return?
    Peter with all due respect ,maybe you should become advisor at Waldecks Nursery and continue spreading manure.
  • Robert Knight | 11 Jun 2014, 11:09 AM Agree 0
    Mentors are a good idea in principle but to hear how some are just simply ripping off new entrants just disgusts me. I would like to see these so called mentors named and shamed.
  • Coast Broker | 11 Jun 2014, 11:20 AM Agree 0
    It is interesting that the MFAA are running another Mentoring Course in Sydney next month at a cost of $1,650. I have been in the finance industry for in excess of 30 years and have previously mentored 3 people into the industry. I have been asked to mentor a 4th person who has completed their Cert IV. I am a member of the MFAA and have been for the last 9 years however because I am not an MFAA Certified Mentor this new entrant cannot join the MFAA until they have completed their Diploma. Enter the FBAA who have allowed him to join the FBAA and for me to Mentor him even though I am not an FBAA Member. Congrats to the FBAA for taking a commonsense approach. 30 plus years experience I think makes me a good mentor to pass on my experience. MFAA want new entrants however they are not helping themselves. They need to take a long hard look at themselves. I don not charge a monthly fee. I take a sliding percentage of upfront and a nominal percentage of trail. Trail is for the new entrant
  • Jack D | 11 Jun 2014, 12:00 PM Agree 0
    This is a pathetically transparent attempt at a hatchet job by Peter White on the MFAA.

    His sad attempt to implicate the MFAA in this is apparent in his comment "Mentoring new brokers should not be seen as cash grab for established brokers and industry associations"
  • Stephen Dinte | 11 Jun 2014, 12:43 PM Agree 0
    One of the great aspects of our industry is the ability for all of us to have differing points of view on every subject, including this one regarding mentors and mentees.
    What I do find sad however is the constant put downs in blogs like this one by brokers who would seem to lack the internal fortitude to use their own names. These people prefer to hid behind a pseudonym.
    These brokers seem content to bag the MFAA and FBAA, and do nothing to help the industry by participating in broker forums like those conducted by the MFAA, or putting themselves up to be part of state councils etc.
    If you are not happy with the way the industry runs, either get out or stand up and work to make a difference.
    It is the Peter Whites and Phil Naylors of this world who are the ones trying to improve our industry. This does not mean that they are always correct, but at least they stand behind their beliefs and put themselves out there for one and all.
    To modify a famous saying, stop asking what this industry can do for you, but rather what can you do to improve it.
  • Coast Broker | 11 Jun 2014, 01:05 PM Agree 0
    Stephen Dinte I am a member of the MFAA Linkedin Forum and have spoken out about this twice. The first time I spoke about it was a few months ago and it received a lot of replies both positive and negative depending on a persons point of view. This included both my Aggregator and the MFAA contacting me independently. The MFAA even when as far as saying they could not see why I could not be a Mentor with the level of my experience. However when it came time for the New Entrant to join the MFAA went back on their word. When I again put a comment on the MFAA LinkedIn Forum in the last couple of weeks it received one reply and nothing from the MFAA so they have effectively buried their head in the sand this time around. By the way I am not trying to hide anything by using a pseudonym. It just that it ties in with my business name. My name is Greg Crellin and I am based on the Central Coast if that helps.
  • Maria Rigoni | 11 Jun 2014, 04:24 PM Agree 0
    Training in this industry requires quality expenditure, quality resources, quality trainers and assessors and a national qualification that truly understands and reflects the job of the introducer broker.
    Training and mentoring new entrants needs a Fair Dinkum challenge of the status quo. First and foremost is an honest review of qualification itself and the accreditation system.
    The MFAA and FBAA are industry bodies' not national training experts. The industry expectation is for quick and cheap qualification courses and from the arguments presented mentoring seems to be a gravy train remuneration grab.
    The whole premise behind 'competency based training' is someone is trained and assessed to be able to do what people are expected to do in performing specific jobs in the market place. The required broker qualification necessitates performance of completing tasks to a set industry standard regardless of how long a person has been in the job.
    Competency based training differs significantly from academic education and the two are often confused. Academic education is graded and measures things other than competence. A person who obtains a Certificate IV in Financial Services (Finance/Mortgage Broking) technically should be 'job ready' and should not be reliant on mentoring or supervision to do their job.
  • Bobby | 12 Jun 2014, 12:26 AM Agree 0
    You can blame Peter White if you like, but reality is MFAA came up with a programme that made them money and then the ones who paid out for the Certified Mentoring Programme did it so they could then charge the newbies a fee and turn it into an extended income source. MFAA didn't think it through, it was just another way for them to make money as their numbers were dwindling.
  • Frustrated Newby | 09 Oct 2015, 07:29 AM Agree 0
    I have not written a single loan in 12 months. I would just love to work on the requirements during mentoring sessions then go off with a sound understanding and complete the set requirements, with phone and email support, if it is still required. I am tired of re-inventing the wheel when it doesn't need to be. It would be good to have established brokers speak of how they set up their offices, manage files, emails, etc. Manuals on their own do not cut the mustard for me. Some income would be extremely helpful. Not long before I am forced to leave due to continual financial hardship.
  • Michael T | 09 Oct 2015, 09:43 AM Agree 0
    Guys,

    Being relatively new myself I can understand the pain of finding a good mentor/partner in the early days, but some onus needs to be placed on the newby too.

    Being new to the industry and not knowing much meant that I needed to do my research. Flip things around and interview potential mentors. There are opportunities everywhere for brokers. Those that charge exorbitant flat fees are generally trying to make money from you (I did say "generally"). Offer up a % of your deals (15-30%) to give them (mentor) incentive to get you to a good place as soon as possible. That way, while they are making money to cover their costs (eventually), you will also have some $ to pay your bills and not become disenchanted with what is a fantastic industry. In saying that, if they are willing to help you (pro-bono to begin with), show them some loyalty in return for their good faith. Don't jump ship at the earliest opportunity.

    My thread is rather general and I'm no industry expert, however, I found this has worked for me. I work with a great bunch of people who are always happy to lend a hand (at no cost).

    Lastly, rather than focus too heavily on theory in the early days, dedicate some of that time to NETWORKING. You learn a lot by simply talking to people in the industry. I know I have.
  • SEQ Broker | 09 Oct 2015, 10:43 AM Agree 0
    Like I say to the two guys I mentor currently. I wish I had someone to ask questions of when I started. I remember not getting any answers and basically having to use best judgement which was not always correct policy wise. I remember that and I am pleased that I can help someone. Brokers are not my competition.
  • Michael T | 13 Oct 2015, 09:17 AM Agree 0
    Guys,

    Being relatively new myself I can understand the pain of finding a good mentor/partner in the early days, but some onus needs to be placed on the newby too.

    Being new to the industry and not knowing much meant that I needed to do my research. Flip things around and interview potential mentors. There are opportunities everywhere for brokers. Those that charge exorbitant flat fees are generally trying to make money from you (I did say "generally"). Offer up a % of your deals (15-30%) to give them (mentor) incentive to get you to a good place as soon as possible. That way, while they are making money to cover their costs (eventually), you will also have some $ to pay your bills and not become disenchanted with what is a fantastic industry. In saying that, if they are willing to help you (pro-bono to begin with), Show them some loyalty in return for their good faith. Don't jump ship at the earliest opportunity.

    My thread is rather general and i'm no industry expert however, I found this has worked for me. I work with a great bunch of people who are always happy to lend a hand (at no cost).

    Lastly, rather than focus too heavily on theory in the early days, dedicate some of that time to NETWORKING. You learn a lot by simply talking to people in the industry. I know I have.
  • New Entrant | 15 Oct 2015, 01:48 AM Agree 0
    Hello there, I'm new to the industry and got my cert IV recently. Can anyone suggest an aggregator who also takes care of mentoring requirements. I'm a stay at home mum with a baby and with very little savings and not able to find someone who could help me with the lender accreditations and mentoring at a reasonable price (<5000$).
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