Broker productivity cause for concern

by Adam Smith03 Nov 2011

The mortgage broking industry must become more productive if brokers are to see sustainable returns, Aussie chief financial officer John McDonald has claimed.

McDonald told the LIXI Conference in Sydney that brokers have succeeded in driving innovation and had seen significant gains in quality, but that broker productivity remained a concern.

“I’m most concerned about broker productivity. I think we’ve made significant improvements in the quality of loan submissions in the last couple of years, and that’s been driven by remuneration. I’m worried we’re not seeing sufficient gains in broker productivity to offset the reduction in commissions,” McDonald commented.

In order to see gains in productivity, McDonald argued brokers needed to focus on efficiency in the loan origination process. McDonald said “better systems” would help drive efficiencies for brokers, and make it feasible for brokers to “make a reasonable buck”.

“The broker sector needs to drive efficiencies. I don’t think we’re near where we need to be with that. I think if the broking sector realises it’s competing with branch-based distribution and has to beat the cost-effectiveness of that as well as the quality of that, then they’re in with a chance,” McDonald said.

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  • by SteveMc 3/11/2011 10:54:07 AM

    I agree wholeheartedly that productivity is an issue - but this is an issue that can't be improved unless lenders start focussing on the crucial issue of delivery. Their processes are so constrictive that we and they have to step back and ask why have turnaround times not improved for 20 years? Brokers are submitting online, we are meeting standards to achieve benchmarks, we are better qualified, more resourced, more compliant and more responsible than ever. We too need to embrace better methods. The market is down and the lenders are crying out for business - yet, it still takes far too long for an unconditional approval. We have to examine this together, and drop the excuses from both sides to get it right.

    Now that funding is sorting itself out, delivery is the key factor, because accurate, fast delivery is the best way to tell your client that you want and appreciate their business.
    0.1% here and there, a birthday card and (empty)promises of exceptional service on their own just don't cut it any more.

  • by Greg Cook 3/11/2011 10:55:52 AM

    When there is so much to talk about thta can help Brokers all I hear these days is Broker bagging out, I am tired of reading such articles

  • by Ozboy 3/11/2011 11:27:23 AM

    Agree, especially if you have to split your income with someone else, we have recently seen what happens when you split your income with your client (Refund) and I am sure every franchisee in the Mortgage Broking space is looking hard at what their franchisor provides them for their cut. Just more leads isn't going to cut it when some will fall over because of things outside of your control. I think the idea that lenders and brokers (as a whole) will get together and tackle this problem is flawed, lenders are all ready showing they only want to support some brokers (segmentation) and the rest they don't care about, you can deal with the untrained people we have just put on. MFAA, FBAA and aggregators could really take this forward but nothing in it for them so little chance. Shame but that's the reality of the situation as it is now....of course according to me!