A boutique brokerage has forgone independence and signed up with an aggregator, claiming it will benefit business growth.
Adelaide-based The Loan Arranger announced yesterday it has joined forces with Choice.
Managing director Steve Marshall told Australian Broker Online one of the key benefits was a potential increase in commissions for its brokers.
“The aggregators have made it more attractive for individual brokers to come in because they can offer a higher commission structure,” he said.
“[Previously] I’ve found that I’ve brought brokers in, mentored them and trained them, and after they’ve got the run of things they go out; because their trails haven’t built up sufficiently they’re prepared to leave and chase that higher commission.”
He said a recent collapse of the company that provided The Loan Arranger’s commissions software had forced him to consider “other options” as “the software had become unsupported.”
Marshall is adamant boutique brokerages still have a future in the industry, however growth limitations under the independent model become a major factor, he said.
“I think it’s harder to grow your numbers as a traditional boutique brokerage.
“We’ve predominately had the same people in our business for 15 years. If our broker numbers reduce, and we have volume hurdles to satisfy to the different banks going forward…we will run the risk of losing some accreditations with some of the lenders.”
Interestingly, Marshall hinted his succession was also a key factor.
“I’m probably reaching a point, from a succession planning point of view [where] I think probably a larger group, an aggregator, is better for us to provide a level of management above me and for the company going forward.”