For mortgage brokers, the maturity of their business brings about the need for careful succession planning to safeguard the value of their years of effort and ensure financial stability.
Ash Playsted (pictured above), a broker business mentor with extensive experience in the field, highlighted the necessity of this process.
An industry veteran with more than 25 years of experience, Playsted began his career as a mortgage broker in the 1990s. He currently serves as the general manager of broker performance at Recludo Group.
Several years ago, Playsted faced the challenges of evolving his longstanding brokerage amidst rapid industry changes, including technological advancements and regulatory shifts.
“I wanted to leave a lasting legacy but hadn’t properly considered a structured exit strategy,” he said.
This realisation prompted him to prioritise and redefine his approach to succession planning, considering his next life act and the future of his business.
Mortgage brokers typically build their businesses through years of commitment, facing fluctuating interest rates, evolving client acquisition strategies, and intense competition.
External pressures such as rising compliance costs, recruitment challenges, and the need to integrate advanced technologies like AI in marketing can significantly strain resources and affect both the business’ current performance and long-term viability.
Playsted shared his experience working with a well-established broker business, illustrating common concerns among owners about transitioning out and ensuring the continuity of their business’s value.
“The constant market changes, compliance demands, and lender complexities have created an overwhelming environment,” he said.
Through collaboration, they developed a strategy that allows the owner to exit without selling, preserving the business’ value and setting a clear path forward.
In a previous Australian Broker article, Playsted noted that, “For us brokers, our business is our retirement,” highlighting that brokers typically lack superannuation, making the value created in their business critical for their retirement plan.
“No matter where a broker is on their journey, focusing on exit planning means they are focusing on the right way to build a business in the here and now and not just being self-employed,” he said.
While diverse revenue streams, efficient operations, and a strong brand are vital, Playsted stressed that these are not sufficient without a structured exit strategy.
“Whether the goal is a high-value sale or passing the business to a family member or team member over time, a well-defined succession plan is vital,” he said.
This plan should facilitate the ‘ease of transferability’ of business ownership, ensuring a smooth transition that maintains the business’ value.
Playsted uses his experience to assist other brokers in crafting bespoke value creation and succession plans.
His methods help brokers smoothly transition, preserving their business’ value and securing their financial future, leveraging strategies that address individual needs and market conditions.
Recludo, an industry investment start-up, announced in December that it was finalising investments in three brokerages from its founding team’s network and plans three to four more in early 2025, targeting 50 over five years. The company aims to enhance sole-trader-style broker businesses with external capital to prepare them for eventual sale.
