Greg
I guess what i was getting at is that as a broker who receives a commission and charges the client absolutely nothing then often we are required to redo a file for a product switch (Variable to fixed rate application) or split loan where the client wants to reduce his PPOR loan and take out an investment equity loan with no new borrowing.
This takes the same time as a new application and the same amount of complaint paperwork.
Honestly with the amount of business i turnover my clients would have a fit if i told them there was a 2 hour fee charge for doing this and is merely part and part of business. I cannot see how a broker who charges a fee for his time would do this for nothing but hate to say this is just reality.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Richard,
I agree, we do this as part of the on-going service to clients, more than earning the trail commission (if applicable).If you can do it in 2 hours, you must be very efficient with your processes.
Greg
Sorry Terry and Greg, I seem to have confused you.
A pro-consumer mortgage broker takes their fee from commissions and cashbacks 100% of the remainder. They are different to a Borrowers Agent.
A Borrowers Agent doesn't have arrangements and is able to look at more than just shopping a deal. However when they do, they look at lenders directly as well as what comes out of mortgage brokers offering cashback deals. i.e. the Borrowers Agent doesn't pay the commission, the cashback broker would.
You can learn more about the difference at http://www.proconsumer.com.au, or you can get the complete guide for consumers by buying my book, Mortgage Free Debt Free from my website, Big W, Dymocks etc. If you buy it from my site, send me an email and I will intercept it from warehouse and dedicate it for you.
Greg – we've spoken before as I approached you last year or the year before after your original post to see whether you were stepping away from commission based work. At the time you said no, however Victoria is still crying out for a local Borrowers Agent as per my shout out on ABC Melbourne. From memory, Vanilla have been operating their model for about two years.
Richard – Yes, I will answer your question, it's a great one and I fully understand your concern/curiosity over how you would set your model given your past of relying on lenders to set your revenue model for you. Don't worry, that's a common concern for those switching from pro-commission to pro-consumer. I'll get back to you once I have finished modelling some ideas for you.
Cheers all,
Michael
Michael.Lee wrote:A traditional broker works for commission and has no agency/loyalty contract with anyone. Traditional brokers are a significantly more expensive option for the consumer.Hi Michael
I'm a tad confused. Who pays you for your services? I assume you don't work for free.
If you're not being paid a commission from a lender (ie – the traditional broker that you've alluded to) then you must be charging the client a service fee (which would likely make your service more expensive than a traditional broker who would have access to the same products but not charge the client a fee).
Insinuating that "traditional" brokers steer their clients to one lender in return for higher commissions is deceptive and misleading. I understand that you have your own agenda – but don't try and scare people into thinking that "traditional" brokers are only after the highest commission.
Most of us have built out businesses up via excellent customer service which leads to referrals and repeat business. If we acted in the way you describe (ie. pushing the bank that pays most) then we wouldn't last long in this industry.
Besides, the commission structures by most lenders don't vary a great deal. The lenders that pay most generally operate in the non-conforming, credit impaired space and any broker sending a vanilla deal to a lender like this will front up to ASIC at some point.
I'm not looking for an argument (I don't have the time or energy) but drop the scare tactics about using "traditional" brokers.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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