The mortgage broking industry is not a profession for worrywarts.
Over the last three years, there were certainly a variety of elements that kept brokers awake at night at around the time that MPA sent out its annual Brokers on Aggregators questionnaire. There was the royal kerfuffle over the royal commission in 2019, then the scary first few months of 2020 with the ‘novel coronavirus’ aka COVID-19 (remember when it was just the OG version of the virus straight outta Wuhan and only classical linguists cared about letters of the Greek alphabet?). And last year, brokers were chewing their nails over a tsunami of new IT systems essential to doing business remotely.
Thankfully, we are past all that now. The banking royal commission has been put to bed on a pile of 20 mattresses like the princess and the pea, we are all familiar with Alpha, Delta, Omicron and its bratty offspring, while digital signatures, online CRM systems and the 39-minute Zoom meeting are second nature to even the most tech-phobic of mortgage brokers.
So, what are the main concerns in 2022?The overall theme seems to be a fading of concern around IT as people get more comfortable with tech solutions, and a return to worrying about getting paid the right amount at the right time.
Broker satisfaction with aggregators as measured by their propensity to jump ship to a rival is at the same level as 12 months ago. Aggregators have clearly competed hard to keep their brokers happy during a year in which training in newfangled systems was intense for many.
Only 7% of brokers surveyed said their aggregator had not done enough for broker development. But this was an increase from 4% last year and is a possible indication that some feel like they are still ill-equipped to handle this brave new broking world.
While concern about getting paid being at the top of the list of priorities could be interpreted as brokers apprehensively eyeing what rising interest rates will mean for markets, another take is that we are simply back to more familiar problems and a more even keel than in the last three years.
One clue that this may be right lies at the bottom of the list when it comes to services from aggregators. Languishing in last place for the second year running is lead generation, with a significant gap to the second-to-last-placed white label offering.
The cementing of lead generation as the service brokers are least concerned about aggregators providing may suggest that they don’t expect extra leads and most brokers feel generally comfortable about their business prospects.
Read on as we dive into each of the categories and reveal the results in more detail.
Loyalty remains unchanged, but broker concerns are shifting from tech support to payments
Brokers are loyal to their aggregators, with little change seen from last year in their inclination to jump ship to a rival.
The percentage of brokers who are extremely unlikely to change aggregators in the next 12 months remains roughly the same as in 2021, at 78%. There is a slight decrease at the other end of the scale, with the number of those extremely likely to change at 3% this year versus 5% last year.
The top reason that brokers picked in 2022 for contemplating any change in aggregator was ‘poor accuracy and timeliness of commission payments’. This was the second-to-top reason in 2021, suggesting that payment is now being seen as a higher priority by some brokers, perhaps as the economy faces new challenges.
On the other hand, the top reason for contemplating a change in the previous two years – poor IT and CRM support – was relegated to number two this year.
Commission payments were ranked as the most important aggregator service again in 2022, followed by quality of lending panel, with IT and CRM support in third place, after coming in second last year.
The winner of the ‘accurate and timely payment of commissions’ category among aggregators with over 600 brokers goes to Finsure, just edging out Loan Market in a close race. Connective took bronze in this category.
For aggregators with under 600 brokers, the top spot went to National Mortgage Brokers, followed by Liberty Network Services and MoneyQuest.
Comments around the issue of commissions show that some brokers continue to have grievances in this area, with multiple responses asking for higher commission splits, automatic commission payments, more frequent commission payments or more user-friendly commission payment systems.
“They are very aggressive when you question anything about missing commissions and consistently blame the broker for it,” one broker said.
While grumbling over commission splits remains evident, the slide in the number of brokers who are very happy with their split appears to have paused. In 2022, 64% said they were ‘very happy’, which is the same number as in 2021. The proportion of brokers who are ‘somewhat happy’ remains roughly the same at 33%.
In terms of annual settlement value, 21% of brokers settled less than $10m, 26% between $10m and $20m, 27% between $20m and $40m, 10% between $40m and $60m, and 16% over $60m.
The ascendence of commission payments and drop in rank of IT and CRM support across both service importance and reason for contemplating a switch of aggregator may reflect the strides that aggregators have made during the pandemic in providing better tech support.
IT and CRM support
For example, one broker said the aggregator they used was very proactive in generating loan products in the fintech space and with digital lending. “These will be the battleground in coming years, and the preferred channel for the next generation coming through,” the broker said.
But brokers still see room for improvement in IT and CRM support. Many commented on the need for simpler systems that were based online, although some noted that their aggregators were in the process of rolling out such steps.
Among aggregators with over 600 brokers, the reigning champion for IT and CRM support over the last two years held on to the top spot but in a nail-biting photo finish. Loan Market edged out outsource Financial and Connective with a miniscule 0.02% difference in rating between first place and third.
For the smaller aggregators with under 600 brokers, the gold medal for IT and CRM support went to MoneyQuest.
IT and CRM support
Liberty Network Services
National Mortgage Brokers
Brokers reveal their dream lending panel and pull no punches on compliance matters
The quality of an aggregator’s lending panel is ranked as the second-most-important aggregator service in 2022 and the fifth-most-likely reason for contemplating any switch to a rival.
Loan Market won gold for its lending panel among aggregators with over 600 brokers, followed by Finsure and Connective. Among aggregators with under 600 brokers, the top spot went to MoneyQuest, while Australian Finance Group and National Mortgage Brokers won silver and bronze.
Many brokers said they were satisfied with the number of lenders on their aggregator panel, but having more was a common suggestion for boosting broker share of the lending market even higher.
When asked which lenders they would like to see added to their panel, the most frequently mentioned financial institutions on the wish list were HSBC, Liberty, 86400 (now ubank), Bendigo Bank, Bank Australia, Newcastle Permanent Building Society and Athena Home Loans.
Compliance support moved down to fourth place from third on brokers’ priority list and remained at fourth on the list of hypotheticals for why a broker might leave an aggregator. While compliance appeared to be less of a concern than last year, some of the most revealing comments focused on this issue.
One broker wished for “better feedback on compliance – instead of just sending a note to say an area needs improving or fixing”.
Others voiced concerns around the cost of compliance as well as its complexity, asking for help from aggregators in this area.
“I feel that their current compliance offering is not as good as it should be,” said one broker.
Another said, “It is becoming increasingly difficult to place deals via the broker channel with current compliance and regulation, and brokers needing to complete due diligence well in excess of what the lenders themselves require.”
Compliance was seen to be taking valuable time away from looking after clients, and brokers urged aggregators to make systems on this front as simple as possible.
“Further streamlining the loan application and compliance process [would] free us up further to do business,” said one broker.
Several also asked for more pressure on government to remove red tape in this area.
Faith in aggregators appears to have taken a hit in 2022, with a drop in those saying hidden costs are not a problem to 82% from 90% last year. Those who said it was either a major or a minor problem rose from 10% to 18%. Once again, concern about hidden costs suggests worries about money in general may be starting to rise. Among those who said hidden costs were a problem, several reasons were given.
One broker said they never heard from their BDM, and the only contact was “email blasts from our aggregator, which is content on patting themselves on the back”. Another cited lack of meaningful consultation about setting up another franchise in the same area.
“I would confidently say that my aggregator has gone out of their way to undermine my business by establishing a new franchise within my commercial space without any communication to me that they were planning to do this,” the broker said.
“Rather than supporting long-standing businesses within the group, they are more about feet on the ground and have no genuine interest in looking after the long-established businesses.”
Asked what the main obstacles would be to leaving their aggregator, the majority of brokers pointed to issues related to lender reaccreditation. This is a major change from last year when reaccreditation was lumped into the ‘Others’ category as an also-ran.
The top obstacle last year – data migration and IT – was relegated to second, with lack of time said to be the third-biggest obstacle.
When it came to which aggregator brokers would pick if they had to change tomorrow, the top choice this year was Connective at 18%, followed by Loan Market and Australian Finance Group, both at 11%.
Connective was praised by many brokers for its flat-fee model and easy-to-use CRM system. Word of mouth also seems to factor strongly for Connective, although some reasons may be more sentimental.
“My wife is currently with them, and other brokers always have positive feedback and praise for them,” said one broker.
Loan Market was praised for its BDMs as well as its leadership, with one broker saying “the CEO was a very good advocate for the broker industry during the fallout from the royal commission”.
Australian Finance Group was cited for its broker support, broad lending panel and commission split.
Finally, despite the increase in business for brokers over the course of the pandemic, it seems that even the finance industry has become a bit jaded with all things COVID-19. Brokers’ perceptions of the support received from aggregators for professional development during the time of COVID slipped to only 71% saying their aggregator had ‘definitely’ done enough, versus 80% last year. Those saying they had not rose from 4% to 7%.
Taking an optimistic view, this may simply show that brokers are ‘people’ people, and professional development always benefits from in-person interaction in relaxed social settings.
Liberty Network Services
National Mortgage Brokers
With broker market share of residential loans at record levels, MPA asked brokers whether their aggregator was doing enough to lift their share even higher
MPA presents the final ranking of Australia’s top aggregators in 2022 based on brokers’ votes across 11 award categories
In this year's survey, brokers were asked to rank their aggregators across 11 categories: accurate and on-time commission payments; IT and CRM support; quality of lending panel; communication with brokers; BDM support; compliance support; training and education; additional income streams; marketing support; white label offering; and lead generation. Brokers could rank their aggregator with a score out of five in each category.
Due to the varying sizes of aggregator groups and the disparity in the number of respondents per aggregator, only those that achieved a response rate of at least 10% of brokers for each aggregator were included in the final list.
MPA also asked brokers a series of questions relating to their aggregator's service and other needs, but these did not have an effect on the overall score.