Senior broker says single operators could be a dying breed
Aside from COVID-19, mergers seem to be the hot topic of the year within the finance industry following the recent announcement of Loan Market’s acquisition of Plan, FAST and Choice, and the merger between Connective and AFG announced a few months ago. But, according to Hank Hong, aggregators may not be the only ones going through a period of consolidation. MPA spoke with the senior mortgage broker for Mortgage Pros about how the industry is changing and why solo-operator brokers could become a thing of the past.
Working in the residential and commercial finance industry since 2002, Hong has seen a lot of change take place. Over the past few years there has been a marked increase in the amount of work it takes for a broker to package a loan, he said. This has largely been due to an increase in compliance following the Royal Commission.
“As a one-man band, to do all the stuff you used to do takes twice the time now,” he said.
Because of more paperwork, verification of living expenses, ID checks and additional documentation requirements imposed by the banks, a loan could take about three to four hours to package where it once took only 40 minutes, he explained.
In order to overcome this challenge, Hong said he has seen a lot of brokers start working together as merged entities or create back office teams to take care of the added administrative work involved.
Read more: Is this the end for single-operator brokers?
“That way they can concentrate on the sales while someone in the backroom does all the paperwork, post settlement, emails and keeps everything afloat,” he said. “It’s a different dynamic - it’s very hard for a one-man band.”
This also enables a broker to focus on sourcing new clients, he added.
“Everyone’s joining into smaller groups or conglomerates. It seems like the same thing as the big mergers of the aggregators. They’re combining together, probably using the best of each business and trying to build a stronger business moving forward.”