Successful broker shares tips from 20-year career
After building a successful broking career over the last 20 years, Aaron Vogt has plenty of sage advice for mortgage brokers setting up their own business.
This includes the need to offer diversified services, connect with referral partners, provide great customer service, work hard and be tenacious.
But the top suggestion Vogt (pictured above) has for brokers starting out is to hire someone to provide processing support.
Vogt, the director and owner of Preferred Finance, based in Mount Barker in South Australia’s Adelaide Hills, established the brokerage in 2006. He has been a broker since 2003 and last week he celebrated 20 years of MFAA membership.
“My goal when I started was to have a full-time assistant but it was just me for the first year and then I got a part-time assistant thereafter,” Vogt said.
“In hindsight, looking back at my [career] journey, I was too slow to get that assistant. I think the number-one thing for a broker is to have processing support because that time that you're not out there meeting people and networking and generating business, you're just sitting there processing.
“The sooner you can stop being the processor and be the lead generator, the better.”
Preferred Finance is now a thriving business with three support staff, an administration officer and two brokers, offering home loans, vehicle and equipment finance, and commercial lending.
Vogt, who won the 2023 MFAA SA/NT Regional Finance Broker Award, is happy to talk about the hard work and persistence it took to set up Preferred Finance and make it a success.
He said after leaving high school he studied accounting, working as night filler at a Drakes supermarket and then later securing a job as an accountant with the company.
“The weekly, monthly, yearly routine wasn’t that exciting and when I looked at other accounting jobs I realise they were all the same – you’re just processing different data,” Vogt said.
He decided to use his skills in commercial finance and landed a role in commercial lending at BankSA. Vogt said he enjoyed the job but the pay did not match his expectations.
“An opportunity came up with one of the guys I knew who set up finance broking for Perks accounting firm in Adelaide, they were a 100-staff accounting firm at the time.”
Vogt said he enjoyed working as a broker for Perks and after a few years decided to branch out on his own, setting up Preferred Finance in 2006.
The challenges of running your own brokerage
Setting up a brokerage was a big challenge, said Vogt.
“When I was working at the accounting firm, they had all the clients and they were just coming in all the time. So I had to go out and find my own clients.”
Vogt said he formed a referral relationship with PKF accounting firm in the growing suburb of Mount Barker with the aim of sourcing a steady supply of leads, but realised in the first year of business that this wasn’t enough leads.
“So then I had to go and become a real salesman and go and network and meet people and get business and 18 years later we've been successful in getting the business going well.”
Among the lessons Vogt learnt along the way was to tap into the large network of people he knew to source clients for the brokers, something he said he didn’t value as much when he first started.
“That’s why I was leaning on that referral partner to get me those leads and then I worked out that going to meet other professionals, real estate agents and accounting firms – they need [a broker] to look after people for them and they value my skills,” said Vogt.
Vogt said he could have bought a business, but he didn’t want to do that as he wanted his brokerage to be based on a value proposition. “I valued my skills and managed to connect with people that valued that too and by working hard and giving good service, I managed to make things work.”
Another lesson Vogt learnt was that persistence pays off. One of his mentors congratulated him on surviving his first year in business.
“He said, ‘You’ve done great, you’ve survived the first year, now you’re hitting your second year. Guess what? You thought you worked hard in the first year, now you’ve got to work even harder in your second year. But after you’ve done that, Aaron,’ he said, ‘in year three, you'll start reaping those rewards and it all will start happening.’ And he was right.”
Vogt said in the third year “things took off” and all the hard work sourcing clients and generating word of mouth referrals came to fruition.
“A lot of people in our industry but also in business in general don’t make it to year three – they give up,” he said.
Diversified offerings
While home loans make up the core of Preferred Finance’s business, the second biggest segment is vehicle and equipment finance, followed by commercial lending.
Vogt said one of the most rewarding things was seeing clients set up their own business and watching it grow from a one-person operation into a larger entity that employed people and sought help from the brokerage to finance commercial properties and equipment.
He said his goal had always been to build up a client base of hundreds of small business clients because they had much greater ongoing lending needs than residential clients, including investment and commercial properties, home renovations and vehicles and equipment.
“My goal was to have all those small business people – I’ve got lots of small business operators and other business operators now, but we have lots of home loan clients as well.”
Vogt encouraged brokers to develop their skills in commercial and asset finance and diversify, especially as the opportunity for growth was far greater than in home loans, which had 70% broker market share.
MFAA’s advocacy for brokers
Vogt celebrated 20 years of MFAA membership last week and he has a role on its dispute resolution team.
He said the industry body played an important role in representing brokers, who were mostly small business operators, especially in their dealings with the big four banks, “four of the largest corporations in Australia”.
“It is vital for us to have a strong party that's looking after our interests and we had some big challenges in more recent times with the royal commission [into banking] and the subsequent election – to me the MFAA really stood and were counted at the time that we needed them,” said Vogt.
Vogt said at the 2019 general election following the Hayne Royal Commission, Labor was expected to win and had planned to implement all of the royal commission’s recommendations, including a fee-for-service model for mortgage brokers, which would have “hurt the industry badly”.
He said the MFAA had galvanised the broker industry, uniting brokers to “push back” and educate politicians about the ramifications of fees for service, convincing the Liberal Coalition, who won the election, to drop this proposal.
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