The future of the industry

As the head of a small but thriving broker network, Ron De Silva has some ideas about where the mortgage industry is headed – and what it will take for brokers to stay on board

The future of the industry
Ron De Silva is the head of the broker network that punches above its weight – and that’s just how he likes it. 

“At the end of the day … RMA tends to be on the outside of mainstream brokerages, and we’re OK with that,” says De Silva, the CEO of RMAI Financial Group. “We’re simply driving towards what we do best, and we’re happy with our position. We have a big family of individual brokers that are very successful.”

RMA does just over $1.5 billion in annual sales, making it a relatively small mortgage network player in contrast to the multi-billion- dollar originating juggernauts it competes with. However, De Silva is no stranger to helping small companies grow.

He got his start in the mortgage industry in 1995 as a mortgage specialist for CIBC, where he worked until he was approached to help establish a small broker network. 

That company was Invis, which is now a major broker channel player.

“Invis got a hold of me and several other CIBC managers, and we rolled it out and put some structure in place and grew it in Ontario,” De Silva says. “I was there until mid-2005. I was VP of marketing, e-commerce and information technology at the time.”

He helped Invis establish itself in new markets before moving to the lending side and essentially doing the same thing.

“I became VP of sales and marketing for Cervus Financial later in 2005,” De Silva says. “We took that organization with a handful of products – one-, three- and five-year high-ratio fixed and a five-year variable – and we penetrated the market so well, we were number 10 in the lending spectrum on Filogix in June or July of 2005. That’s a huge deal for a start-up.” 

Now, of course, De Silva is the head of RMA, and he is focused on growing that company.

So how does the small network compete with the larger broker networks when it comes to attracting top talent? For De Silva, it’s all about embracing the entrepreneurial spirit.

“RMA keeps our operation simple – we don’t try to be everything to everybody – and you truly get the best compensation in the industry when you work with RMA. That’s how we continue to distinguish ourselves,” De Silva says. “Some brokers aren’t interested in that: They want the family environment, and they’re willing to give away a portion of their commission. Our brokers don’t need a company telling them what they need to do; they know how to go out there and grow their businesses.”

Winds of change
Having been in the mortgage industry for a while, De Silva certainly isn’t afraid to disrupt the industry.

“I fancy myself an advocate of the ‘feet on the street,’” he says. “I am largely credited for advocating the change in the RedX database that was erroneously recording a broker’s AMP designation as mandatory requirement for licensing. After several discussions and the boycotting of Teranet’s services, the RedX service changed their database to not recording incorrect or irrelevant broker information.”

Throughout the years, he’s seen several changes as the industry has evolved, and he has some ideas about how it will progress in the future, and the challenges it will face. 

“I think one of the bigger stories you’re probably going to run into is something slightly different from what you’ve been dealing with,” he says. “The market has been growing, but I think we’ll see some settling in terms of prices.

“The largest cities are driving the price escalations,” he continues. “For the longest time, we’ve been saying there has to be a correction, but we haven’t seen it. At the end of the day, you might see some changes in certain buyers’ ability to purchase real estate, which may reduce price growth. The growth may be restricted to 5% in 2016.”

The future of brokers
Not is all bleak for brokers, however. Despite expected price settling, De Silva believes the industry will continue to chip away at big banks’ market share.

“You’re going to see more penetration from consumers adopting brokers, more than they have in the past. I think the last number I saw of new mortgage originated last year, 40% were originated by brokers And that’s a significant number of new mortgages,” De Silva says. “The broker channel will continue to grow. To me, that’s a given.”

Especially when you consider first-time buyers are increasingly using the services of a broker, he adds. Those first-timers will likely become repeat customers, which really points to the importance of brokers striving to provide the best possible customer service.

“I think the biggest challenge brokers will face will be to really create the type of loyalty that you want from your customers who come back to you,” De Silva says. “I’m not sure millennials have that as a conditioned characteristic: I think they do tend to be very price-conscious and value-driven. They will shop everywhere and chase down the best prices. I think brokers will start
cutting into their own commissions for more and more, which could cut them out of the marketplace. They need to find other ways to provide value.”

A lot of brokers have a kill-and-eat mentality that will eventually be overcome by the availability of technology to the consumer, De Silva argues. “Brokers have to farm to eat. If brokers are only as good as their rate … they will find themselves on the outside,” he says.

“You need to look at the value proposition that you are offering.”