A St. John’s mortgage brokerage firm is breaking from the industry’s traditional business model — and serving as a test case for its head office.
APlus Mortgage Group has opted for a team-based approach that involves a business development manager who drums up customers, who are then helped by agents at the company’s Austin Road office, rather than having one person walk the couple through the house-buying process each step of the way.
Leslie Penney, APlus’s vice-president of business development, said the company decided to try the new technique about a year and a half ago.
“Typically, most mortgage brokerages have independent contractors, and they just go out and do their own business from start to finish, from prospecting to qualifying the client, through to getting approval, and getting them signed up and ready to fund,” said Penney.
“We’ve decided to change that, take a different approach, because just from networking and talking to different people in the industry and referral sources, communication is more of an issue.”
The idea, Penney said, is to make sure that if a client needs to get in touch with the person handling their paperwork, that person is in the office working on the file and not out drumming up new business. He said clients used to complain about delays in returning emails and phone calls. Delays can also be tough on the real-estate agents, who are often working with tight financing deadlines.
“We figured that by employing this process, it would be more streamlined, easier for referral sources, easier for the client, to be in contact with us, with the lender, to know what stage the deal was at.”
The model does away with commissions — the traditional incentives for mortgage brokers to bring in more business — and puts the team on salary positions. Penney said his incentive is the firm’s bonus structure, and he now makes more money than he did before.
The assembly-line approach isn’t particularly innovative in itself, said Jim Murphy, the president and CEO of the Canadian Association of Accredited Mortgage Professionals.
He noted it’s similar to the system used by the real-estate industry, but said he wasn’t aware of any other members of his association employing a similar approach. He said it might work if members of an office excel at some parts of the brokerage business but not others.
“Different people have different specialties,” he said, suggested that the flip side to APlus’s approach is that sometimes people prefer to have the same person working with them all the way through.
“That is by far the most common model, but there are always different models. I don’t know what is a right or wrong answer per se. I guess it comes down to the consumer, what their comfort level was.”
Ian Murray, a mortage broker with 37 years’ experience who works for The Mortgage Centre in St. John’s, said he thought APlus’s approach might be better suited for a younger company that’s quickly trying to drum up a lot of business right out of the gate. He said he prefers to build a relationship with a client from start to finish.
“There’s nothing wrong with that model. We’ve seen it in the past, not so much in Newfoundland, but ... I’ll use the expression ‘upalong,’ in the larger metropolitan markets like Toronto, what have you,” he said.
“It depends on how one wants to handle their business. Personally speaking, my thrill is taking it from A to Z. There’s a bonding process. It’s even above a business level, it becomes personal. This sounds corny, but it’s almost like it becomes family.”
Murray said he thinks the reason the individual approach is much more common — especially in Atlantic Canada — is because most people prefer to have one person guide them through what can be one of the most stressful experiences of their lifetimes, and don’t want to be handed off to other office employees during the process.
“I don’t think from a consumer level that’s what I would want to do,” he said, but added if the company’s successful doing it that way, and the employees enjoy that model, that’s the main thing.
“We would measure that by the number of units and dollar volume and new money that they would do. … If it works for them, god bless their cotton socks, and I hope they do very well with it.”
Penney said they’ve just found a business model that works for them, and they’re not attempting to reform the industry.
“The other way’s just the normal, standard protocol,” said Penney, who added that APlus — which does still have a few traditional independent mortgage agents — took its inspiration not from the real-estate industry, but from the banks they work with, with employ business development managers to sell their financial products and services.
“We’ve got people who like that role — it’s a people-person role, you’re networking, out talking to people, whereas the underwriting role is a numbers role, talking to lenders, packaging deals.”
He added that the company’s head office is keeping an eye on business to see if the approach might be adopted in any other of the firm’s 1,800 branches.