(May 19, 2005) Canada’s mortgage brokers say establishing new referral sources is their number one priority for 2005, according to a new study. That means cultivating relationships with financial advisors and insurance agents.
However, mortgage brokers don’t really have a clear idea on how to move forward on establishing referral networks with advisors, says Greg Holohan of the Taddingstone Consulting Group, which conducted the survey.
“We did ask the flip side, if they were actively referring to financial advisors, because this is a two-way street,” he said in an interview. “But the mortgage broker profession is still focused on real estate agents and there aren’t many of them that have good working relationships with advisors.”
“They’re really pushing for professionalism and being seen as credible,” Holohan adds. “And there are definitely some bad apples out there that have caused some negative attention to the profession. But they are really moving away from just being the guy who can get the lowest rate and starting to be a financial partner with their clients.”
Part of that push for professionalism involves designations, specifically the Accredited Mortgage Professional (AMP) mark, launched by the Canadian Institute of Mortgage Brokers and Lenders in 2003. The Taddingstone survey found that 79% of brokers either had the designation or were working towards it.
“I think we’ll see further professional in the industry and I that’s a good thing for everyone involved,” says Holohan.
For advisors, working with a broker can help them serve clients more holistically. “The credit side of the balance sheet of the balance sheet is often overlooked by advisors,” Holohan notes. “It’s amazing how often that credit perspective is ignored when it’s really important to the average Canadian.”
Mortgage brokers also need to boost awareness among consumers of the services they provide, the study suggests, as well as financial institutions.
“Mortgage brokers represent a large and growing part of the mortgage market — approximately 30% of annual mortgage originations. Financial institutions that are looking to partner with brokers need to take a more systematic approach to understanding how brokers actually do business,” says Holohan.
There are rewards for becoming a broker’s preferred lender. The study indicates that while brokers deal with an average of 5.9 lenders on a regular basis, 53% of a broker’s business is directed to the broker’s preferred lender.
CIBC’s FirstLine Mortgages was ranked first by brokers as their preferred lender. Several other firms also scored high, including TD Canada Trust, First National Financial, MCAP and Scotiabank.
Interestingly, the ultimate decision to place business with a particular lender rarely comes down to rates or compensation, the study found. “I am far more likely to switch based on service,” said one broker from Nova Scotia. “You need to have competitive rates and good compensation; but most of all you need to have the answers for us when we need them,” added another Alberta-based broker.
Taddingstone, a Toronto-based strategy consulting firm, conducted 30-minute interviews with more than 500 mortgage brokers from across the country for its 2005 Mortgage Broker Report.
Filed by Doug Watt, Advisor.ca, email@example.com