In my day job as a business coach and mentor, I consider myself lucky to be working with a multitude of really successful and fast-growing mortgage companies.
One continuing question, with multiple answers, is: What’s the right package to attract new advisers?
Although the businesses I’m coaching have wildly varied models from your vanilla mortgages but with great customer service, through the specialist lending strategy to the high-net-worth (HNW) individual approach, the one common theme is recruitment of advisers and what the offering should be.
Debate aside on whether you can actually have a self-employed adviser that only works for one company, what is the right way forward?
If we’re going the self-employed route, then what’s the right split? Is it 60/40 in your favour if you supply the lead or 60/40 in their favour if they self-generate? What about 70/30 or 50/50?
On the employed route, is it better to pay a high commission and low base or vice versa? Where does the multiple need to be set before commission is earned?
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Is £30,000 basic and 30% commission after you’ve banked three times salary the way forward, and should there be an override if they hit certain thresholds?
A difficult balance to strike
If you’re looking to me for answers, then you’re in the wrong place. All I can say is don’t be overly generous. It’s easy to go up, it’s almost impossible to come down.
If you have overrides for hitting certain banked figures, you can soon be in a position where you don’t want your best advisers writing more business as the splits simply don’t work anymore. This is further impacted if the lead source becomes more expensive.
Also, you need to consider the support that’s being given to the adviser. An adviser on a favourable split but doing all their own admin has a far lower earning potential than a broker with full admin support.
There are a great deal of expenses that the business owner incurs that the adviser doesn’t understand. If the adviser is on a 50/50 split and you’re supplying the leads, on a case value of £1,200, the broker receives £600 and won’t even expect to contribute to the cost of the coffee.
Meanwhile, the business owner is paying to generate the lead, provide a home for the broker and administrators, rent, rates and tax, and also have their hands in the till. What are you left with? And the adviser is convinced you’re robbing them blind.
Working smarter
I think, whatever the proposition, it needs to be clear, fair and transparent. A package with multiple strands becomes hard to administer and, when the full amount of income isn’t achieved, it’s perceived that skullduggery is at work.
With regards to the advisers, in my experience, the better the adviser is at selling, the more admin support they need to keep them on track. Show me an adviser who’s brilliant at admin and I’ll pretty much guarantee they can’t break the £100,000 banked barrier.
Here’s another way of viewing things and a way that’s proving effective with some of my clients.
Document the client journey from initial enquiry through to completion and beyond. Next to each stage, note the tasks that only a qualified mortgage adviser can complete. You’ll be amazed at how little there actually is, meaning that a well-trained administrator could complete all the non-qualified tasks.
Now you’re not looking for more advisers but more administrators. That’s a lower acquisition cost and a more readily available pond to fish in.
Prove to an adviser that they only need to be involved three or four times in the sales process. Now, that £250,000 written is achievable and you have a strong basis for negotiating a more favourable commission for you, which you’d need to cover additional administrators.
That said, the reduction in commission should handsomely cover the cost of the extra administration. The other positive is you have advisers not involved in admin, which means they’re happy, things run smoother and they’re less likely to want to jump ship to a company offering the traditional model.
I just thought I’d poke the bear and start a debate.
If you fancy a chat on this or anything else revolving around your business, then I’m available on paulflavin@growpartnership.co.uk
