Macquarie Stresses Value of Referrals for Mortgage Brokers
Macquarie Practice Consulting has released its "2012 Mortgage Broking Benchmark Report," the second in what the firm expects to be an annual series devoted to the industry. For the report, Macquarie compiled responses “from almost 200 mortgage broking business around the country,” and insurance brokers may be nodding their heads in agreement with Macquarie's conclusions, many of which apply with equal force to the insurance industry.
A majority of mortgage brokers listed “attracting new business” as their greatest challenge for the coming year. In that light, the report’s most compelling conclusion, according to Macquarie, is the continuing importance of referrals to the mortgage business. Referrals from existing clients and from referral partners were identified by survey respondents as the two principal sources of growth.
Macquarie Associate Director Fiona Mackenzie emphasised the need for brokers to recognise referrals’ importance before they can capitalise on their opportunities. Once that recognition is in place, brokers can commit to a focus on the referral side of their operations.
“The next step is to assess your existing and potential referral partners to ensure they are the right fit for your business, Mackenzie said. “You need to ask yourself if you connect well on a personal level and whether your offering fits strategically with their business model and client base.”
Mackenzie noted that brokers need to demonstrate a wholehearted commitment to the process and be willing to invest the substantial time and energy it takes to create and nurture successful partnerships. Formal arrangements, including joint ventures with referral partners, can be especially valuable, since they generate average profits that can be more than twice as large as those available through informal arrangements.
In addition to referrals, the report highlighted the importance of the Internet as a source of new business. As an influence on financial decisions, online research is second only to advice from family and friends, according to Mackenzie, and online leads have increased by one-third this year for larger companies.
Mortgage brokers had several other concerns for the future. A soft property market, declines in investor confidence and questions over commission levels were mentioned as concerns by 68%, 51% and 35% of respondents respectively. On the other hand, fully 73% of the brokers surveyed were optimistic about future business, with 76% expecting to see revenue growth over the coming year and more than one-third expecting that growth to top 20%.