Finding Your Fit

from The Canadian Mortgage Broker Magazine - Summer 2022

by CMBA (National)

Cullen Commission Recommends Changes to Mortgage Brokering

brokerage decision

Are you a freshly-minted mortgage

FINDING YOUR

agent looking for a brokerage house to help launch your career? Joining a brokerage can provide you with valuable education, mentorship and professional growth opportunities, but choosing the right firm isn’t always as simple as it sounds.

BY LISA GORDON

According to Kimberlee Freeman, CEO and founder of KMF Enterprises, there are important factors to consider. Based on her 24 years of experience, Freeman said more transparency between brokerage houses and the agents working under their umbrella is needed. She believes the mortgage agent training course should include detailed information on how brokerages are typically structured.

“A new agent has absolutely no idea where to begin,” she told Canadian Mortgage Broker magazine. “Brokerage houses must be clear and show what they are offering, so agents understand. It would be great to have education somewhere in the mortgage training course. When they get licensed, there should be a checklist of key items that agents should ask about – including case studies of different types of brokerage structures.”

Freeman is past president and chair of education for CMBA Ontario and the current treasurer and chair of national education for CMBA National. She said the issue is so important that the Ontario chapter created a checklist to help mortgage agents link up with the right brokerage house. After all, both the brokerage and the individual agent are looking for the right fit.

“How do you investigate a brokerage to make sure they are someone you want to join? Google them and have questions ready for them. Who are the leaders? Check them out; do your research. When you do approach them, you will be prepared,” she advised.

Some of the many questions to ask include clarification on the house fees and what services they include – proprietary software, marketing materials, technical support and structured mentorship, for example. How are an agent’s credit bureau fees charged back to them? What is the commission split and how are volume bonuses handled, if applicable? “And, here’s a big one,” said Freeman. “What happens if an agent decides to leave? What is the exit process and what happens with their book of business, or CRM? These are all important questions.”

18 I SUMMER 2022 CMBA-ACHC.CA CMB MAGAZINEADOBESTOCK

BEGIN WITH THE END IN MIND According to mortgage industry veteran Dustan Woodhouse, author of the Be The Better Broker series of books and president of Mortgage Architects in Vancouver, it’s best to begin with the end in mind.

“When it comes to work, you shouldn’t enter into a contract without understanding how to get out of that contract,” he said.

“It needs to be very clear. If this isn’t the right fit for me, how do we break up? If you wind up deciding to make a move six years from now, how will this play out? Are they organized, professional, is everything written down? Or, is everything kind of loosey goosey, smoke and mirrors? It could be a sign of a mess ahead. How it starts is how it ends.”

When it comes to client data, understanding who owns it is key. In general, Woodhouse said the Personal Information Protection and Electronic Documents Act (PIPEDA), the federal privacy act, supersedes any internal company policies.

“A broker/owner should be following the rules. If they release your client data to you, which then goes to a new brokerage, they are technically contravening the act. So, you need to make sure you’re building your own database with your clients’ permission, so you have a copy of it. Don’t use a corporate email and don’t store everything on a brokerage server.”

As with many situations in life, how you ask a question is often more important than the question itself.

“I think the topic of splits is the first thing on an agent’s mind,” said Woodhouse. “In any role, you tend to want to know what it pays. But the question needs to be rephrased. Instead of asking what commission split the brokerage offers, you need to ask how the

split is calculated by the brokerage.”

To illustrate, Woodhouse gave an example: “In our organization, for instance, let’s take a lender who pays 75 basis points plus 35 basis points in maximum volume bonus. We offer our brokers/agents a true 95/5 split. ‘True’ means that they receive 95 per cent of the total 110 basis points, or a net of 104.5 basis points.

“Other brokerages may claim to offer a 95/5 split, but it’s actually 95 per cent of 95 per cent. Which lacks, to use the word of the day, transparency. It’s a bit ridiculous for a brokerage to claim this is OK given that their split simply represents overhead. And brokerages, like any business, have all kinds of other overhead. Yet, for some reason, they routinely base splits on the net of the split they are paying to the superbroker, to the house. Why not net of all operating expenses? Why not net of CRA as well? It creates a moving target, and it’s bad math. As I say, that five per cent split simply covers overhead in a neat and tidy number;