MORTGAGEBROKERNEWS.CA ISSUE 9.8 | $6.95
TOP10
COMMERCIAL BROKERS
2014
MICS A BROKER’S REFERENCE BANKS VS. MONOLINES BROKERS WEIGH IN ON THE BATTLE RENT TO OWN ADD THIS REVENUE STREAM
PLUS
Rate site
row pg. 8
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mortgages that fit.
CONTENTS
MARKET MATTERS 4 | Editor’s letter 6 | Letters to the editor 8 | Reading between the Lines: RateHub launches its own brokerage
NEWS 10 | News analysis 20 | National pictureat-a-glance
30 | A broker’s guide to all things MIC 34 | Prioritize your high-return activities and reap the rewards, writes Doren Aldana 38 | Banks vs. monolines: Who really has the superior offering? 60 | Global bank rankings: How does Canada compare?
FEATURES 16 | Broker advice: A R2O (Rent to Own) financing strategy is something many mortgage brokers use within their tool box, writes Bruce Smith of Centum Future Mortgage Group Inc.
22 COVER STORY
Top Commercial Brokers
CMP pays homage to the top ten commercial brokers by volume
issue
9.8 It’s all done wIth money.
Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $1 billion under administration, we offer customized mortgage solutions for term, bridge and construction financing from $4M to $100M. Blake Cassidy | 800 494 0389 | www.romspen.com
DATE:
august 5, 2014_10:36 aM
License # 10172
LIVE: 7.5” x 2.875”
AD NUMBER: RoM CMP 14 08
COLOUR: CMyK
AD / JOB TITLE: done with Money
CLIENT:
RoMPsen
AUGUST 2014 |8.75” 1 x 4.125” TRIM: 8.25” x 3.625” BLEED:
CONTENTS
MARKETING 42 | Automated lead generation: Why not automate the lead generation process, writes Doren Aldana 44 | Why you need motivated and capable employees 54 | Leading and following 56 | How to achieve success before it’s too late
REGULARS
42 | Brokers discuss one trust company’s commitment to the alternative space 62 | Favourite Things 64 | CMP Service Directory
2 | AUGUST 2014
50 MARKETING
Leadership: Are you on track?
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CONTENTS / EDITOR’S LETTER
MORTGAGEBROKERNEWS.CA
COPY & FEATURES SENIOR EDITOR Vernon Clement Jones STAFF WRITER Justin da Rosa CONTRIBUTORS John Bargis, Paul Therien, Bruce Smith, Olivia D’Orazio, Doren Aldana, Mark Oliver, Jill Fraser, Hilary Armstrong, Matthew Michalewicz, Maggie Crowley COPY EDITOR Rachel Naud
ART & PRODUCTION SENIOR GRAPHIC DESIGNER Red Redrico
SALES & MARKETING ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER - SALES John Mackenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce
CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis
Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries trevor.biggs@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss.
CANADA’S BIG GUNS IN A SPECIALIZED SEGMENT You commercial brokers have, yet again, outdone yourselves. Somehow – amid tighter lending requirements and increased competition in the space – the total funded volume by CMP’s top ten commercial brokers spiked incredibly, year-over-year. Which is no small feat, considering the amount of deals that were inevitably lost at some point during the process. This year’s list features some new names as well as some familiar ones. As one perennial top-ten puts it, “participating in this list isn’t for every broker but the two or three deals I earn as a result of it make it worth it.” Here’s hoping our cover will contribute to the success of each of the ten featured commercial brokers. Flip to page 22 to see who cracked the top ten. Also in this issue is a handy guide for brokers interested in learning more about mortgage investment corporations (MICs). Turn to page 30 to discover what sort of client is best served by this popular option as well as some other details you need to know before jumping in. And of course, September marks the return of CMP’s Brokers on Lenders survey. Hundreds of brokers have already had their say and submissions continue to pour in. Industry players across the country can look forward to that issue hitting desks in a month’s time.
Cheers, Vernon Clement Jones Editor
CONNECT
Contact the editor:
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4 | AUGUST 2014
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CONVERSATIONS / LETTERS TO THE EDITOR
GUNS A BLAZIN’ RE: CMP YOUNG GUNS(CMP 9.7) The first-ever list of young broker channel players, or Young Guns, offered mortgage professionals a glimpse into the future of the industry, including its challenges. GO GET ‘EM, IF YOU CAN I think that young brokers, or agents, have their work cut out for them in trying to match the success that my generation has been able to squeeze out of the business. I do think that some of them will though, but it will be through a different business model than those that are currently in use. Cheers. -Mark Hartley
I applaud younger agents who are out to make a name for themselves in Canada. I wish them luck, but I think they will have to do more than what I saw in this feature in order to be able to do it. The business is changing and depending on rate sites, like so many of the younger agents do, won’t get the job done. The industry is really all about building relations with consumers and lenders in order to make a success of it. -B.C. Broker
Young brokers, I think, have an advantage over the young people elsewhere in financial services. That being said, they will still have to shake a leg in order to make it because of the increased competition with rates sites and the banks. We, my generation, have not done a great job of protecting the health of the industry against the dual threat of banks and rate sites. -Mark Ho
Way to go, Annie Mirza! Young women will help lead the broker industry to new heights in the coming years. I think Annie is a great example of the power they hold in terms of building relationships with clients and helping to elevate the industry. -Mindy Lazar
6 | AUGUST 2014
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MARKET MATTERS / READING BETWEEN THE LINES
RATE SITE SURPRISE
1
Brokers were taken aback by RateHub’s decision to launch its own brokerage, ostensibly bringing the comparison site into competition with its clients. Two industry players examine the move
2
3
4
8 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
There is no argument that RateHub’s decision to compete directly with its broker customers in the mortgage space is a clear conflict of interest, and any denial or media spin on the issue from the CEO doesn’t change the facts. Anyone who doesn’t see this is simply choosing to live in ignorant bliss. RateHub’s move was very likely a result of stagnant revenue growth from its current client base, and nagging costs, so the next logical step was to become a broker. How this plays out, and whether or not RateHub succeeds in its endeavour, will come down to how its clients react to this significant change in their model. If brokers continue to support the site, it may not even matter in the long run if they’re able to generate more than enough revenue through their newly formed broker arm.
to re-evaluate their business models after concluding that the client/broker relationship is no longer the main driver behind who the consumer deals with. This can only lead to one thing: they, too, will set up call centres at a lower cost per unit, since they won’t have to deal with broker commissions used for deep discounting any longer, and they are very much equipped to do so financially and structurally. Make sense? After all, if it’s all about rate sites and deep discounting, who needs brokers? Are we really just order takers, or professionals with sound advice and good value for the consumer? Something to think about when considering your business strategy, which is predominantly “eat what you kill.” John Bargis of Mortgage Edge
Onto the bigger challenge the industry faces: the lack of foresight on the part of those who choose to predicate their business model on forgoing good, sound financial advice to the consumer and building strong relationships with those clients in exchange for deeply discounted rates, which is not necessarily in the best interest of the typical client, who doesn’t “read the fine print. Make no mistake, the majority do not. I’ve personally received several inquiries from borrowers who didn’t feel comfortable with the lack of service or advice they received from a prominent rate site broker, who didn’t have the time to properly review the payment structure on a commitment, and why would he under the rate site model, which allows for a diminished time limit per client unless the discount broker wants to lose money. Ever wonder why TD and Scotia implemented the in-branch fulfilment model? It’s because the model works best for the banks in developing relationships with referred clients through brokers, yielding them higher returns. Yet the majority of consumers continue to deal with retail banks. Does anyone in our industry really believe that the banks would be on the losing end of the rate-discounting game? I think not. And what about the monolines? How would they feel about the rampant rate discounting? Will they have trouble competing, or will they disappear? Don’t bet your money on that happening. The monolines are already being squeezed for more by brokers as a result of this buy-down insanity, as if it’s the monolines’ responsibility to support this bad habit. They will ultimately reach a breaking point, which will force them
In closing, I offer a word of extreme caution to all rate site junkies: be very careful what you wish for. You could all wake up one morning and realize that everything the industry has struggled through to gain the trust of the consumer by providing sound unbiased advice and service, which includes you, could all disappear right before our very eyes. Make no mistake about it, the deep discount model only serves to diminish the much needed value we as professional brokers provide to the borrowing public by eliminating the very reason our industry experienced success and strong growth in the first place; naemly, our relationship-building skills.Thankfully the majority of the industry still gets it. Keep in mind, we’re not selling books or widgets online. We’re professional advisers to consumers for one of the most important financial decisions in their lives, and this can’t be done with their best interest in mind on scraps.
AUGUST 2014 | 9
MARKET MATTERS / NEWS ANALYSIS
MORTGAGEBROKERNEWS.CA
A DIFFERENT TAKE Many brokers have characterized Ratehub’s decision to create its own brokerage as a slap in the face for themselves and their clients. Still others are lauding it as a good move. Paul Therien, VP of operations for Centum, offers his reasoned analysis
10 | AUGUST 2014
S
Since around 2010, websites designed to attract customers by advertising the lowest rates have seen a surge in the Canadian mortgage market. This has largely been due to an increased awareness among consumers about rates, something driven by increased media exposure. The Internet has placed vast amounts of information at our fingertips and created the most highly educated consumer in our history. Want to find out about a mortgage? Look for low rates? Simple — go online. As a result, websites like Ratehub have been created that focus on rate to capitalize on an already pervasive attitude in the marketplace. These sites are increasingly a tool for the consumer to shop for mortgage products, and with that, there has been more controversy about the value of these sites and the role that they play in our industry. Some people see these sites as being an excellent way to not only grow their business, but also to increase consumer exposure to brokers. There are others, however, who believe these sites devalue mortgage brokers and the role that they play in satisfying consumers. I believe that these sites may provide a valuable service, but at the end of the day it will always come down to service and professionalism. Putting RateHub aside for a moment, let us consider web-driven leads and the realities of these leads. In our industry the figures don’t lie; we have a roughly 3 per cent conversation rate on leads to application, and from application to funding we hover at 50 per cent. So of 100 leads generated the average is to fund a mere 1.5 mortgages. (This is an INDUSTRY average, there are those that do better). Why is that? The answer is much simpler that you might imagine. Leads, no matter where they are generated, are only as good as the person who receives that lead. Statistically the chances of converting that lead dramatically drop when you exceed the 15 minute mark from the point of time when the consumer clicks and when they receive a phone call. Make no mistake, it is the phone call that counts, an emailed response is not enough. The consumer
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MARKET MATTERS / NEWS ANALYSIS
This is not about how you perceive the service you provide; however, it is about how the consumer perceives it.
12 | AUGUST 2014
has mortgage on the brain when they sent the lead, they are sitting at their computer actively sourcing mortgage information. The likelihood that it is still be front of mind two hours later is slim or next to none. Sites like Ratehub earn 100 per cent of their revenue from the leads that they sell. With a lead selling for between $25-$150 in our industry, those are pretty tight margins to work with as a company when you consider how much revenue has to be spent on driving traffic to the site in the first place. If they want to increase their revenue they have three options (1) Reduce Expenses (2) Increase sales (3) Find alternate sources of revenue. Numbers 1 and 2 likely have been tried and, although a greater return may be had, there are still limited opportunities for growth. Enter diversification. From a purely business perspective it simply makes sense for Ratehub to diversify and open its own brokerage. It provides an opportunity to drive more revenue and, most importantly, control the consumer experience with their brand. I will say it again, control the consumer experience with their brand. Earlier I mentioned that the industry has a low conversion rate for web leads, and that is primarily due to the length of time or quality of the contact the consumer receives. That consumer experience is not reflective of the mortgage broker who received the lead, it is reflective of the site, or brand, from which the lead was generated. The consumer is not going to say “I had a really crappy
MORTGAGEBROKERNEWS.CA
experience with a broker from ABC Mortgages,” they are going to say, “I went on this website (Ratehub, etc) about mortgages and no one got back to me; the service was horrible, etc.” As an industry, we live, and we die, by the service experience that our customers receive from us. Rate may drive them to make the initial contact, but if they do not receive good service, they won’t stick around long enough to give us business. Most brokers will always strive to provide good service, and most of you who read this commentary will puff your chest and proclaim that you always provide excellent service, and it is likely that you do. This is not about how you perceive the service you provide; however, it is about how the consumer perceives it. A customer searching on the Internet for a mortgage is not loyal to any particular brand, they want instant high quality service and the lowest possible price. That does not mean getting a phone call two hours later and being asked to go to a website to fill out an application, and it most certainly does not mean getting an emailed response. If you don’t care enough to pick up the phone, well you can’t really want their business that much, can you? I can guarantee you that is pretty much exactly what the consumer thinks. I personally believe that a broker’s greatest tool is service, expertise and always taking care of the needs of their clients. It is why our business is primarily driven through referrals. The world is changing though and the Internet and ease of access to information continues to challenge many professions. Consumers are more intelligent and have more knowledge than ever before and they have been empowered. A smarter consumer means that we have to find new ways to attract consumers, and prove to them that we are their best option. Good or bad, attracting them with rate is one tool that gives us the opportunity to demonstrate our value. Only time will tell if Ratehub has made the right decision with the opening of their own brokerage. It may lose some broker clients, but the potential increase in lead conversion may be well worth the effort if it enhances the consumer experience with their brand. That increased brand reputation will only serve to enhance the overall broker community and drive higher quality leads to the brokers that choose to stick it out as partners.
HOME TRUST
MARKET MATTERS / NEWS ANALYSIS
MORTGAGEBROKERNEWS.CA
CMHC SURVEY REVEALS CONDOS INVESTMENT RATES
Was it all a misunderstanding? Canada Mortgage and Housing Corporation (CMHC) has released the results of its 2013 Condominium Owners Survey and it suggests 82.9% of condos are indeed owned by their occupiers and not the investors who own 17.1 per cent of those units. “As information on condominium investment is rather limited at this time, CMHC has gathered new data on a segment of domestic condominium investment activity in Toronto and Vancouver,” says Bob Dugan, chief economist at CMHC’s Market Analysis Centre. “While the results are not representative of other markets or all types of investors, the survey helps to shed some light on the profile and purchasing motivations of a segment of condominium investors in Toronto and Vancouver.” The data shows that among the 17 per cent of owners who are investors, around half rent out their lastpurchased properties. More than 42,000 households in the Vancouver and Toronto area were surveyed. The survey did not cover Canadian households that own condominium units in Toronto or Vancouver but do not reside in these CMAs. Foreign investors and corporate investors are also not included, but according to Dugan, “CMHC continues to explore opportunities to enhance the availability of information on foreign and corporate investment activities in the housing market.”
CANADIANS SEE INCREASE IN NET WORTH
STATS
82.9%
of condos are owner occupied
THE SKY MAY BE FALLING AFTER ALL
A Toronto-based investment expert says, yes, we are in a housing bubble and is predicting a sharp correction. James Hodgkins, chief investment officer at CHS Asset Management argues that if and when rates end up in a more normal range of say 3-4%, property will be 50 per cent overvalued on a price-to-rent ratio. He says that banks are overstretched because of valuations but also due to consumer leverage being stretched.
17.1%
of condos are owned by investors
Source: CMHC
14 | AUGUST 2014
We hear a lot about the rising levels of debt in Canadian households and while that is a concern, when you look at the average household balance sheet, things look rosier. Last year net assets saw an increase of 8 per cent, with the average Canadian household worth $442,130 and debts at $122,705. Although we know that property values have helped push asset figures higher, there has also been an increase in investments.
DEVELOPERS SEEK NEW WAYS TO FIND COMMERCIAL TENANTS
With vacancy rates increasing in Metro Vancouver, developers are finding new ways to attract tenants. Unoccupied office units in the area are at their highest since 2005, reaching 9.3 per cent in Q2 of this year. Developers are now engaging with potential new clients to help them build the properties they want to occupy. While this may not be unusual when building large-scale office accommodation for bigger clients, these new levels of input are being afforded to smaller tenants. Not too long ago, commercial real estate was stacked in favour of landlords and developers as space was tight, but experts now suggest it is turning more towards tenants.
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MARKET MATTERS / BROKER ADVICE
ARE MORTGAGE BROKERS KILLING THE GOLDEN GOOSE?
FINANCING ‘RENT TO OWN’ PROPERTIES A R2O (rent-to-own) financing strategy is something many mortgage brokers have in their tool kits, writes Bruce Smith of Centum Future Mortgage Group Inc. But only when used correctly, does it represent a win/win for clients, investors, homeowners and, yes, brokers
With a typical rent-to-own deal, an investor purchases a property on behalf of the client who rents it for a specific term, until such time as the client can obtain a mortgage and take legal possession of the property. This may be a new property or may represent an existing property that a client cannot refinance under more traditional methods. This method of financing may also appeal to a homeowner as a means of bringing more qualified buyers to the table, or may offer an alternative to the investor who has no interest in the typical tenant/landlord relationship. 16 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
The two components to the deal are the “lease” or occupancy component and the “option” or purchase component. We will explore below the benefits of such an agreement, some of the key elements that makes up a rent-to-own agreement, and what pitfalls as mortgage brokers you should be trained to observe and prevent.
BENEFITS OF A RENT TO OWN For the client – Allows homeownership without the immediate need to qualify for a mortgage. A typical rent-to-own candidate lacks the income, credit or full down payment to qualify for a traditional home purchase. They simply rent the home until such time as they qualify for a mortgage. The investor may assist them in a savings program in order to accumulate the balance of the down payment. The mortgage broker assists with the credit repair. The client benefits from any appreciation in the home beyond the option price and settles into a preferred lifestyle sooner than expected. For existing homeowners, a R20 agreement may prevent loss of the home due to power of sale or failed refinancing attempts. For the investor – Attracts a better quality tenant during the rental process due to the pride of home ownership. The investor avoids the “nuisance call” from tenants for minor repairs where the client is obligated to repair and maintain the property. Allows the property to be pre-sold, without the need for additional real estate fees. Provides financial protection in the event the homeowner reneges on their responsibilities or fails to exercise the option agreement. For the Realtor/existing homeowner – Allows them to qualify more purchasers. Clients that can’t obtain financing today, may still represent a potential sale opportunity. For the mortgage broker – A mortgage for your investor and ultimately a mortgage for your client. Two mortgages on the same property, usually within a one-to three-year time period.
KEY ELEMENTS OF A RENT TO OWN
1
Each deal is different based on the needs of the client and the investor so there are no set rules to adhere to. The investor makes money on the resale of the home, or on the monthly rents or both.
2
The resale value is determined at the time of the agreement, or market value can be determined at the time the option is exercised. Best practices suggest the resale value is pre-determined within the option to purchase agreement.
3
The investor typically prefers a nonrefundable down payment as security on the deal. As the investor requires a minimum of 20 per cent down to purchase an investment property on behalf of the client, there should be some “skin in the game” by the client, to provide the investor some remedy, should the client not fulfill their commitment.
4
Part of the monthly rental payment is typically applied to the down payment. Rents can be market rents or structured like a mortgage at private lender rates similar to a VTB mortgage. CMHC is very specific in terms of market rents and the need for a portion of the down payment to be refundable in the event the option is not exercised. CMHC’s position as providedby Business Development Representative, Joelle Jackson, is below: Rent should only be accepted to satisfy minimum equity requirements if it is acknowledged in a contractual agreement that includes the prepayment of equity on a monthly basis, as part of an agreement to purchase. This agreement would involve the monthly payment of an amount in excess of the current market rent for the property and would also include at least a partial refund in the event the prospective purchaser does not exercise his/her right to buy. The presence of this provision demonstrates the purchase price is not being over-stated to include the down payment. The amount of equity credited to the prospective borrower should only represent the sum of the amounts by which monthly payments exceed the market rent for the property. Approved lenders should confirm the monthly rent payments are in excess of market rent by reviewing the contractual agreement (e.g. the rent-to-own agreement) which should state the full purchase price of the home, and the portion of the monthly rent payments which are in excess of current market rent. The purchase price submitted AUGUST 2014 | 17
MARKET MATTERS / BROKER ADVICE
by the approved lender should include both the down payment (which has already been paid to the vendor) and the balance owing to the vendor on closing.
5
The R2O deal is structured based on the comfort level and expectation of all concerned, but primarily is structured to facilitate a client deficiency. The client may be deficient in income, down payment or credit so the term of the R2O should provide the client adequate time to correct this deficiency. The expectation should be that the client will correct the deficiency and qualify for a mortgage within the term of the agreement.
6
The process may require the payment of an upfront fee to begin the process for document preparation and to compensate the investor for time spent in a property search. This is viewed as a “commitment” fee and may be applied to the down payment. Best practices suggest that a fee should not be expected to simply review an application. This would be consistent with the practice of not charging upfront fees on a mortgage application. Where the mortgage community needs to step up is in implementing “best practices” for all R2O transactions. The perception by some, that a R20 is simply a scam to bilk naive “want-to-be homeowners” must stop. As in life there are the unscrupulous individuals which if given a free pass, will “Kill the Golden Goose” for the rest of us. I suggest it is your responsibility as a mortgage professional to recognize what is a quality rent-toown agreement and what is not.
WHAT A RENT TO OWN IS NOT
1
A VTB (vendor take-back mortgage). If the investor is transferring ownership to the homeowner on day one and holding a mortgage on the property, then this is not a rentto-own transaction.
2
An arrangement where all rent is applied to the down payment. It seems unlikely that an investor would agree to this when they could simply rent out the property for market rents.
18 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
Typically some portion of the rent is rebated as a means of assisting in the accumulation of a down payment. All rent may be applied if structured like a VTB mortgage but in most cases a portion of the rent will be applied to the down payment with the exercising of the option agreement.
3
A cash grab for the investor, predicated on the belief that the homeowner will default on their responsibilities. Aside from unscrupulous investors, most participating in this investment vehicle want the property to ultimately sell, as their profit is predicated on a successful transaction. They will not continue to market or resell the property forcing the option to be exercised before the term is up.
4
For properties priced above market value. Investors need to make money on the resale of the property. Price it too high on the resell and the homeowner will never obtain the required appraised valuation required for mortgage financing.
5
Where no consideration is given to the income or creditworthiness of the applicant. As credit is critical to any mortgage transaction, credit management for clients is a must.
6 7
It only locks you into specific properties owned by the investor. Many investors let you select the property of your choice, as long as it meets their own investment parameters. A deal requiring no independent legal advice. Savvy investors don’t want unhappy clients and potential lawsuits so always have clients obtain legal advice by lawyers experienced in rent-to-own transactions. I hope you found this article informative and beneficial. For more information I suggest you contact associations that are advocates for rentto-own properties, such as CAROP, (Canadian Association of Rent to Own Professionals). Complete your own due diligence and I believe you will find rent-to-own financing a viable option for clients and investors alike.
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STATISTICS / RESIDENTIAL SALES ACTIVITY
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According to CREA’s monthly national statistics, sales edged up less than one per cent from June to July; continuing a trend begun in the spring National home sales jumped 0.8 per cent from June to July of this year and 7.2 per cent year-over-year. “On the surface, national sales activity in July was similar to what we saw in May and June,” CREA President Beth Crosbie said. “That said July sales picked up in markets that struggled to gain traction in the spring, while activity eased slightly in some of Canada’s largest urban markets.” Overall, seven provinces and one territory experienced positive year-over-year growth in home sales; led by Northwest Territories (+ 66.7), British Columbia (+ 11.0), Ontario: (+ 9.6) and New Brunswick (+8.5) Alberta (+ 5.0), Manitoba (+ 4.6), Quebec (+ 3.1), and Nova Scotia (+ 1.1) also saw year-over-year sales growth. Meanwhile, Newfoundland and Labrador (-3.4), Prince Edward Island (-6.6), Saskatchewan (-8.2), and Yukon (-28.1) experienced negative yearover-year sales gains. Overall, the mid-summer boom continued for most of Canada, with the country enjoying a 7.2 per cent year over year hike in sales. And the positive sales growth is expected to continue according to CREA, whose economists believe will be urged by continued low interest rates. “Low mortgage interest rates continue to bolster home sales activity,” said Gregory Klump, CREA’s Chief Economist. “With the Bank of Canada widely expected to hold interest rates steady until next year, mortgage financing will remain attractive over the second half 2014 and continue to support Canadian economic growth while waiting for Canadian exports and investment to improve.” 20 | AUGUST 2014
100
per cent
122.2
per cent
Thompson
37.3
Powell River
per cent
Medicine Hat
21.4
per cent
Moose Jaw
TOP PERFORMING CITIES
July Sales Activity
(year-over-year percentage change)
MORTGAGEBROKERNEWS.CA
HOT TO COLD: SALES ACTIVITY BY PROVINCE (year-over-year monthly percentage change) Source: CREA
+7.2 per cent
Northwest Territories: +66.7 per cent British Columbia: + 11.0 per cent Ontario: + 9.6 per cent
Overall Canadian sales activity
New Brunswick: +8.5 per cent Alberta: + 5.0 per cent Manitoba: + 4.6 per cent
21.3
Quebec: + 3.1 per cent
per cent
26.3
Moncton
35
per cent
Brantford Region
D+H CMT Mortgage ad final.pdf
1
per cent
Nova Scotia: + 1.1 per cent
Yourmouth 4/16/2014
10:53:44 AM
AUGUST 2014 | 21
FEATURE / CMP TOP COMMERCIAL BROKERS 2014
CMP
TOP 10 COMMERCIAL BROKERS 2014
In its third year, CMP’s Top Commercial Brokers list features some familiar faces but also a surprising number of new ones Commercial brokers painstakingly pore over deals putting months of effort into closing each one. Sometimes all the work is for naught, with those financing structures collapsing before very frustrated eyes. Still, these 10 brokers prove perseverance pays, as they build book and reputations beyond reproach Canada’s commercial brokers bounced back in a big way this past year, with the top ten reporting a combined $817,544,500 in deals funded. That’s a jump of $244 million yearover-year, for those keeping score. The No. 1 broker, himself a three-time winner,
22 | AUGUST 2014
reported his own significant year-over-year increase of $51,220,000. Not to mention that the listing of top players is no longer the exclusive domain of men, with two women joining the ranks among some of the segment’s most recognizable names. Although the numbers are impressive, they don’t quite capture just how many dollars were lost in the eleventh hour on deals that fell through. Such is life in the world of commercial brokering. Still, we’re sure if you asked any of our featured professionals they’d say the slog is worth it.
MORTGAGEBROKERNEWS.CA
Number of commercial mortgages closed in 2013
Support staff who don't write loans
Support staff who write loans
Years as a commercial broker
Rank
Name
Company
City
Value of the commercial mortgages funded in 2013
1
David William Beckingham
Dominion Lending Centres Commercial Capital Inc.
Vancouver, B.C.
$209,220,000
42
1
1
28
2
Rena Malkah
CYR Funding
Thornhill, Ont.
$150,000,000
30
3
3
35
3
Mike Chiu
Capital West Mortgage Inc.
Vancouver, B.C.
$122,326,000
11
1
0
15
FUNDED VOLUME BETWEEN $50,000,000 - $100,000,000 Rank
Name
Company
City
Number of commercial mortgages closed in 2013
Support staff who don't write loans
Support staff who write loans
Years as a commercial broker
4
Brennan Wood
Mortgage Alliance Commercial Canada
Toronto, Ont.
10
1
0
4
5
Steve Kates
Verico Northwood Mortgage
Markham, Ont.
12
8
4
35
6
Phil Wooster
First Island Financial Services Ltd.
Victoria, B.C.
20
4
0
27
Support staff who don't write loans
Support staff who write loans
Years as a commercial broker
FUNDED VOLUME UNDER $50,000,000 Rank
Name
Company
City
Number of commercial mortgages closed in 2013
7
Jason Cosman
The Mortgage Centre Tridac Corporation Limited
Toronto, Ont.
15
2
1
4
8
Neil Shopsowitz
Dominion Lending Centres Commercial Capital Inc
Vancouver, B.C.
25
0
0
8.5
9
Gay Andrews
Caplink Financial Corporation
Edmonton, Alta.
16
0
0
19
10
Harry Tyson
Dominion Lending Centres Innovative Mortgage Solutions
Coquitlam, B.C.
10
0
0
1
AN OVERVIEW
$817,544,500 TOTAL FUNDED VOLUME:
176.5
19
TOTAL NUMBER OF AVERAGE NUMBER YEARS IN THE BUSINESS OF DEALS
17
AVERAGE YEARS IN THE BUSINESS
AUGUST 2014 | 23
FEATURE / CMP TOP COMMERCIAL BROKERS 2014
MORTGAGEBROKERNEWS.CA
THE NO. 1 COMMERCIAL BROKER IN CANADA
We picked the brain of the hottest commercial broker in Canada, David Beckingham, to see he does it and why too few are following his impressive lead CMP: Congratulations, David. Now, why are so many brokers reluctant, despite the example you provide, to enter this potentially lucrative end of the business? Beckingham: I believe most brokers are apprehensive about entering the commercial mortgage industry because it is complicated. To do well, the market requires that brokers possess a broad skill set, including experience with accounting, a good legal mind and a strong sales background. Experience with accounting is important because of the constant need to review and understand financial statements. Deep knowledge of contract, real estate and mortgage law is important because it is the backbone of every commercial mortgage transaction done. Finally, a strong sales background allows you to both acquire clients and then negotiate on their behalf. You can be a broker without this skill set, but having them gives you a huge advantage. Another reason for some apprehension may be that the time required to develop a business in this industry is lengthy. For the reasons I’ve already talked about, it takes a long time to become a competent broker and the reality is that most young brokers don’t have the time or patience to survive the span of time needed to develop a solid income and network of business connections. At the minimum, with a strong background, it takes three to five years to earn a comfortable living on a commercial brokering income. Lastly, I’d like to address the part of the question that pertains to the market being ‘potentially lucrative’. Make no mistake, there are lots of brokers out there struggling to survive as commercial mortgage brokers. The appeal of doing large deals leads to assumptions of an equally large income, but this is not always the case. The time 24 | AUGUST 2014
between each deal can vary and for larger deals, it can be very long as it is much more difficult to fund each commercial loan. In order to be successful in commercial mortgages, you need a constant flow of commercial deals coming into the office in order to provide a broker with a decent income.
CMP: How have you thrived when others have struggled to attain these commercial deals? Beckingham: People looking for a commercial mortgage lean toward doing business with a seasoned commercial mortgage professional. They invest enormous levels of time and money into commercial development and what they want in return is the certainty that project financing is handled ethically, professionally and on time. I suppose the answer is simple . . . I have worked very hard over the past 26 years to acquire industry knowledge and experience as a commercial mortgage broker which, in turn, has translated into a proven track record. This is appealing for borrowers. This isn’t a formula though. In some ways, it’s about character, work ethic and a never-say-never commitment to getting the deal done. It’s also influenced significantly by relationships . . . with lenders, developers and borrowers.
CMP: For this segment to grow, do you think more commercial brokers should mentor brokers interested in breaking in? Beckingham: Yes. The only way to become a commercial mortgage broker ,and for the commercial mortgage business to flourish, is through mentorship. When I was 21, I was mentored in the industry by a seasoned commercial broker who showed me the ropes. At that time, he had 20+ years in the business and this is how I got my start. It is a significant advantage to have several years of mentorship in the industry before working
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FEATURE / CMP TOP COMMERCIAL BROKERS 2014
independently as a broker. Regrettably, the way the industry is currently set up, I believe there are limited opportunities for mentorship. Many experienced commercial mortgages have little time to mentor young professionals which at least in part, results in these young professionals leaving the industry before getting the experience they need to find success. The best formula for brokers wanting to get into the business is to work as an assistant to a senior commercial broker. The senior broker benefits from the support of an assistant and at the same time, the assistant earns experience in and exposure to the industry and at the same time earns an income while working and learning.
CMP: How did 2012 compare to 2013? Were there more opportunities or fewer in commercial brokering? Beckingham: For me, I was fortunate in 2013 to have several large transactions closing, which I normally don’t seen and which resulted in a higher volume in business. In particular, I was fortunate to close a package of five shopping centres contained within one transaction and a package of 11 industrial buildings in a single transaction. These kinds of deals can make or break a commercial broker’s year. In general however, 2013 was better than 2012 because more funds came into the marketplace and the availability of money increased. For example, the securitized mortgage industry continues to expand. Traditional avenues for financing, such as banks, credit unions and life companies expanded their lending programs and in addition to this, new securitzed mortgage funds established a stronger mortgage presence.
CMP: Many commercial brokers cite competition with the banks as constantly increasing. What do you do to set yourself apart and win as much business as possible? Beckingham: I operate a service-oriented business. I don’t view banks as competition. Rather, I see them as a funding source. When I have a client who needs a commercial mortgage, I have two primary client needs to consider if finding the best deal possible: 1) the most cost-effective source of funds and 2) the place where my clients’ needs are best served. If that is the bank, then that’s where we’re going!
26 | AUGUST 2014
CMP: How much have tightened regulations affected your business? Beckingham: Profoundly. Each and every year, the due diligence load associated with commercial mortgages increases. Tightening regulations have lengthened the time required to close a transaction, which, in turn, has increased work load and reduced incomes. There is a silver lining however. The increased regulation constraints has lead to more borrowers needing the services of a broker because navigating the process of securing a commercial mortgage is a lot more difficult that it used to be. CMP: What are some of the biggest obstacles brokers face with lenders? Beckingham: In my view, there are two main obstacles with lenders. The first is the impact of increased regulations on mortgages being funded in Canada. This trend will never change however. Secondly, the availability of funds constantly ebbs and flows. One month, a particular lender will have exhausted their lending potential and then the next month, they will have a surplus of funds. It is in this ever-changing world of finance that opportunity exists for commercial mortgage brokers to prosper when they know the industry well and know where and when the money is available. CMP: How has commercial brokering changed in the past few years? Beckingham: More commercial brokers are affiliated with national firms. When I first entered the business, commercial brokers joined smaller, local firms. Now, the trend is for commercial brokers to join firms that run offices across the country because it provides them with a client base they would not otherwise have access to. Collectively, these national companies have large funding volumes and it is this volume that allows individual brokers access to more funding sources and lenders. CMP: How do you see commercial brokering evolving? Beckingham: Personally, I see the commercial brokerage industry expanding. More and more investment monies are flowing from the stock market into the commercial real estate market. This market transition will only increase the volume of business in the commercial real estate field because investors are increasingly interested in the security and stability of a real estate investment over a stock investment. This transition will only increase the need for commercial mortgages and commercial mortgage brokers alike.
MORTGAGEBROKERNEWS.CA
COMMERCIAL RENTAL VS. RESIDENTIAL MULTIFAMILY
The differences may seem obvious, but even to a seasoned vet there are always more to learn. Chad Robinson of 360º Bestinterest Mortgages Inc. shares some of those key details I wouldn’t have guessed that when I booked a Jeep tour to the top of a volcano, I would end up meeting an investor and hearing first-hand how very different investing in strip plazas and commercial buildings is compared to multi family. As a commercial mortgage broker, investor and Realtor for, I already had great technical understanding but that first-hand account was something very different and instructive. It made for a very interesting conversation — one all brokers serious about claiming a share of either business can benefit from hearing. As we wound our way up the service road crawling over four-foot boulders, the conversion naturally progressed to real estate. It turned out that our guide and owner of the tour company had invested in real estate and done very well. He was a true investor. Saving his day job revenue to buy his first strip plaza and working his way to several large plazas and office buildings. On a vacation a few years back he took the same tour as I was on and at the end of the week bought the tour company and never came back to Canada. He truly had found his personal Belize! It was an awe-inspiring story. My family has owned a large amount of residential rentals for decades but very few commercial properties so I was just as anxious to compare notes as was he. Generally, each category can be broken down into small and large properties;
COMMERCIAL VS. MULTIFAMILY: WHICH REIGNS SUPREME? Commercial
Residential
Tenant laws Financing Vacancy Operational expense Property management a four-plex or a four-bay mini-mall has many of the same challenges. As we climbed a few thousand feet and my partner started to have altitude sickness, we took a break overlooking a valley and began to discuss the most glaring difference: our tenants! He could not believe how bad the process of eviction had become in Ontario to evict a residential tennant. “You mean you can’t just change the locks and sell his stuff?” he asked. I chuckled and said no. I thought his head was going do a rendition of the exorcist when I told him about the Tribunal. The sad thing is, Ontario is not the worst; try owning residential property in Quebec, where you are not even allowed to ask for I.D. He told stories that he was able to evict tenants, within days not months. When I told him it was possible that some tenants who really know how to work the system could live
AUGUST 2014 | 27
FEATURE / CMP TOP COMMERCIAL BROKERS 2014
in a unit for months or longer he thought I was getting altitude sickness. “Why would anyone buy a residential?” he asked. “I agree that the laws covering the tenants is far superior for commercial than residential,” I conceded. Basically whatever you put in the lease becomes the laws governing your relationship. So why residential? I said “Because of the financings of course!” It was now 5 am and just becoming light enough that I could see his investor eyebrows peek up… Financing… Yes it is incredible right now, the lenders are throwing money at multi-family buildings. With CMHC insurance you can borrow up to 85 per cent loan to value (CMHCs value albeit) with some rates below three per cent. I had just received a quote on a building before that trip for a multi-plex in Windsor and was offered 2.5 per cent for five years and 3.4 per cent for 10 years. It is a good thing he wasn’t driving at that point as he would have driven the the jeep of cliff! “Wow, the most you can get is 65 per cent LTV and at that I get raked over the coals. Heaven forbid if you are leasing to small business it is next to impossible to get a good rate.” This led to a long discussion on why lenders feel multiplexes are less risky than strip plazas and 28 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
office buildings. In most cases residential vacancy rates are fairly linear. They follow a predictable path. Even in tough economic times residential vacancy tends to stay low in most cities as few people buy houses. Commercial, with a few large tenants taking large spaces, can take months or years to replace. I pondered this as we rocked back forth and held on for dear life as the Jeep articulated over a very large boulder on the edge of a cliff. So the grudge match seemed pretty even at this point. Point to commercial for tennant evictions. Point to residential for financing. Vacancy goes to residential. “What about operational expense?” I said as we crested another rise. I knew where this would go but it was worth it to see his eyes light up. “That is the best part! All my leases are triple net! The tenants pay for everything.” Hmm point to commercial. 2 vs 2 as we cleared the final rise of top. As we pryed ourselves out of the Jeep and stretched our legs it was incredible to think, here is this investor doing what he loves every day. Driving a 4x4 up to the top of the world with some crazy tourists looking for adventure. All the while his buildings are producing a steady flow of income. All his management is 3rd party and he reviews his reports once a week and checks in with his tenants and property managers. I was watching the sun peek its head over the horizon as he came over with a coffee and muffin. After a few minutes he turned and said “So have I sold you on commercial? And if you find a nice residential building with a decent cap rate let me know I might be interested.” I smiled as we enjoyed the coffee and sunrise. When it comes down to it, as asset classes, both have their merits. I think multi-family investing and lending is a safer bet in smaller centres. One only has to look at what has happened to commercial retail in small towns to know it can be a challenge. However, I think a large portfolio should definitely have a mix. When underwriting office and retailing plazas the lenders place a large amount of weight on the leases and quality of tenants. It is also very important to watch when leases are expiring and what the renewal clauses are. A complete review of the leases in paramount for commercial. If you are just chasing yield office or retail may get a better return but ensure you have large cash reserves. A well-placed multi-family building will provide with a stable and consistent cash flow for decades.
canada’s premier non-bank Lender We understand your financing needs. We offer fast turnaround and structures that can open new opportunities for your business. Single family homes Condo’s Rentals Investors Bridge and term financing Infill construction financing First and second mortgages
Phil Fiuza Managing Director, Single Family Mortgages
Mobile (416) 561-9224 Office (416) 607-4209 phil.fiuza@atriummic.com
Atrium is listed on the Toronto Stock Exchange ( TSX: AI ) Atrium mortgAge investment corporAtion is mAnAged by cAnAdiAn mortgAge cApitAl corporAtion – lic. 10284
BUSINESS STRATEGY / LEADING INCENTIVES
A ‘BRIDGE’ TO SUCCESS:
THE MORTGAGE INVESTMENT CORPORATION(MIC) Rules are tightening, but you know this. What you may not know is how effective a MIC can be in winning support for those complex client files. Olivia D’Orazio lays out a starter guide for increasingly curious agents
30 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
We hear you: As banks and even Alt-A lenders tighten their purse strings, you’ve been left to grapple with the growing number of client files unable to win financing. Maybe the borrower is looking to purchase a large rural property, or maybe they’re ready to build their dream home, or perhaps their credit isn’t as strong as it could be. Either way, you and your no-longer-A clients are faced with fewer options. But there is one strategic player an increasing number of seasoned brokers are partnering with, the mortgage investment corporation, or MIC. If you’ve never used the services of those lenders (once a boast among some “A” brokers), there are a few intricacies you’ll need know.
THE KIND OF CLIENT
Corp., says his company often provides funding for million-dollar homes. “[We help] clients who are having issues qualifying under rules that have been set out by the regulator,” he says. “So the self-employed, those who need higher mortgage balances, properties in excess of a million dollars.” But it’s no longer just clients with poor credit scores or those who don’t have enough liquid capital for a down payment who most benefit from MICs. Graves says brokers should explain to their clients the benefits of using a MIC; for example, clients who need funding for a construction project. “The types of clients we see are a lot stronger than we’re used to because the banks are being stricter than they used to be,” he says. “We’re seeing stronger business and stronger clients.”
Not all clients will benefit from a MIC. Those who cannot get financing from traditional lenders, like banks or monolines, often turn to MICs for funding for their various real estate projects. “We serve a niche within a niche,” Michael Graves, marketing manager and business development officer of W.A. Robinson Asset Management Ltd and Pillar Financial Services Inc., tells CMP. The company, which also includes Frontenac Mortgage Corp., finances rural properties and construction projects, and helps those with bruised credit scores get funding. Phil Fiuza, the managing director of singlefamily mortgages at Atrium Mortgage Investment
A good portion of that “stronger business” comes despite the sticker shock of some MIC rates. The lenders, says Fiuza, nonetheless fill a gap in the market and provide individuals with financing that they might not get otherwise. “There’s a reason why a MIC gets a deal,” he says, “and it’s because [the client] got turned down from an A-lender.” Graves says he encourages borrowers who say they’ve found a cheaper rate to go with that lender. “If you can get a better rate, you’ll likely be outside the MIC realm,” he says. “But if you’re at a point
APPOINTMENT NOTICE W.A. Robinson is pleased to announce:
HIGHER RATES
Matthew J. Robinson is named Chief Executive Officer and Portfolio Manager of W. A. Robinson Asset Management Ltd. effective July 1. Matthew Robinson succeeds Wayne Robinson, who founded the company in 1980 and who will continue as a senior advisor. Matthew Robinson obtained his real estate broker licence in 2000 and his mortgage broker designation in 2004. He earned his degree at Queen’s University and has been working with the Robinson Group for 18 years.
Based in Sharbot Lake, Ontario, the Group includes W. A. Robinson Asset Management Ltd.,Pillar Financial Services Inc., Frontenac Mortgage Investment Corporation (fmic.ca with AUM of $135 million) and Lake District Realty Corp. It has provided independent financial counsel since 1985 and has managed mortgagebased investments since 1986.
Matthew J.Robinson B.Sc., CIM, AR
For more information visit: robinsonsgroup.com and lakedistrictrealty.com
AUGUST 2014 | 31
BUSINESS STRATEGY / LEADING INCENTIVES
where you’re talking to a MIC, you’re getting to a point where you’re looking at higher rates.” Indeed, brokers and borrowers alike should know – without a doubt – that mortgages from MICs will have higher interest rates and higher fees. But, Graves adds, you’ll also find much shorter terms with a MIC, usually just one or two years. Nick Kyprianou, president and CEO of River Rock Mortgage Investment Corp., said MICs are like a bridge between a borrower’s current situation, and a situation in which they’re able to qualify for a loan from a bank or other A-lender.
“In order for this type of capital to be available, these fees need to be there,” “Borrowers come to MICs for a short-term gap,” he says. “They fix whatever they need to so they can get back into traditional lending.” Often times, borrowers will use a MIC to get into the market and raise enough equity that their loan would be appealing enough for a bank or other A-lender to take on. “We often see people come in then get out [after their term has ended] and sell their home or get refinanced at a bank,” Graves says. “[Brokers] want to get the deal funded and get that [client] to try and turn around their situation. The rate isn’t as big of a deal when it’s just one year.” Most MICs also want to help the client with an exit strategy. “We need to know that you can get refinanced, finish building your home, sell your home,” Graves says.
WHERE THE MONEY COMES FROM In order to understand why MIC rates are so high, it’s important to know where the money comes from. Remember that MICs are investment corporations, and must keep their own clients happy. “In order for our investment to be of interest to
32 | AUGUST 2014
investors, we have to provide them with a yield that’s better than other investments,” Fiuza says. “In order to get that yield, we have to charge a higher interest rate on the mortgage.” Where brokers are loyal to their clients, MICs are loyal to the business and to their investors, who provide the capital for the loans and mortgages. “MICs have an obligation to pay investors,” Kyprianou says. “The [MIC’s] management needs to make a return, so MICs need to charge a rate over and above what they’re paying the investors, plus pay employees’ salaries and rent. It’s just like a bank, it’s just that the costs are higher for a MIC.” There are two types of MICs: private and public, with public MICs being traded on an exchange. Capital for the mortgage that a borrower receives from a MIC is funded by individuals or investment groups who invest in MICs for a certain yield. “We raise capital by selling to portfolio managers at a yield of six to seven per cent,” Graves says. “It’s GIC plus three. Then the manager and administrator take a point-four for what they’re doing. “So in order to get that [yield] out to the investor, we need to [charge borrowers] eight to 12 per cent.” Graves adds that construction, which is the riskiest type of loan, has rates between 10 and 12 per cent, while debt consolidation-type loans have rates from 6.99 to 9.99 per cent. “In order for this type of capital to be available, these fees need to be there,” Graves says. Indeed, the MIC must mitigate any possible risks and ensure that any losses it incurs aren’t passed on to their investors. “It’s all related to the risks,” he says, “to make sure the company can keep operating and serve those that are in need. That’s why you have the higher rates and the fees.”
COMMON MISTAKES Aside from the readily available capital that borrowers can take advantage of, MICs also provide an opportunity for clients and their brokers to explain why they aren’t going through traditional lending routes. But, Fiuza, Graves and Kyprianou agree, that tends to be one of the arenas in which brokers drop the ball. “There’s a reason why a MIC or a B-lender gets a deal and it’s because [the client] got turned down
MORTGAGEBROKERNEWS.CA
from an A-lender,” Fiuza says. “There’s a story there, and a lot of brokers don’t get that full story.” Graves says the banks don’t have the time or money to look at every lender’s story, but instead use a formulaic approach. “That’s where we come in,” he says. “We listen to the story and verify the information, but we’re more flexible.” MICs, Fiuza says, need to know the full story – not just the positive points. “We need to look into that story,” he says. “It’s an exception to the market and we need to know why we should let them borrow this money.” Indeed, Graves says MICs want to know everything about who they’re lending to: the story of client, their character, their credit and their collateral. “We need to price it accordingly,” he says. MICs are also better prepared for the types of situations that clients will be in and, unlike banks, MICs are equipped to handle those types of clients. “Give [MICs] all the information,” Kyprianou said. “You don’t need to hide anything. Tell me everything and I’ll make it work for you.” Kyprianou also said that River Rock doesn’t require support documentation, but is satisfied with self-proclaimed documents. They also accept clients with poor credit and don’t have a minimum gross debt servicing or total debt servicing.
REGULATION While this we’ll-accept-anyone attitude that MICs
often embody is likely to attract brokers and clients looking for risky loans, investors are put at ease by the MICs offering memorandum, the documentation that regulates the MICs’ operations. “In [the offering memorandum], you list what kind of people you lend to and the potential risk, so people can decide if they want to invest,” Kyprianou explains. “Banks need to follow much more stringent guidelines because their depositors are being guaranteed by the federal government.” Therein lies one of the loudest complaints that brokers and borrowers have about MICs: the seeming lack of governmental oversight. But in addition to the offering memorandum, MICs are strictly regulated and those regulations are getting tighter as more borrowers turn to MICs for financing. “There are rules laid out in the Income Tax Act,” Graves says. “Those rules have been in place for many years.” Graves says Matt Robinson, the CEO of Pillar Financial Services and W.A. Robinson Asset Management, and Wayne Robinson, the founder of Pillar, W.A. Robinson, and Frontenac Mortgage Investment Corp., have been in talks with the Ontario Securities Commission regarding MIC regulation. “We are regulated and … as these entities grow larger, you’ll see more regulation,” Graves says. “And the most compliant MICs are the ones that are going to survive over the years.”
®
AUGUST 2014 | 33
BUSINESS STRATEGY / SECRET #18
ORGANIZE YOUR TIME AND BUSINESS WILL BOOM That’s another secret to becoming a superstar mortgage broker, writes Doren Aldana: Prioritize high-return activities to reap the rewards
34 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
There are “Real Advantages” to joining RMA MORTGAGEBROKERNEWS.CA
SECRET #18: SUPERSTARS BLOCK SCHEDULE TIME EVERY WEEK. What are high-return activities? These are activities that, if implemented consistently, can bring you the most amount of profit in the shortest period of time. In short, they have massive impact on your bottom line. I call these activities “the shortest path to the cash” because they have a way of cutting through all the clutter and BS and getting you to focus on what actually makes you money. You see, the average mortgage professional tends to confuse activity with productivity — they focus on being “busy.” Superstar mortgage professionals, on the other hand, focus on being productive. The former is activity-oriented, the latter is resultoriented. So, one of the hidden secrets of superstar mortgage pros is that they find ways to leverage their time by doing the activities that produce the highest results possible. The first step to increasing your productivity is to find out what is hindering your productivity. Consider these three questions:
“Solid management, best commission structure and all the support a broker needs... that’s what I’ve enjoyed in my five years with RMA.”
Mary McFarlane RMA Mortgage Broker Hamilton, ON
1. What do I do on a regular basis that does not qualify as a high-return activity? 2. Which of these activities can I delegate or delete? 3. How can I systematize or streamline these activities so they take less, or better yet, none of my time?
If you think you can’t afford to hire an assistant, think again! In most cases, it actually costs you more NOT to delegate than to delegate, even if all you do is hire a part-time assistant to start off with. For example, if you want to make $100,000 per year and you work 50 weeks per year at 40 hours per week, your hourly income needs to be $50 per hour. However, if you’re handling all of the administrative minutia – that you could easily delegate to someone for $15/hour – your income will drop accordingly! That’s why superstar mortgage pros always have at least one assistant and in some cases, they even hire processors and underwriters, so they can focus on what makes money: sales and marketing. The first step in this whole process is to identify your high-return activities. Starting today, make a list of your TOP 3 highest-leverage activities that if acted upon would make the greatest positive impact on your bottom line within the next 90 days or less.
It’s in your best interest ™
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AUGUST 2014 | 35
BUSINESS STRATEGY / SECRET #18
Here are a few examples:
1
Database Marketing. If you already have a database of prospects, clients and referral partners, this is the easiest money you’ll ever make. It’s like shooting fish in a barrel. Here are a few proven campaigns:
Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and has won the “Best Industry Service Provider” award three years in a row at the 2012, 2013 and 2014 Canadian Mortgage Awards. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free copy of Doren’s new CD titled, “21 Secrets of Superstar Mortgage Brokers,” visit: www. SuperstarMortgageBroker.com
36 | AUGUST 2014
• Annual Mortgage Review Campaign – where you talk to your clients once per year over the phone and take them through a quick 15-minute diagnostic process to make sure their mortgage is still up-to-date and in sync with their shortterm and long-term needs. • Birthday Call Campaign – call your clients up on their birthday and say something like, “Hey Mr. Jones, I know we haven’t talked for a while but I thought if there was ever a good time to reach out and reconnect with you, this would be the day. Happy Birthday!” It only takes two to five minutes per year but this one call can build lasting “trust equity” with your clients like nothing else. • Monthly Client Newsletter – send a fun, entertaining, educational, home-spun-looking newsletter to your prospects, clients and referral partners every month like clockwork via direct mail and watch your repeat and referral business skyrocket! This is extremely powerful. • Weekly Email Tip – send your prospects and clients an email once per week (ideally using video) that provides valuable education on topics like financial literacy, home maintenance and the occasional mortgage and real estate tip. The better the content, the more often you can send... and receive “Thank You’s” instead of complaints. • Renewal Campaign – put a marketing system in place to contact all your clients at least five months prior to their renewal date. Use email, direct mail and a followup phone call to ensure you make contact with everyone. The more media methods you use, the better your results.
I could keep going but you get the idea. Now lets talk about the next high-leverage activity...
2
Referral Partner Marketing -- As you know, there are a lot of ways to skin the cat on this one. I recommend starting off with the highest capacity referral source that can send you
MORTGAGEBROKERNEWS.CA
the most amount of referrals: Realtors! Yes, I know they’re a pain in the ass but that’s because your whole approach with Realtors is flawed. You see, the key to massive success with Realtors -- or any other referral source for that matter -- is to offer so much unique value that you become irreplaceable and indispensable. To learn how to get Realtors chasing you, instead of you chasing them, watch my free online workshop at: www. ultimaterealtormarketingsystem.com
3
Consumer-Direct Marketing -- Again, there are more options here than you can shake a stick at. To help you cut through the clutter, here are three questions for determining the best strategy: a. Can it generate qualified mortgage leads profitably without having to cold call? b. Can it give me the added advantage of 3rd-party endorsement (i.e. a trusted source singing my praises) so I can gain instant credibility and position myself as a trusted adviser? c. Can it be automated or systematized so it takes very little work once up and running?
If you can get a solid YES to all of those three questions, you’ve got a winner! If you’d like to see an example of a killer strategy that fulfills all three of the above criteria, visit: www.done4umortgagebenefits. com So there you have it, I’ve just given you a proven roadmap to follow to ensure you’re focusing where it counts -- making money. Armed with that newfound clarity, now you’re ready to block schedule time in your calendar each and every week to focus on your high-leverage activities. I recommend dedicating at least one hour per day towards these high-impact, money-making activities -- the more the better! As Zig Ziglar says, “If you are willing to discipline yourself to do things you need to do when you need to do them, the time will come when you can do the things you want to do, when you want to do them.” In next month’s 19th secret, you will learn about a powerful lead generation secret that hardly anyone knows about... that can launch your profits into orbit. Stay tuned...
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FEATURE / BANKS VS. MONOLINES
Banks and monolines duke it out It may not be a fair fight but monoline lenders are known for punching above their weight. What sets these two popular lending options apart?
38 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
All brokers have their clients’ best interest at heart, which is why you carefully weigh all the options before suggesting a lender. For most typical residential mortgages this comes down to a bigname bank – like TD Bank or Scotiabank – or a monoline, like First National or MCAP. What can banks offer brokers? What’s the benefit of using a monoline? And what should brokers consider before recommending one lender over another? They’re questions that continue to occupy broker thoughts, no matter how long those mortgage professionals have been in the business. The answers, surprisingly enough, are changing in some interesting ways. Broker Christopher Molder with Tridac Corp. in Toronto says banks don’t usually have the same restrictions by which a monoline is often bound. “The bank doesn’t have the restrictions of the insurer on conventional mortgages,” he says. “So we have more flexibility when applying to mortgages.” Since a monoline’s mortgage portfolio is covered by one of three insurers, all mortgage applications – even those with more than 20 per cent down – must meet the insurer’s guidelines, whatever they are. With banks, however, mortgages with 20 per cent down don’t need the approval of the insurer. “There are fewer masters to serve [with banks],” Molder says of the process. Brad J. Compton, a Dartmouth, N.S.-based broker with Invis, says that some of his clients prefer working with banks for a different reason. “There are certain times when a client wants a physical branch where they can speak to someone face-toface,” he says. Additionally, banks tend to be better at selfpromotion, having spent decades creating brands that are widely recognizable. “In some cases, clients are very brand-aware and banks have done a really good job of that,” Molder says. “For whatever reason, there is a lot of trust in banks, so some clients insist in dealing with a big name bank.” Compton says that, with some clients, recommending a monoline will involve a lot of reassurance on the broker’s part. “If it’s a name they’ve never heard of, there is a bit of putting the client’s mind at ease, ‘Yes, it is a reputable institution,’” he says. Compton adds that banks are also more willing than monolines to lend on certain properties, like mobile homes or to non-resident borrowers. Compton also said banks tend to offer a more robust
PERCENTAGE OF YOUR MORTGAGES ORIGINATED THROUGH A BANK (2013)
26-50%
0-25%
51-75% 76-100% Source: 2013 CMP Broker Sentiment Poll
line of products, like all-in-one mortgages or a line of credit, though that trend is beginning to widen beyond banks. “Now some monolines are offering that,” he says. “Up until recently, you were only able to get those products from a bank.” Indeed, monolines, like First National and MCAP, are diversifying their product offerings to remain competitive. The interest rates and terms are often more appealing at non-bank lenders, and brokers looking to a trailer model – that is, getting paid at renewal – would need to go through a monoline to get that type of payment plan. However, the greatest draw to monolines is the trust they’ve built with brokers. “There’s less [reason with a monoline] to worry about the lender considering the client theirs,” Compton says. “Banks in the past have been very competitive with keeping the client. Monolines tend to be a lot more faithful.” Compton says it’s common for banks to require that clients go into a branch to sign the final documents. Brokers don’t have control over what bank employees say to that client who you have worked tirelessly with. “I’ve lost deals to banks,” he says, “but you don’t have to worry about that with a monoline.” AUGUST 2014 | 39
FEATURE / BANKS VS. MONOLINES
MORTGAGEBROKERNEWS.CA
One mortgage professional who has worked for both a top bank and a leading monoline, and who asked to remain anonymous, says what sets monolines apart from banks is the service they provide – particularly, the timeframes in which that service is carried out. “Approval [through a monoline] is quicker and [monolines] don’t have as many levels of approval, so turnaround is much quicker than at a bank,” she says. Monolines, she explains, often have a onecommittee approval process; banks, depending on the size and the terms of the loan, must filter potential deals through several layers of approval. More complicated deals will take longer, since committees will be forced to direct the loan application to management tiers with the appropriate limits for that loan. So, where monolines
PERCENTAGE OF YOUR MORTGAGES ORIGINATED THROUGH A BANK (2014)
53.97% 0-25%
3.17% 34.92% 26-50%
76-100%
7.94% 51-75%
PERCENTAGE OF YOUR MORTGAGES ORIGINATED THROUGH A NON-BANK (2014)
9.52%
25.40% 76-100%
0-25%
15.87% 26-50%
Source: 2014 CMP Broker Sentiment Poll
40 | AUGUST 2014
49.21% 51-75%
can pull an application through the approval process in a day or so, in some cases it takes banks two to three weeks to do the same. Monolines are also more progressive – and therefore, more flexible – when it comes to their products, Molder says. “You get more generous prepayment policies,” he explains. “It has to do with flexibility for the client, so when and if they have to break the mortgage, the penalties are a lot lower at monolines than the bank.” But the greatest benefit to a monoline, according to the brokers we spoke to, actually stems from the fault of many banks: their tendency to draw clients from brokers. “Once you send a client to a bank, it’s unlikely that you’ll see them ever again – at renewal or in the future,” Molder says. “The bank is a lot stronger at building a fence around their clients.” Another problem with banks is their unreliability. “We’ve seen banks pulling out of the broker landscape,” Compton says. “Just because you’re dealing with them today doesn’t mean you’ll be dealing with them a year from now. So who knows what will happen with the bank [when it] doesn’t have that relationship with brokers.” Banks – particularly TD Bank – also tend to register all their mortgages as collateral, a move that brokers are not keen on. “TD is in the habit of registering all their mortgages as collateral charges,” Molder explains, “and that’s a way of building a fence around their clients and I wouldn’t want to compromise a client like that.” But monolines aren’t angels in the lending realm. Molder says non-bank lenders have certain restrictions that big banks often don’t. “The biggest con [to monolines] is the restrictions that insurers or investors put on the underwriting of certain mortgages,” he says. “And sometimes monolines are really restricted by the policies or the terms put in place by investors and the source of funds. You could be dealing with a lender for years, and then they could get a new investor and new policies that come with that investor and that causes a lot of frustration.” Ultimately, it’s up to brokers to analyze the products that banks and monolines each offer, and determine what best suits the client’s needs. “I think there’s room in the marketplace for both banks and monolines,” Compton says. “It’s more of a rate and a term discussion than a bank and a monoline discussion.”
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FORUM / COMMENTARY
BEST OF TIMES; THE WORST OF TIMES
Two key announcements in the B space have brokers talking — and, yes, debating — the kind of change they’ll need to better service client demands. We’ve rounded up some of the broker commentary on MortgageBrokerNews.ca
42 | AUGUST 2014
“I have a very strong understanding of what B-20 did and I can leverage that knowledge to better serve brokers in the growing alternative space,” Gino Tieri, who has been appointed vice president of sales and marketing for Equity Financial Trust, told MortgageBrokerNews.ca. “I view Equity as becoming one of the leaders in that space over time.” Tieri brings with him 20 years of sales and marketing experience. After completion of his undergraduate degree in consumer marketing at the University of Guelph in 1992, Gino commenced a long and successful career in sales and marketing with time spent in a diverse set of industries, including technology, telecommunications, marketing services, and most recently financial services, according to Equity Financial’s press release. “Gino broke into the mortgage business in 2010 joining MCAP as VP of national sales, leading origination sales and marketing efforts in the mortgage broker channel.” Under Tieri’s leadership, mortgage broker originations at MCAP grew from $3.5 billion to over $5 billion annually. At the same time the former head at Equity Financial Trust has now established his own entity. As MortgageBrokerNews.ca reported in July, Nick Kyprianou will now
News
MORTGAGEBROKERNEWS.CA
InternatIonaL
&
u.s.
90.6% 52.1%
inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing. U.S. housing market worse than thought More than two years after the recession The number of Americans who bought previously focus on building RiverRock Mortgage Investment If a client has a first mortgage with a officially ended, many people can’t qualify for occupied homes rose in October. But the National bank, the term is not due before 18meet higher down payment Corporation. loans or Association of Realtors says it overstated more than how is “Due to the inafter residential Even those with excellent credit three million salesincrease during and the Greatmortgage Recession, months and he needs funds,requirements. to stable this jobs are holding off because they fear regulations being placed on weaker banksthan and trust it possible to be of any helpand showing the housing market was prices keep falling. Sales are also previously thought. And what of rate can wethat gethome them? It iswill OK companies,” he said, “we see tremendous client?Percentage homeownership being hurt by a decline The private trade group says sales rose four per about equity loans, but how do we help in first-time buyers, who opportunity to work with mortgage brokers in order to talkcosts, including areper critical reviving cent in October to a seasonally adjusted annual rate of client at payments, a fair rate, not 12 centtoor 18 perthe housing market. to assist them with securing financing for their self- thismortgage Sales have fallen in four of the five years 4.42 million. That’s below the roughly six million homes total loans of 75 per cent to value. employed, soft or poor credit and new immigrant centutilities and property since the housing boom went bust in 2006. a year that economists say are consistent with a healthy taxes that take up a Rhéau Séguin clients.” Declining prices and record-low mortgage rates housing market. But it’s ahead of 2008’s revised sales, typical household’s haven’t been enough to boost sales. now considered the worst in 13 years. monthly pre-tax to see Nick back lending in same time, home construction has BROKERS WEIGH IN its sales from 2007 to 2010 It is great At the The trade group revised in Vancouver a gradual comeback and should add to the per cent,alternative from more than 20.6 million to nearly ourincome industry. He has abegun keen Indown my 14opinion, financing and Toronto, economy’s 17.7 million. Among the reasons for the lower fi gures, understanding of what brokers growth in 2011 for the first year since will be the future in the mortgage respectively (RBC the Great the Realtors group says: changes in the way the Census needEconomics in the “B”Housing space and I know he Recession began in 2007. Last month, brokerage industry as the builders broke ground on an annual rate of Bureau collects data, population shifts and some sales will be aTrends great and resource on the deals that banks underwriting guidelines are 685,000 homes, the government said recently. being counted twice. trusts just Report) cannot fund.That Every it gets tightening under Bill 20. youand Equity andAffordability was aday 9.3 per cent jump from October and The Realtors consulted with Thank government just a little bit harder to handlepace income Financial Trustexperts, for leading thethe way. the fastest since April 2010. private housing including Federal Reserve, verification and low credit scores with our Angela Wong-Liao of Invis and Urban Development, Most economists say home prices will keep the Department of Housing by atIleast five per cent, through 2012. the Mortgage Bankers Association, the National traditional institutional “B” falling, partners. am sure Many forecasts don’t foresee a rebound in prices Home Builders, mortgage giants Fannie RiverRock will be a great resource. ItAssociation is about of time that self-employed until at least 2013. Mae and Freddie Mac and CoreLogic, a California-based Ron Butler people, small business owners get The high rate of foreclosures has made data firm that first raised doubts about the annual some respect. Everyone says small resold homes cheaper than new ones. The numbers earlier this year. businesses arehas the back bone Good news for sure, Nick. I welcome median price of a new home is roughly 30 per CoreLogic estimated thatof theour Realtors group economy, their back being another experienced entrant centinto above the price of one that’s been occupied overstatedyet sales in 2010 by bones at leastare 15 per cent.broken by pushing themnumbers to private the B space. Hopefully this will put before – twice the normal markup. Investors are The changing couldmortgage affect how lenders. economists taking advantage of the discounts. view theKhan tradeof group’s data. It could also affect companies some downward pressure on Hensey Hensey Financial rates The housing market is struggling even that use the figures for hiring and expansion plans. and fees on the “used to be A deals” applicants. as the broader economy has improved in Sales are measured when buyers close on homes. We need Alternative Lenders but long Daniel McKay recent months. But many deals are collapsing before that point. term players or professional unThe economy grew at an annual pace of two One-third of Realtors said they had at least one contract regulated per cent in the July-September quarter. Many scuttled in alternatives. October, up from 18 per cent in September. Anonymous economists expect slightly better growth in the Contracts are being cancelled for several reasons: October-December quarter. CMP Banks have declined mortgage applications; home
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mortgagebrokernews.ca
AUGUST 2014 | 43
BUSINESS STRATEGY / MOTIVATION
WHY YOU NEED MOTIVATED AND CAPABLE EMPLOYEES
Mark Oliver explains why businesses need to understand the basics of human motivation in order to increase employee satisfaction and productivity in the workplace
44 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
Motivation combined with capability tends to lead to effective behaviours, and behaviour underpins performance. To get the right answer to the question above, it helps to ask the right question, and the question in this case would be: how do we get our employees to perform better? If someone has the capability but not the motivation to do something required to perform, then the necessary behaviour is very unlikely to arise and they will not perform; similarly, if someone has the motivation but not the capability. You need both motivation and capability for performance.
WHY MOTIVATION IS KEY The second question that follows on from this is: which is most important with regard to performance – motivation or capability? At first it would seem that the more important of the two would be capability, and there is often a great emphasis on training in the workplace to enhance that. The appropriate training is important and, after all, motivation is not trainable, so one might wonder what is the use in focusing on human motivation? But look more deeply and you will realize that motivation is much more important than capability in the wider context of both professional and personal life. In short this is because of two facts:
1 2
Motivation determines what you do; in many ways it determines the path you take at work (and in life). If you do not have the motivation, your capability becomes largely irrelevant. Not surprisingly then, motivation precedes capability and often leads to capability.
Given all this, the third question becomes very important: what can we do to increase motivation? To answer this you can split the factors affecting motivation into two parts: internal and external to the individual. Internal factors: The internal factors include a person’s personality (values, beliefs, etc.). An important time to look at this is when recruiting
If you do not have the motivation, your capability becomes largely irrelevant. Not surprisingly then, motivation precedes capability and often leads to capability individuals, and it is wise to use good psychometric instruments to help increase the accuracy of your decisions, such as the Universal Hierarchy of Motivation Professional Report (see accuratesurveys. com), especially as they are so cost-effective. External factors: Key external factors are the systems and structure of the organization. But it is often difficult to predict how these affect human motivation. Consider the real-life example of a day-care centre that encountered tardy parents at closing time each day. This situation led to anxious children and frustrated careers. A solution put in place by several day-care centres in Haifa, Israel, was to fine parents $3 if they were more than 10 minutes late. Rather surprisingly, this solution had the opposite effect and the number of late parents more than doubled after the fine was introduced. It turned out that the guilt the parents felt in being late was motivating them to be on time, but now the payment of a small fine assuaged these feelings and they were less motivated to be punctual. A good model on human motivation is helpful because it helps you to predict better what the actual outcomes will be. The Universal Hierarchy of Motivation (UHM) provides the basis for a complete understanding of human motivation so that you can accurately predict what behaviours will result from system or structural changes. For instance, many people still believe that bonuses AUGUST 2014 | 45
BUSINESS STRATEGY / MOTIVATION
UHM LEVEL
MOTIVATIONAL DRIVE
INTRINSIC MOTIVATOR
EXTRINSIC BEHAVIOUR
7
MEANING
OPTIMISM
GRACE (COURTEOUS GOODWILL)
6
WISDOM
UNDERSTANDING (LISTENING)
FEEDBACK (NOT CRITICISM)
5
COURAGE
EMPATHY
ACCOUNTABILITY
4
COMPASSION
SYMPATHY
COOPERATION
3
POWER
PRAISE (GENUINE)
COMMITMENT
2
PLEASURE
HUMOUR
INVOLVEMENT
1
SURVIVAL
BELIEF
SATISFACTION
make employees work harder and more effectively. Alfie Kohn, a teacher-turned-writer, found that the more you reward a person with grades or incentives, the lower the person’s productivity. In this context, individuals become less intrinsically motivated. Bonuses (extrinsic motivators) actually reduce people’s performance on complex tasks because they limit individuals’ capacity to fulfil the task by changing their focus to how to get the best bonus.
How much an employee is ‘engaged’ to the organization has been shown in many studies to have a direct correlation with productivity INTRINSIC MOTIVATION American psychologist Edward Deci observed that tangible rewards inevitably reduce the intrinsic motivation of individuals. He stated: “the facts are absolutely clear, there is no question that in virtually all circumstances in which people are doing things in order to get rewards, external tangible rewards undermine intrinsic motivation”. 46 | AUGUST 2014
(There is one exception to this observation. This involves jobs where there is little intrinsic motivation, such as simple repetitive manual tasks, and in that case rewards do tend to increase output or productivity.) The UHM helps you to understand human motivation comprehensively and so makes the most accurate predictions on what people’s motivation (and hence resulting behaviour) will be, given a set of system or structural changes. The higher UHM level we are at, the more impact we have on our own and others’ lives. The UHM levels are shown in the table above, correlated with the relevant intrinsic motivator and extrinsic behaviour. How much an employee is ‘engaged’ (feels an emotional bond) to the organization has been shown in many studies across industries to have a direct correlation with productivity. International studies have found that employees who were fully engaged in their work were almost 50% more productive in terms of revenue generation and 300% better at delivering value than their disengaged (disaffected) colleagues. The ‘extrinsic behaviours’ in the table correspond to increasing levels of positive engagement, going up the table, and starting with the lowest one: satisfaction at work. The UHM theory explains the observations that paid bonuses at work are poor motivators because they only move employees’ motivation to the level of pleasure, which renders them less able to deal with greater and more complex challenges which are best dealt with at a higher level.
MORTGAGEBROKERNEWS.CA
CONCLUSION So to get the best performance (or combination of people’s motivation and capability) from those employees you currently have in the organization, it is critical that you provide the structures and systems (including pay systems) that will help to motivate them at the higher levels. To be able to understand and predict what these are, you have to have a very good model or framework describing human motivation. Once you have set up the environment in your organization that achieves this, only then is it worth investing time and money in training your employees. If you do it the other way around, the risk is that not only will the employees not use the new skills they acquire in their training but also they are more likely to leave the organization, which means someone else is likely to get all the investment you have made in them!
Mark Oliver is managing director and CEO of MarkTwo Consulting, and author of The Seven Motivators of Life. Visit marktwoconsulting. com or lulu.com.
Sophie Bush
Marketing Manager
1-604-530-7430 sophie@vwrcapital.com www.linkedin.com/in/sophiebush
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www.vwrcapital.com AUGUST 2014 | 47
BUSINESS STRATEGY / LEADERSHIP
GETTING INSIDE OUR
HEADS Taking your team to the next level means understanding your employees and yourself. Jill Fraser reports
“A good leader possesses two key attributes, the ability to set direction and the skill to drive people towards that direction, motivate and align them and ensure that the direction appeals to their hearts as well as their heads.” Their hearts? Twenty years ago, an article on leadership would have reflected the domination of boardrooms by alpha males who believed that emotions and
48 | AUGUST 2014
feelings in an office environment were about as relevant as children’s storybooks and as welcome as T-shirts, and probably kicked off with something like: “A good leader recognizes that business strategy is a highly rational process of eliminating variables and maximizing opportunities.” Leadership in 2012 is a much more holistic concept: leadership training institutions such as Deloitte’s Leadership Academy use the analogy of children’s stories to encourage business leaders to tap into their own stories in order to become more open, honest, transparent and real—whereas employees wearing T-shirts is now a universal sign in major corporations around the globe, showing that a relaxed dress code lifts staff morale, acknow ledges individuality, and potentially increases creativity and productivity. Today, as expressed in the opening quote by Deloitte’s Leadership Academy chief and founder, Tom Richardson, good leadership engages the heart as well as the intellect, and encompasses a number of key qualities. Richardson established the Deloitte Leadership Academy to expand the capabilities of leaders after recognizing that ‘people, not PowerPoint’ drove organizational performance. He has years of experience in the leadership stratosphere— working intimately with 15,000 top business leaders—and so is uniquely placed to explain why leadership is a people game. “The characteristics and capabilities of good leadership are universal across almost all indus tries,” he says. “But it’s become more and more important in the finance industry because of the pressure around bonuses and remuneration. “People will only stay in an organization if they feel connected and engaged. They’re not being paid to stay there with bonuses anymore. The need for leaders in the financial services industry to build up their people skills has become increasingly important.” Andrew Henderson, a veteran of leadership management, introduces the term ‘leadership charisma.’ “It’s to do with connection: a connection that makes me feel that my leader is charismatic and the only way that connection will be established is if my leader has the emotional intelligence to understand me—what motivates me, why I’m here, how I react. “Unless leaders understand and invest in their people, they will not be able to influence them
MORTGAGEBROKERNEWS.CA
because when they want to rally their team to do something, the reaction will be ‘you only want us to do this because of what you will gain,’ ” he adds. “But, if each individual knows from experience that their boss is invested in them, listens to them (consultative leadership) and honestly cares about them, they will trust the leader’s decision on behalf of the team. That’s leadership charisma,” Henderson maintains.
LEADERSHIP: KEY QUALITIES
EMPATHY COMMUNICATION PROCESS & TACTICAL ORIENTATIONS
LOGIC
NEUROSCIENCE IN ACTION A high-trust factor is paramount in the leaderemployee equation in the insurance industry, says John Toohey, professor of business psychology at the Graduate School of Business and Law, RMIT University, because of the nature of the business and the fact that a culture initiated and practiced at the top is mirrored down the line and will eventually shape customer relations. Toohey familiarizes his graduate MBA students with neuroscience to add weight and credibility to the argument that the most effective, charismatic leaders function from their emotions. “Through neuroscience, which looks at how the brain operates, we have come to realize that decision-making is primarily emotion-based,” explains Toohey. “The emotional parts of our brain kick in long before the rational parts. The rational parts follow and try to make sense and contextualize. “A lot of men in business are afraid of that component, and don’t want to know about it. The executive education I’ve done in this area is fascinating: people have quite bemused smiles when I first tell them this, but as they dig into it and I show them the research they begin to look more bewildered than amused.” Toohey contends that an area of critical impor tance in business education is the nature of beliefs and biases. He teaches that the brain is highly
EYE FOR DETAIL
INSPIRATION
EMOTIONAL INTELLIGENCE & SELF-AWARENESS ‘BIG PICTURE’ VISION
AUTHENTICITY
plastic/durable. Beliefs belong to the irrational/ emotional world, and a strongly held belief can change the neural pathways of the brain (thus the plasticity). “Leaders usually don’t understand this and therefore don’t get the impact,” he says. The significance of all this, Toohey says, is to highlight the relevance of self-awareness (what we believe, how we behave, and why) in what he refers to as the “psychology of strategy” for leaders to “inspire people to act in predictable ways.” “I challenge managers and executive MBA students because usually they are very good at identifying biases in others, and very poor at identifying them in themselves,” adds Toohey. “I tell them, ‘If you don’t understand yourself, go and grow cabbages or do some other solo job.’ “Don’t pretend that you can go into a business and take a leadership role, because you’ll only make a mess of it. If you don’t understand yourself you’re never going to understand others; you’re never going to be able to motivate them.”
We Need 2 or 3 Good Agents for Alberta
B etter rates. Better products.
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• We provide the work • We pay $50,000 salary plus commission • We’re very busy
Interested? Send resume to: info@mortgagestogo.ca AUGUST 2014 | 49 (no phone calls please)
NEWS ANALYSIS / BUSINESS LEADERSHIP
LEADERSHIP
ARE YOU ON TRACK?
Do you have a business leadership plan to see you through the challenges ahead? Fascinating research suggests that industry leaders are always thinking one step ahead
50 | AUGUST 2014
These days, mortgage brokers are faced with a mountain of business advice, but are you aware of how your peers are facing up to the challenges ahead? New research hopes to provide some answers to this question, illuminating the leadership strategies that market leaders in the mid-size business space are employing. So, what are the leadership trends that brokers should consider following in their own businesses? According to the recently released Business Leaders Report, mid-size businesses currently have a heightened focus on people-based strategies to overcome future business challenges. Breaking this result down into its constituent parts reveals that recruitment of talent and staff retention are the big issues that business owners are focusing on to avoid disruption: just over 41% of respondents ticked the talent recruitment box, while almost 37% opted for staff retention.
MORTGAGEBROKERNEWS.CA
AVOIDING BUSINESS DISRUPTION Which of the following would the business in which you work need to focus on in order to overcome potential challenges that could disrupt the overall direction of the business? Recruitment of talent
41.2%
Staff retention
36.5%
Pricing strategies
36.5%
Diversification of products and services
31.8%
New distribution channels
30.6%
IT/technology upgrade
22.4%
So what should brokers do to keep their staff engaged? The report’s results suggest that the two most important motivational strategies are: • being a good role model and fostering employees’ ownership of a common vision and goals • focusing on individual team members, including providing coaching and mentoring
LEADING STAFF Are the following approaches to leadership very effective in motivating and influencing staff? Being a role model to foster ownership of common vision and goals
61.2%
Focusing on the individual and providing coaching and mentoring
58.8% 32.9%
Social media marketing
18.8%
Providing non-monetary reward in recognition of effort and/or achievement of goals
Traditional advertising/ marketing activities
17.6%
Leading in a command and control structure
32.9%
Debt reduction
17.6%
31.8%
Team-building activities
16.5%
Leading by charisma to raise expectations and beliefs
Acquisition of competitors
25.9%
11.8%
Providing monetary reward in recognition of effort and/or achievement of goals
Obtain more capital
9.4%
Business insurance
7.1%
Other
2.4%
Source for all infographics: Bankwest Business Leaders Report. Multiple answers allowed.
“Perfecting your leadership strategy is crucial for any business and the Bankwest Future of Business Series report certainly supports that in identifying some specific trends, particularly around people-based strategies and new techniques for motivating staff,” says executive general manager of business banking Sinead Taylor.
Given the importance that retaining the right people plays in avoiding business disruption, the report’s authors suggest that leadership and staff motivation are crucial. Interestingly, while the report highlights that monetary rewards and open recognition are common motivational strategies for many businesses, respondents appeared to suggest that these aren’t necessarily the most-effective routes to take.
Adopting the best leadership style to get the best out of your team is crucial to any business leader, and brokers are no exception. After all, as Taylor points out, “profit comes from productivity and we all know that a motivated team is a benefit for any business.” What’s the favoured leadership style among mid-sized businesses in Canada? If the results of the Bankwest report are anything to go by, a
LEADERSHIP STYLE
AUGUST 2014 | 51
NEWS ANALYSIS / BUSINESS LEADERSHIP
GENERATIONAL APPROACHES democratic approach to leadership is by far the most popular one. Over 47% of the business leaders surveyed opted for the democratic approach, leaving transforma tional leadership in a distant second place with a response rate of 18.8%. The full results were as follows:
Do you believe there is a difference in which approach of leadership best motivates and influences senior staff and junior staff?
Yes 70.6%
PERSONAL LEADERSHIP Which of the following best describes your personal leadership style? 1. Democratic Share the decision-making abilities with employees by promoting the interests of the employees and practising social equality: 47.1% 2. Transformational Work to change or transform employees’ needs and redirect their thinking. Create a vision of what you aspire to be, and communicate this idea to others: 18.8% 3. Paternalistic Act as a father or mother figure by taking care of your subordinates as a parent would: 15.3% 4. Authoritarian Keep strict, close control over employees by keeping close regulation of policies and procedures given to employees: 12.9% 5. Transactional Motivate employees through a system of rewards and punishments. Focus on increasing the efficiency of established routines and procedures:
Not sure 11.8% No 17.6%
Which of the following leadership approaches do you believe are most effective for junior staff? Focusing on the individual and providing coaching and mentoring
71.7%
Being a role model to foster ownership of common vision and goals
58.3%
Providing monetary reward in recognition of effort and/or achievement of goals
38.3%
Leading by charisma to raise expectations and beliefs
31.7%
Providing non-monetary reward in recognition of effort and/or achievement of goals
28.3%
Leading in a command and control structure
26.7% 1.7%
Other
4.7%
6. Laissez-faire All the rights and power to make decisions are fully given to the employee: 1.2%
GENERATION GAP Given that mortgage brokering is an industry that is encouraging fresh young talent to give it a go, one set of survey results that brokers with an eye on the future would do well to pay attention to are the responses to questions on how to work with junior staff. More than seven in 10 respondents, for example, cited the need to employ different motivational tactics with junior and senior staff. When it came to identifying strategies to get the best out of junior staff, 71% of respondents said focusing on providing coaching and mentoring was effective. At the other end of the experience scale, 73% of respondents said the top approach for leading senior staff was to lead by being a role model.
52 | AUGUST 2014
Which of the following leadership approaches do you believe are most effective for senior staff? Being a role model to foster ownership of common vision and goals
73.3%
Providing monetary reward in recognition of effort and/or achievement of goals
48.3%
Focusing on the individual and providing coaching and mentoring
46.7%
Providing non-monetary reward in recognition of effort and/or achievement of goals
43.3%
Leading by charisma to raise expectations and beliefs
35%
Leading in a command and control structure
30%
Other
0%
MORTGAGEBROKERNEWS.CA
There also appeared to be a consensus on the need to incentivize junior and senior staff in different ways. For example, almost three in five respondents said career progression opportunities
were most effective for motivating junior staff, while 48.3% believed cash bonuses were the best way to motivate senior staff.
INCENTIVES
Not sure 18.9%
Do you believe there is a difference in the effectiveness of the current range of incentives in the business in which you work in motivating junior staff and senior staff?
Yes 54.7% Which of the following incentives do you believe are most effective for junior staff?
No 26.4% Which of the following incentives do you believe are most effective for senior staff?
Career progression opportunities
58.6%
Cash bonuses
48.3%
Cash bonuses
51.7%
Additional contributions to super
41.4%
Time in lieu
44.8%
Career progression opportunities
37.9%
Gift cards
44.8%
Time in lieu
37.9%
Free or discounted tickets to events
24.1%
Free or discounted travel
37.9%
Retail discounts, including gym discounts
24.1%
Gift cards
27.6%
Free merchandise
17.2%
Free or discounted tickets to events
24.1%
Additional contributions to super
13.8%
Free or discounted meals or accommodation
24.1%
Free or discounted travel
13.8%
24.1%
Free or discounted meals or accommodation
10.3%
Discounts on insurance products, including health insurance
Discounts on insurance products, including health insurance
Retail discounts, including gym discounts
17.2%
10.3%
Free merchandise
13.8%
Other
3.4%
Other
3.4%
AUGUST 2014 | 53  
BUSINESS STRATEGY / LEADERSHIP
& FOLLOWING
LEADING
A leader requires followers. So why is all the focus on former and not the latter? Hilary Armstrong is looking to right that imbalance
Most of us want to be leaders. Leadership is snazzy, even sexy. We hear that Gen Ys want leadership now (or a month after they land a job), and that climbing upwards in an organization is the only way to be a successful human being. Our culture spends millions per annum on researching the role of leader, but we spend little effort or money on leadership’s essential role-mate, the follower. Being a follower is definitely not sexy. Most agree that leading is a role rather than just a position and that it exists at all levels of an organization and can be occupied by anyone. But following is also a role and can be occupied by anyone; in fact, it is by the majority of people in an organization. Yet we do not hear about it. There is an abundance of leadership ‘role marketing’ in job titles that have sprung up at all levels of an organization. There are executive leaders, senior leaders, department leaders, people leaders, area leaders and team leaders. The word ‘follower’ does not exist in any job title. However, it is present, and describes everyone else in the organization (as well as all the people in the leadership roles).
WHY MIGHT THIS MATTER? It matters because it disguises the authority assigned to people when they accept a leadership role, and 54 | AUGUST 2014
particularly how this authority shapes relationships. Think of being in the context of an organizational meeting when the CEO comes into a room. The CEO is treated differently to an executive assistant who walks in. This difference (or deference) shapes the conversation practices and outcomes of the meeting. Likewise, the physical environment shapes the relationship; for example, the C-suite positioned at the top of the building with the view, or open-plan spaces designed carefully around leaders sitting near the window; or a learning environment with the teacher standing at the front of the room. This is neither good nor bad unless we are unaware of it, because without awareness of the authority that a title gives, a leader may perpetuate unproductive relations with people they are meant to lead. Power, status and authority all shape relation ships in organizational contexts, and it is our awareness of the connection between roles, power and relationships that is important. Many people use their leadership roles and their status for the good of others. They are the effective leaders, the ones who are aware that their success as leaders depends on their followers’ success. More often people given leadership roles are unconscious of the role difference; of the entitle ments that a leadership role gives them. They are the ones who are blind to the reality that their
MORTGAGEBROKERNEWS.CA
Power, status and authority all shape relationships in organizational contexts, and it is our awareness of the connection between roles, power and relationships that is important
success depends on the success of their followers; who are unaware of their status and the privileges that accompany it, who forget the inescapable relationship between leader and follower. They are the ones who are likely to lead cultures of underground conversations, disengagement and disillusionment.
THE ROLE OF A FOLLOWER You may have heard the phrase ‘influencing up’ as a euphemism used by people in a follower role to indicate the presence of a dysfunctional leader. Many people feel powerless in the face of a dysfunctional leader (in fact, it is one of the main reasons for changing jobs). They experience themselves, rightly or wrongly, as having no voice. Martin Luther King once said, “The problem of the age is not the strident voices of the bad people but the appalling silence of the good people.” There is a helpless silence that many people feel when they perceive unethical practices being perpetrated by a leader who also has the power over their employment and career. There is a lot of research into effective leadership. An effective leader is authentic, inspirational, mindful, relational, strategic, has drive, expertise and is results-oriented. So what are the characteristics of an effective follower?
Successful “influencing up” means the courage to speak up in the face of destructive behaviours, taken for granted custom and practice, or a clash of values. It can also lead to the courage to make personal choices about staying in or leaving a role. An effective follower requires the wisdom to know when to take a risk or not, when to speak and when to remain silent; the self-discipline to come to work, do the job and feel satisfied at the end of the day, even in the face of difficulties, knowing that one’s identity, value and success are not necessarily shaped by work. Importantly, it involves having the ego strength to not confuse one’s personal value with one’s aspiration and ability to climb the organizational ladder. We are all leaders and followers and there is much to be gained from recognizing the inescapable relationship of these two roles. Loyalty and humility, quiet determination and diligence, as well as acting with grace in the face of others’ seniority, are all characteristics that an ineffective leader might think about next time they are put in the role of follower. This would give them the much-needed capacity as a leader to walk in their followers’ shoes, to remember that leadership is essentially a role that is in the service of their followers, and that their success ultimately depends on this.
Hilary Armstrong is director of education at the Institute of Executive Coaching. For further information, visit iecoaching.com
AUGUST 2014 | 55
MOTIVATION / SUCCESS
How to achieve success before it’s too late Still waiting for the right time to start investing or working towards creating the life you want? Time might be running out, as Matthew Michalewicz explains in his book Life in Half a Second
56 | AUGUST 2014
Everyone knows that life is short – it’s the most overpreached truth on earth. But how short is it, exactly? Planet Earth is 4.5 billion years old. The species you and I belong to, Homo sapien, did not emerge until some 200,000 years ago. The oldest known fossils of modern humans are only 160,000 years old, discovered in Herto, Ethiopia. So of the billions of years this planet has been floating through the nothingness of space, we’ve been around some 0.0044% of that time. Put another way, if our planet was exactly one year old, then modern humans would have only been around for the last 23 minutes. Measured on the same scale, if our planet was a year old, then your entire life would amount to half a second.
WHAT WOULD YOU DO IF YOU HAD ONE YEAR TO LIVE? We don’t appreciate this as kids. Time seems unlimited and goes by ever so slowly. We’re impatient to grow up, become adults, and enter the real world. We imagine all the freedom we’ll have, all the things we’ll get to do. But when adulthood finally arrives, we discover that we’ll be spending the vast majority of our ‘freedom’ at work, paying bills, surviving, often in jobs we don’t like or don’t care about.
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Life is not how we imagined it and disillusionment sets in. We spend our half second doing everything except what we really want, dreaming of the future, of some distant, faraway day when life will be different, better, when we can finally do the things we want. But as we grow older, time begins moving faster and faster, and our long-awaited day never seems to come. The tragedy of life isn’t that we only have half a second. The tragedy is that we waste it. In my travels across continents, countries, and cultures, first as a serial immigrant and later as a businessman, I met people from every walk of life imaginable. I became obsessed by a single question: What would you do if you only had one year to live? Why? Because I always received the same answer. With only a year to live, most people would quit work, spend time with family, see the world, and do everything they always dreamed of doing before it’s too late. Their answers would be thick with emotion – not sadness or regret, but enthusiasm, eagerness. I felt they were about to set sail on some journey they often fantasized about but never actually took. With heat and fervour, eyes flashing, gleeing almost, they spoke of the many things they would do before death claimed them. And after the hundredth question and hundredth answer, I finally thought, Good God! Can we only live when we’re dying? My impression of the world is that we spend life doing what we ‘have to’ rather than what we ‘want to’. This comes across in many psychology and happiness studies, especially those related to work. Harvard studies show that worker happiness is at an all-time low, with 74% of employees wanting to find a new line of work. At heart, we would rather be doing something else.
SO WHAT ARE YOU WAITING FOR? If we only had one year to live, our desire to start living – to use what’s left of our half second to the fullest – would become unstoppable and we would finally, finally, take action. But is that what it takes? Must we be confronted with death to finally do the things we want? Is that what we’re waiting for? Sadly, it seems so. Death always seems a long way off, a concept almost, as remote and abstract as the dark side of the moon. We don’t appreciate our mortality or fully comprehend how little time we have, so we
Do you have a bucket list? No? Then make one and do it now
defer our desires for another day. It’s not until death becomes more tangible, inevitable, that we realize our time is measured and we spring into action. We’re relaxed and laid-back about the time we have left because we measure our age in ‘years lived’. We know that 50 is older than 40, and 40 is older than 30, but so what? What does that really tell us? Not much. It’s like knowing how many litres a car has used without knowing how many litres are left. The most important information is missing. So what would happen if we measured our age in ‘days left’ rather than ‘years lived’? I bet we wouldn’t be as relaxed and laid-back. I bet that death would become less abstract. Let’s try it. The average life expectancy of the global population in 2011 is 70 years, ranging from 80+ years in countries such as Japan, Australia and France, to less than 60 years in South Africa, Laos and Kenya. Let’s assume you live in one of the 16 countries where life expectancy is more than 80 years, or that you’ll beat the odds and live to be 80. In either case, subtract your current age from 80 and multiply the result by 365. This is the amount of ‘days left’ you have – assuming all goes well and you don’t find yourself on the wrong end of ‘average’. I’m currently 37 years old, so 80 – 37 = 43, and 43 x 365 = 15,695 days. So that’s it. That’s all I have left: 15,695 days. And there’s something more meaningful about ‘15,695 days left’ than ‘37 years old’. I feel a sense of urgency, haste. There’s a countdown on my life. I’m in a hurry to live. The world is right there, outside my window, in the blueness of the sky, over the horizon, begging to be discovered, touched, appreciated. It’s all there waiting for me – so what am I waiting for? “I’m here to live, man, live!” I remind myself each morning. I want to lie in the grass, underneath the burning sun and swirling clouds, wind blowing, seasons changing, with the raw earth under my fingernails. From the largeness of the cosmos to the smallness of my little toe, I love life. And knowing that everything is ephemeral, fleeting, here one moment and gone the next, I’m not saving anything for later.
THERE MIGHT NOT BE A ‘LATER’ Like the great motivators that preach from stadiums and pulpits, I want to live full and die empty. AUGUST 2014 | 57
MOTIVATION / SUCCESS
MORTGAGEBROKERNEWS.CA
I’ve skydived, explored the great pyramids, sat next to the Moai on Easter Island, bungee jumped, owned Ferraris, driven 300km/h, rock climbed above Machu Picchu, sailed the Mediterranean, scuba dived on wrecks in the Caribbean, photographed the Nazca Lines from a light plane, touched the giant tortoises on Galapagos Islands, met the Pope, worked with Lech Walesa, and dined with Arnold Schwarzenegger – I’m not waiting for anything. Each morning I tell my wife and kids how much I love them, as if I’ll never see them again – each year I’m living like it’s my last, bucket list and all. Do you have a bucket list? No? Then make one and do it now, while you still can, while there’s still life and strength in your veins. If you only had one year to live, you’d do it now. Nothing would stop you. No amount of commitments, obligations or responsibilities.
That’s all I have left: 15,695 days. And there’s something more meaningful about ‘15,695 days left’ than ‘37 years old’. I feel a sense of urgency, haste. There’s a countdown on my life
Excerpted with permission from the author Matthew Michalewicz. Life in Half a Second is available at all good bookstores and online. Visit www.michalewicz.com.au
58 | AUGUST 2014
But because you measure time in ‘years lived’ rather than ‘days left’, the future seems unlimited, so you defer and wait. You do everything you ‘have to’ and very little of what you ‘want to’. But what are you waiting for? When you’re old and frail? When your desire has evaporated? When your loved ones are gone?
WHY ARE YOU STILL WAITING, DEFERRING? I see people doing it every day, everywhere I go, in airports, restaurants, factories, offices, classrooms – waiting and deferring.
I see it on their faces, in their eyes. They believe they’ve got all time in the world, so they wait and defer, putting off the things they ‘want to’ for another time, for ‘later’. And when later comes, they often feel it’s too late – that they’ve waited and deferred for too long. But why continue to wait and defer because you’re older today than you were yesterday? What sense does that make? You won’t have any more ‘days left’ tomorrow than you do today. What’s left is what’s left, and you must make the most of it. Harlan David Sanders certainly made the most of his ‘days left’. After a colourful life that included farming, piloting steamboats, and selling insur ance, he founded Kentucky Fried Chicken at the age of 65, immortalizing his 11 herbs and spices and becoming a multimillionaire in the process. Ray Kroc did the same, beginning his legendary transformation of McDonald’s into a global colossus while he was in his 50s. There are thousands of similar stories, as evidenced by entrepreneurial statistics. Consider that the ‘over 55’ category is responsible for starting 28% of all new businesses in the United States each year. The truth is that it’s only ‘too late’ when you’re dead. That’s the only time when it’s truly ‘too late’. Any time before that, the dice are still in play, the dealer still has cards to deal, you still have time.
NO TIME TO LOSE It’s not over till it’s over. But you don’t have any time to waste, nobody does. If you want more from life than the daily grind of work, routine, retirement and death, you’ve only got half a second to do it. To achieve success and turn your dreams into reality, the only time you’ll ever have is now. I don’t know who you are, where you live, or anything about your values or background. But I do know one thing: you’ve only got half a second. And you might be content to use that half second waiting and deferring, waiting and deferring – never quite knowing why or what for. But not me. I want to close my eyes knowing I made the most of life – knowing I never waited and I never deferred. If I had more time, I would have done more. But with the time I had, I did all I could. That’s why I’m in a hurry; that’s why I don’t have a moment to lose. There’s a countdown on my life. And guess what – there’s a countdown on yours as well.
t #2: c a F t n a Import
n an old o y a p u If yo unt you o c c a n o collecti h as 28 c u m s a may lose points. to our r e f e r Please icle for t r a t x e n facts! t a e r g more
THE DATA / BANKING BRANDS
GLOBAL BANKING BRAND VALUES Citi GLOBAL TOP 500 BRAND RANK: 24 BRAND VALUE (US$M): $24,518 BRAND RATING:
AA+
HSBC
BNP Paribas
GLOBAL TOP 500 BRAND RANK: 20 BRAND VALUE (US$M): $26,870 BRAND RATING:
GLOBAL TOP 500 BRAND RANK: 42 BRAND VALUE (US$M): $20,206 BRAND RATING:
AAA
AAA-
Bank of America GLOBAL TOP 500 BRAND RANK: 21 BRAND VALUE (US$M): $26,683 BRAND RATING:
AA+
Wells Fargo GLOBAL TOP 500 BRAND RANK: 15 BRAND VALUE (US$M): $30,242 BRAND RATING:
AAA-
Where do Canada’s banks rank among the globe’s 500 most valuable brands? Here’s how they performed compared to the top 10 banks, according to this year’s Brand Finance rankings 60 | AUGUST 2014
Chase
Santander
GLOBAL TOP 500 BRAND RANK: 28 BRAND VALUE (US$M): $23,157 BRAND RATING:
GLOBAL TOP 500 BRAND RANK: 43 BRAND VALUE (US$M): $20,021 BRAND RATING:
AA+
AAA-
MORTGAGEBROKERNEWS.CA
Source: Brand Finance Australia 100 2014/Brand Finance Global 500 2014
ICBC
China Construction Bank
GLOBAL TOP 500 BRAND RANK: 30 BRAND VALUE (US$M): $22,803 BRAND RATING:
GLOBAL TOP 500 BRAND RANK: 51 BRAND VALUE (US$M): $18,954 BRAND RATING:
AA+
AA+
TOP GLOBAL BRANDS The highest-ranked bank in the top 500 most valuable brands list was Wells Fargo at 15th. So who are the non-banking brands that dominated the top 10? Here’s how the global top 10 shook out: Rank
Name
Country
Brand value (US$m)
Brand rating
104,680
AAA
1
Apple
US
2
Samsung Group
South Korea
78,752
AAA
3
US
68,620
AAA+
4
Microsoft
US
62,783
AAA
5
Verizon
US
53,466
AAA-
6
GE
US
52,533
AA+
7
AT&T
US
45,410
AA
8
Amazon.com
US
45,147
AAA-
9
Walmart
US
44,779
AA+
10
IBM
US
41,514
AA+
Agricultural Bank of China GLOBAL TOP 500 BRAND RANK: 58 BRAND VALUE (US$M): $17,783 BRAND RATING:
AA+
TOP CANADIAN BRANDS Here are Canada’s top 10 most valuable bank brands Rank
Name
Brand value (US$m)
Brand rating
1
RBC
11,060
AA+
2
TD
10,855
AA+
3
Scotiabank
7,717
AA+
4
Bank of Montreal
7,114
AA+
5
CIBC
5,028
AA
6
National Bank
2,294
AA
7
Desjardins
2,270
AA
8
Laurentian
305
A+
9
Canadian Western Bank
249
A+
10
Cannacord Financial
180
A
AUGUST 2014 | 61
PROFILE / FAVOURITE THINGS
Favourite things Fred Testa, mortgage broker with Invis
Favourite Food: Pasta. Believe it or not, it’s homemade spaghetti and meatballs. Nothing is quite the same, especially when you use fresh ingredients from the yard.
Favourite Book: The Godfather. My roots are Italian and I just love the book. Favourite Movie: The Godfather for the exact same reasons.
Favourite Music: 60s music. Doo-wop, R&B because that’s when I grew up.
Favourite Sport: My favourite sport is hockey – I’m a Canadian boy and I was raised here.
Favourite Celebrity: Muhammad Ali. He didn’t take any crap from anybody and he stood up for what he believed in, which even meant being incarcerated instead of going to the war.
62 | AUGUST 2014
MORTGAGEBROKERNEWS.CA
Favourite Vacation Spot: I’d have to say Italy. The history and just the sheer beauty of the architecture.
Favourite Drink: Red
Favourite Mortgage Product: That’s a really
wine. A glass of red wine is healthy for you and I like the taste of it.
tough one. I would have the say the majority of my clients like to play it safe and they usually go for a five-year fixed.
Favourite Place to Be: I’m a real homebody. I have a little man cave and I find peace and serenity there. I have a big 60-inch flat screen, surround sound and reclining chair.
Favourite thing about working in the Mortgage Industry: The flexibility to make my own schedule. I love dealing with and talking to people.
The FiNANce cOMPANY ThAT TAkeS A “cOMMON SeNSe APPrOAch” TO LeNdiNg.
YOur PArTNer FOr • Personal loans • 2 nd Mortgages • ConstruCtion Mortgages
www.tribecca.ca 261 Sheppard Avenue West | Toronto, Ontario | M2N 1N4 Tel: 416.225.6900 | Fax: 416.225.6905 | Licence # 12225
It’s time for a new perspective.™
AUGUST 2014 | 63
SERVICE / DIRECTORY
MORTGAGEBROKERNEWS.CA
Banks
B2B Bank b2bbank.com/mortgages Ph: 1 800 263 8349 Inside Back Cover Non-Bank Lenders
V.W.R Capital Corp www.vwrcapital.com Ph: 1 866 907 5407 Page 47
RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 35
Genworth Financial Canada www.genworth.ca Ph: 1 800 511 8888 Outside Back Cover
MortgageToGo.ca www.mortgagetogo.ca Page 49
Insurance
Atrium Mortgage Investment Corporation www.atriummic.com Ph: 416 867 1053 Page 29 Broker Networks
First National Financial LP www.firstnational.ca Ph: 416 593 1100 Page 11
Axiom Mortgage Partners axiommortgagepartners.ca Ph: 1 866 504 0516 Page 5
Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 13
Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 37
Pillar Financial Services www.pillarfinancial.ca Ph: 613 282 1242 Page 31
Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 7 & 41
Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 33
Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3
速
VERICO www.verico.ca Ph: 1 866 983 7426 Page 47
Commercial Lenders
ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1 & 25 Technology & Softwares
TM
D+H Limited Partnership www.dhltd.com Ph: 1 866 345 6449 Page 21 Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 2 Real Estate
Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Inside Front Cover
Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 43
Invis / Mortgage Intelligance www.invis.ca Ph: 1 866 854 6847 Page 31 Services
Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 63
64 | AUGUST 2014
Mortgage Architects www.mortgagearchitects.ca Ph: 1 877 802 9100 Page 19
Score-Up www.score-up.ca Ph: 416 479 9585 Page 59
At B2B Bank, we’ve got more ways to get your mortgage deals funded with: A full suite of conventional, expanded and alternative lending solutions Regional teams with local knowledge A wider range of qualifying criteria for a wider variety of clients
BANKING THAT WORKS FOR BROKERSÂŽ b2bbank.com/mortgages | 1.800.263.8349 All mortgages are funded by, registered in the name of, and administered and serviced by B2B Bank. Mortgages are subject to credit approval by B2B Bank. Some conditions apply. B2B BANK and BANKING THAT WORKS FOR BROKERS are registered trademarks of B2B Bank.