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CONTENTS
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UPFRONT 04 Editorial
The economic fallout of new mortgage rules
20
44 46
Get to know more about a product that can boost your business while helping your over-55 clients
BROKER INSIGHT
Calgary-based broker Skye McLean shares how she’s been able to thrive in a challenging market
48
INDUSTRY ICON
10 News analysis
One of the pioneers of the industry’s tech revolution, CMLS Financial’s Dan Putnam offers his thoughts on its next frontier
Industry pros analyze the impact of the latest round of regulations
12 Investment update
Has the cooling of Vancouver’s market gotten too cold?
14 Market update
CMHC upgrades its warning about Canada’s housing market
18 Opinion
50
How brokers can articulate their value in the midst of the latest changes
THE POWER OF GIVING
54 Career path
In today’s world, philanthropy isn’t just about feeling good – it’s also smart business
PEOPLE The winding road that led Frank Tucci to the top job at Canadiana Financial
56 Other life
Stefan Cherwoniak has cooked up a side job as a professional caterer
52 FEATURES
iCOMMUNICATION Why it’s time to ditch the annual performance review in favour of a culture of constant feedback
2
08 Head to head
Brokers weigh in on the probability of a foreign buyer tax in Toronto
FEATURES
PEOPLE
Are Toronto residents ready to follow Vancouver’s lead on a foreign buyer tax?
PEOPLE
FEATURES
A BROKER’S GUIDE TO REVERSE MORTGAGES
06 Statistics
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4/11/2016 6:23:02 AM
UPFRONT
EDITORIAL
www.mortgagebrokernews.ca ISSUE 11.11 EDITORIAL Editor Justin da Rosa
A chill creeps into the air
J
ust how much will the new mortgage rules cool the housing market? The answer: Who the hell knows? Not the Bank of Canada, anyway – and if they aren’t entirely sure, who can be? That’s three unanswerable questions in a row, and that still doesn’t beat the record of unanswerable questions raised about the recent mortgage rules – cleverly titled (in an almost Orwellian way) “Preventative Measures for a Healthy, Competitive and Stable Housing Market” – and what they might do to quell the red-hot housing market and, indeed, the mortgage industry.
In the Bank of Canada’s most recent report, it predicted that the new rules will be responsible for a 10-basis-point hit to GDP growth this year When news broke, industry players scrambled to figure out just what the Department of Finance meant when it referred to insured mortgages (fears were confirmed that they were referring to all bulk insured mortgages), and now we’re left wondering what these policies will do to the housing market. Bank of Canada Governor Stephen Poloz gave us the first estimate. In the Bank’s most recent Monetary Housing Report, it predicted that the new rules will be responsible for a 10-basis-point hit to GDP growth this year and a 30-basis-point dampening next. But then Poloz backed away from that estimate – or, at least, provided the Bank an out should the actual impact not fall within those figures. “It’s a highly uncertain figure,” he said following the release of the policy report. “[The dampening to GDP] could be bigger, but it could also be smaller.” Economics, eh? Gotta love the highly scientific game of predicting markets. The team at Canadian Mortgage Professional
Writers Joe Rosengarten Libby Macdonald Ephraim Vecina Kimberly Banks Copy Editor Clare Alexander
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Correction: In CMP 11.10, it was incorrectly stated that Verico Tribe Financial funded an average of $2 million per agent/broker in 2015. They average $20 million.
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4/11/2016 5:32:46 AM
UPFRONT
STATISTICS
To tax or not to tax?
HOME PRICES RISING OVERALL According to data compiled from 53 of the country’s real estate markets, the price of a home in Canada rose 12% year-over-year in the third quarter of the year. Even with the major decline in sales seen in Vancouver in September, prices in the city were still up 30% year-over-year.
A new poll shows that three in four Torontonians favour following in Vancouver’s footsteps with a 15% tax on foreign homebuyers
Average home price Q3 2015
WHILE CANADA’S residential real estate market continued to grow in the third quarter of the year, Vancouver – the city that for so long led the country’s housing boom – faltered. The August introduction of a 15% tax on foreign buyers had a major impact on September’s figures, most notably a 33% year-over-year drop in home sales. The dampening effect of the new tax on Vancouver’s already-cooling market has caused
a flurry of activity in other markets as offshore investors apparently make a break for the nation’s other major cities – particularly Toronto, where September activity spiked 21.5% year-over-year. Unsurprisingly, Ontario’s provincial legislators are openly mulling the prospect of introducing a similar tax ahead of the next election; according to at least one study, such a move would be overwhelmingly popular with residents of Canada’s largest city.
Q3 2016 Year-over-year % change
Greater Vancouver $914,705 $1,194,653 30.6%
Victoria
$1.53 million The average price of a detached home in Vancouver in September
15.7%
90%
Drop in the average Vancouver home price since April
Percentage of Vancouver residents who supported a tax on foreign purchases, according to a July survey
$1,091,817 $1,464,507 34.1%
20.4%
The average increase in a Toronto property’s selling price since last year
Sources: Real Estate Board of Greater Vancouver; Angus Reid Institute survey, July 2016; Toronto Real Estate Board
TORONTO WANTS TAX
VACANT PROPERTY CONUNDRUM
More than three-quarters of GTA respondents to a survey by the Angus Reid Institute said they support a Vancouver-style tax in their city.
According to the same survey, almost 70% of Torontonians would stand behind the decision to levy a tax on vacant homes in the GTA; almost a third of respondents reported strong support for such a proposal.
Moderately oppose
40%
Strongly oppose
12% 11%
37% Moderately support
32%
Moderately support
40%
Moderately oppose Strongly support
Source: Angus Reid Institute survey, September 2016
6
Strongly support
Strongly oppose
37% 16% 14% Source: Angus Reid Institute survey, September 2016
www.mortgagebrokernews.ca
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Charlottetown Edmonton
$219,243 $224,219 2.3%
Fredericton
$386,829 $374,712 -3.1%
$239,777 $246,696 2.9%
Quebec City St. John’s
$271,085 $274,877 1.4%
Saskatoon $392,734 $384,909 -2.0%
$343,587 $332,597 -3.2%
Greater Montreal Area $336,327 $352,798 4.9%
Greater Toronto Area
Winnipeg
$610,308 $693,154 13.6%
$284,991 $291,426 2.3%
Halifax
Calgary
$305,682 $308,017 0.8%
Regina
$464,707 $457,044 -1.6%
Ottawa
$330,545 $332,540 0.6%
$397,161 $411,654 3.6% Source: Royal LePage National House Price Composite, October 2016
NO DOWNSIDE FOR RESIDENTS?
BROKERS SAY YES
Few Toronto residents perceive any disadvantage to the introduction of a tax; in answer to a question asking how such a change would affect them personally, two in five respondents thought the tax would be good news for them.
More than half of brokers who responded to a poll on MortgageBrokerNews.ca said they favoured the tax in BC.
50%
46% 12%
40% Undecided 30% 20%
21%
54% 34% 7%
10% 0%
21%
Really Good news for me, Neither good Bad news for me, excellent news but it won’t have a nor bad news but it won’t have for me big impact for me a big impact
6% Disastrous news for me
Source: Angus Reid Institute survey, September 2016
It was a bad idea – the government shouldn’t interfere
37%
40%
The tax was a good idea – the market needed to cool down
Source: MortgageBrokerNews.ca poll, September 2016
www.mortgagebrokernews.ca
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UPFRONT
HEAD TO HEAD
How long before Toronto sees its own foreign buyer tax? Amidst worries that foreign real estate investors will trade Vancouver for Toronto, many believe a similar tax is inevitable
Deepak Bansal
Mortgage broker Dominion Lending Centres Home Capital Solutions
Michele Hall
Mortgage agent Mortgage Intelligence
Dustan Woodhouse
“We’ve heard rumblings from Realtors who work predominantly with foreign buyers that these buyers will begin to look elsewhere. Ontario’s finance minister, Charles Sousa, has welcomed BC’s new tax and promised to monitor the activity of foreign investment within our province. However, I cannot foresee a copycat effect in Toronto anytime soon, primarily because there is not enough data yet from BC on the effect that this has had on their foreign buyer ownership. I would not be surprised if a similar foreign buyer tax, possibly less than 15%, were introduced in Toronto mid- to late 2017.”
“I am sure there will be some changes, and these may deter some investors, pushing them into other markets where the tax does not exist. It is a great deal of additional money to factor into a purchase price in an expensive market. However, we must consider that some of this money is being laundered in Canada by cash buyers investing millions of dollars in homes, which may or may not be lived in. Without a foreign investment tax to cool the markets in Toronto and out west, housing will become out of reach for our children and Canadians in general.”
“Based on the fact that regulators and politicians are under more pressure – and scrutiny – than ever to keep a lid on the real estate markets, is it reasonable to expect a foreign buyer tax to be introduced in Toronto? Yes. Will it do anything to reduce foreign buyer investment? Perhaps in the short term, and perhaps optically, but over the long term, it will have little effect. The market will normalize the sudden price increase, and onward things will go. These changes, as with most made in our space, are far more about optics than they are about effective change.”
Mortgage broker Dominion Lending Centres Canadian Mortgage Experts
FOLLOWING VANCOUVER’S EXAMPLE According to a recent poll by Mainstreet Research, more than half of Toronto’s residents are in favour instituting a tax on real estate buyers who are neither citizens nor permanent residents, similar to the recent levy imposed on home purchases in Greater Vancouver. The survey also found that 27% of respondents were unsure of their stance on the idea of the tax, while only 21% of those asked stood in opposition to a tax. These figures come in the wake of an apparent rush of foreign investment into the nation’s largest city – Sotheby’s International Realty Canada predicts that Toronto will lead the nation in luxury sales of properties over $4 million, driven by nonresident investors.
8 www.mortgagebrokernews.ca
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UPFRONT
NEWS ANALYSIS
Brokers grapple with new rules In the month since the government’s new mortgage policies were announced, industry players have gotten a better idea of just how much the market will be impacted THE FIRST institution to weigh in on what impact the new mortgage rules might have was mortgage insurer Genworth Canada. And it was a sobering take. “Based on year-to-date 2016 data, we estimate that a little over one-third of transactionally insured mortgages, predominantly for first-time homebuyers, would have difficulty meeting the required debt service ratios, and homebuyers would need to consider buying a lower-priced property or increase the size of their down payment,” the insurer said just one day after the new regu-
That’s the new reality, says Toronto-based broker John Panagakos, whose clients have either had to settle for a smaller property or find a co-signer. “Right away I had clients that were trying to buy a house in the $650,000 range, and today they put in an offer on a condo for half the price,” Panagakos says. “It was because of the stress test. The only workaround is someone getting a co-signer.” And that may soon become the norm, at least for the time being. Mortgage Professionals Canada chief economist Will
“Every single lender is dealing with the changes, and most of them got caught by surprise” John Panagakos, Dominion Lending Centres lations were announced. That stat – that more than 33% of insured buyers would not have qualified under the new regime – was mistakenly interpreted by some to mean that 33% of buyers would no longer qualify for mortgages. Of course, that’s not the case – those impacted could have found workarounds with the help of a broker.
10
Dunning weighed in on what he believes the impact will be – and how buyers will deal with the new rules. “Some might have been able to increase their down payments so that they could complete that purchase,” Dunning wrote in recent report. “Others might have been willing and able to purchase a less expen-
sive property, such as a smaller home or [one in] a less expensive location. But, if more people are chasing lower-priced homes, more of them will be unable to find something that meets their needs and for which they can get financing. In short, some of these buyers would not be able to make sufficient adjustments, and they would not make any purchase.” It isn’t just brokers who have had to work a little harder to meet the new guidelines – lenders are feeling the pressure as well. “Every single lender is dealing with the changes, and most of them got caught by surprise because there was no consultation,” Panagakos says. “There was a big lag getting information, getting updates and getting approvals. The lenders I deal with are dealing with it well.” And while many homebuyers will still
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BROKER SENTIMENT MortgageBrokerNews.ca recently polled brokers to find out how they feel about the latest round of mortgage regulations. Here’s what they had to say:
56%
say the changes were unnecessary
28%
believe they were necessary
Source: MortgageBrokerNews.ca poll, October 2016
find a way to achieve the homeownership dream, industry players recognize that the new rules will cool home sales somewhat. In
corrections in house prices,” he says. “It’s good to promote stability in the market, and so the government is doing that on the one
“We are definitely going to give more recommendations as to what we feel are areas of opportunity” Janet McKeough, Canada Mortgage Brokers Association a conference call in late October, CMHC chief economist Bob Dugan told reporters that his organization estimates about 5% to 10% of mortgages will be affected by the changes. Despite this, he argues that the regulations were a prudent move. “Having measures that help promote stability in the market can help prevent sharp
hand with measures like we saw announced on October 3. What we’re trying to do to contribute to that is by ... letting people know where we think there are imbalances. That information can factor into their decisions when they’re involved in the housing market, and hopefully can help keep more stability in the market and [keep] these imbalances
from getting too large.” Right now, no one in the industry has a clear answer as to what effect the new rules will have. After all, there is a possibility they will be tweaked in the near future – especially if the mortgage broker associations have their way. The Canada Mortgage Brokers Association [CMBA] recently spoke directly with Finance Minister Bill Morneau and provided its own recommendations for change. “We threw a few ideas out. He did say there would be some communication with monolines,” says CMBA director Janet McKeough. “They are putting something out and requesting feedback. We are definitely going to give more recommendations as to what we feel are areas of opportunity to ensure Canadian consumers are protected, but also that the policies will have the maximum benefit for everybody.”
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UPFRONT
INVESTMENT UPDATE
Potential buyers “spooked” in BC Between the foreign buyer tax and new mortgage rules, the Vancouver market is plummeting
listed for twice as long. Meanwhile, Canada’s central bank warned that the national economy will experience slight declines in output amid dampened sales numbers. In its mid-October report, the Bank of Canada revealed lower growth forecasts for this year and the next “due in large part to slower near-term housing resale activity,” even as it maintained its key policy rate of 0.5%. The BoC adjusted its growth forecasts to 1.1% in 2016 and 2% in 2017, downward from 1.3% and 2.2%, respectively. The BoC also predicted a 0.3% decline in real GDP by the end of 2018 as a result of the
“There’s no doubt – the number of transactions has gone down”
In early October, the Real Estate Board of Greater Vancouver announced a drastic 33% year-over-year drop in home sales, leading to murmurings that British Columbia’s 15% foreign buyer tax has essentially chased a significant number of wealthy overseas buyers away from Canada’s most expensive city. “There’s no doubt – the number of transactions has gone down, and homes are on the market longer,” said REBGV president Dan Morrison. “The tax spooked everybody, and even locals are now holding back and watching.”
NEWS BRIEFS
Complicating matters is Mayor Gregor Robertson’s plan to impose a tax on unoccupied residences by next year, along with the federal government’s recent introduction of new mortgage rules intended to cool down growth in the country’s most overheated markets. Aside from the decrease in the total number of sales, properties in Vancouver are also spending much longer on the market. In some instances, home types that took as little as 14 to 21 days to sell before the foreign buyer tax was introduced are now staying
Investors have started to ‘double up’ in hot markets
Taking advantage of record demand, many consumers in Vancouver and Toronto are purchasing and moving into new properties before selling their old homes. “[We] have seen many customers considering income properties, and that’s probably not surprising given the low-interest-rate environment we are in,” said Pat Giles of TD Bank. “It’s still a very small portion,” added Benjamin Tal, chief economist at CIBC World Markets. “But in the low-rise market, the potential for speculating or flipping is high.”
regulatory changes, and anticipates that the economy won’t get back in shape until the middle of that year. And the reverberations don’t end there: An independent study conducted by Mortgage Professionals Canada’s chief economist warned tenants in Vancouver to brace themselves for higher rental costs in the next few months. In his report, Will Dunning cautioned that the reduced demand stemming from the tax, as well as the reduced value of mortgages that consumers will be able to qualify for, will eventually lead to less home construction and more constrained supply – and, consequently, higher prices across the board.
Good credit history elsewhere is meaningless
A sterling credit record in another country does not translate to being able to buy a home in Canada, according to MoneySense columnist Romana King. “Despite what could be a long history of acting like a responsible consumer, [credit] history means little as soon as you cross into our Canadian borders,” King wrote. “Truth be told, many countries don’t even have a concept of credit history.” A credit report outlining multiple transactions within Canada would go a long way toward getting a mortgage, King added.
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Q&A
Kathryn Grant
Mortgage rules to impact investment
Director of broker services CENTUM FINANCIAL SERVICES LIMITED PARTNERSHIP
Years in the industry 8+ Fast fact The newly introduced mortgage ‘stress test’ requires borrowers to qualify at the Bank of Canada’s posted benchmark rate of 4.64%
Based on your transactions, how are consumers responding to the new federal mortgage rules? Right now, consumers are definitely still confused and don’t understand how the new rules are going to affect them. And mortgage brokers are still waiting to see what’s going to happen to the market, as it’s still too early right now to know how the changes are going to affect us. I do believe, however, that the big banks are really going to start taking advantage of their leverage over mortgage brokers when it comes to conventional deals.
How will the new federal mortgage rules affect investment properties? It’s definitely going to get harder to get investment properties financed, but brokers can still help consumers access alternative options via different types of lenders. These other avenues might be a bit more limited, but they will still be able to finance investment properties.
According to observers, private second mortgages can help those who don’t qualify under the harsher ‘stress test.’ What are your views on this? I think mortgage brokers are going to start changing the way they do business. They will probably start accessing private lenders more than ever and aligning themselves with some good private lenders out there. This is to meet the demand for alternatives to serve clients who
GTA low-rises seeing increased sales
The Greater Toronto Area has seen a recent surge in sales volume in the low-rise segment, despite supply and inventory remaining at rock-bottom levels. The Trimart Research Corporation recently revealed that 64% of its new low-rise sales forecast has already been achieved, even though full numbers from September 2016 have yet to come in. The Building Industry and Land Development Association arrived at a similar conclusion, adding that supply of new homes in the GTA has shrunk by 41% over the past decade, down to 17,213.
don’t necessarily fit the new ‘stress test,’ or those who don’t meet CMHC guidelines. As mortgage brokers, it is up to us to devise creative financial solutions by aligning ourselves with the right investors and private lenders.
The new risk-sharing model included in the new regulations will compel lenders to assume a part of the losses accrued from defaulted insured mortgages, but some believe the extra costs might end up getting shouldered by consumers. What is your opinion on these developments? There’s definitely a possibility of interest rates rising because of the new rules. And yes, at the end of the day, it’s the consumer who will most certainly pay for it. We simply go for what we can afford – but that can be a good thing in this case, as we’re not over-leveraged, and we’re not putting ourselves into something that we just can’t pay for.
Considering all of the recent changes, what would be the best move for self-employed Canadians who are still contemplating whether to rent or buy? If they have been self-employed for more than three years and their business is stable, and things are going well? Definitely buy. I always believe in buying. However, if they are newly self-employed, they should rent for a little longer until they’ve established their company and they are looking at a steady income for the next five to 10 years.
Vancouver mayor decries late intervention
The BC government waited too long to impose its 15% tax, Vancouver mayor Gregor Robertson told The Globe and Mail. In August, sales plummeted by 26% year-over-year following the implementation of the levy – but Robertson pointed out that prices had already climbed too high. “Middle-class Canadians being able to buy a house in Vancouver and Toronto, those days have probably passed because the interventions didn’t come,” he said. “The jury is still out on whether [the tax] will have the desired effect.”
New rules will cool mortgage market, not prices
Contrary to the expectations of lowered home prices as a result of new mortgage rules announced in October, mortgage origination itself might be cooled down by the regulatory changes, says Addenda Capital co-chief investment officer Jean-Francois Pepin. “If it slows down the housing market, it’s going to slow down the quantity of mortgages that will end up being on banks’ books, which means there’s a smaller pool that’s available to be securitized,” Pepin told the Financial Post.
www.mortgagebrokernews.ca
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4/11/2016 5:34:00 AM
UPFRONT
MARKET UPDATE NEWS BRIEFS Household debt exceeds Canadian GDP According to Statistics Canada, the country’s household debt load surpassed economic output for the first time in history in the second quarter of 2016, as credit-market debt (including mortgages) swelled to 167.6% of income. The organization added that the ratio between household debt and GDP spiked from 98.7% in the first three months of 2016 to 100.5% in the second quarter. The data indicated that Canadian families are still able to meet their debt obligations effectively, however, as credit-market debt remained at around 20% of household net worth.
Vancouver sees sharp decline in luxury sales A significant drop in luxury housing transactions has led to a decline in the value of Vancouver real estate, according to the Conference Board of Canada. The number of completed luxury sales in Vancouver fell sharply right after the implementation of BC’s new 15% tax on foreign homebuyers. The average sales price in the city also saw a decrease of 6.9% in August compared to the same month last year, down to $846,244. “It is one of only four cities where prices were down yearover-year,” the board’s report noted.
Fairways could become housing developments in Toronto
Strong demand for expansion in Toronto has shifted the struggle for living space to the city’s golf courses. A steady decline in golfers over the past few years has prompted communities and private owners to realize that turning these
green expanses into subdivisions is a financially sound decision, especially considering the highly valued status of Toronto land at the moment. “If you are owner of a piece of property … it’s just become so valuable that you can make so much more money off it by selling it for real estate than you can operating a golf course,” said Golf Canada CEO Scott Simmons.
IMF more pessimistic about Canada outlook
In early October, the IMF clipped its projections for Canada’s economic growth by 0.2%, down to 1.2% for 2016 and 1.9% for 2017. The organization said that Canada’s economy will be “held back by the severe impact of wildfires in Alberta on oil output in the second quarter.” The sluggish rate of recovery also introduces much risk to an economy still reeling from the petroleum crash. “Canada’s oil production is strong, but new investment in oil sand fields is limited,” the IMF report added.
Fewer millennial buyers could hurt economy Speaking with the Vancouver Sun recently, housing policy expert Duncan MacLennan expressed concern that Vancouver’s cripplingly high home prices, along with the recent changes to mortgage regulations, will limit millennials’ prospects of buying and owning homes – and, in turn, affect the national economy in the long term. “If [millennials] don’t become homeowners until they’re 40, the point at which they can pay for other things really gets pushed further into the distance, so that I think it will have a potentially negative effect on savings ... and also on consumption,” MacLennan said.
CMHC raises red flag for overall market The organization warns of overvaluation and overbuilding in a majority of Canada’s metropolitan housing markets In its Housing Market Assessment for the fourth quarter of 2016, the Canada Mortgage and Housing Corporation announced that it has uncovered growing evidence of risk in a majority of the nation’s housing markets. The report, which was released in late October, marked the first time that the agency has waved the red flag on the Canadian market as a whole. The previous assessment in July saw CMHC raising a yellow flag. “We now see strong evidence of problematic conditions overall nationally,” CMHC chief economist Bob Dugan said in a news release. “This is fuelled by overvaluation – meaning house prices remain higher than the level of personal disposable income, population growth and other fundamentals would support. This overvaluation, coupled with evidence of overbuilding in some centres, means that growth in house prices will slow, and housing starts are expected to moderate in 2017 and 2018.” CMHC considered four factors in evaluating market conditions: overheating, overbuilding, overvaluation and acceleration of home price growth. “In CMHC’s overall assessment of the housing market in Canada, the level of evidence of problematic conditions is raised
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to strong from moderate,” the organization said in its report. “In addition to strong evidence of overvaluation, CMHC detected moderate evidence of price acceleration for Canada as a whole.” Not surprisingly, CMHC singled out Vancouver and Toronto as trouble spots, but also highlighted Hamilton and Quebec City as epicentres of overvaluation.
“This overvaluation ... means that growth in house prices will slow” “The rapid growth in house prices was both concentrated and intensified within the provinces of British Columbia and Ontario, spreading from Vancouver and Toronto to other cities, contrasting with the picture in the rest of Canada,” the report said. “The evidence for Vancouver is unchanged with the detection of overheating, price acceleration and overvaluation. For Toronto, in addition to price acceleration and overvaluation, overheating now is detected.” Five other cities – Calgary, Edmonton, Montreal, Regina and Saskatoon – have been given a yellow flag for overvaluation. CMHC cited the continued weakness of oil prices and petro-economies as a major contributor to this development. “The ratings of strong evidence of problematic market conditions in the overall assessments for Calgary, Saskatoon and Regina remain unchanged, reflecting the joint impact of overbuilding and relatively weaker fundamentals,” CMHC said.
Q&A
Eitan Pinsky Mortgage broker DLC ORIGIN MORTGAGES
Years in the industry 5 Fast fact Pinsky was a finalist for the Best Newcomer Award at this year’s Canadian Mortgage Awards
The new reality for young homebuyers Based on your observations, how are potential buyers coping with the trend of price growth? For our clientele – we typically work with young professionals – many borrowers have sufficient income to weather this storm, or have parents gifting part of their down payment. But these purchases are condos; it’s very difficult for most buyers, high-income or otherwise, to purchase detached homes in Vancouver. Observers have warned that elevated home prices, along with the recent changes to mortgage regulations, will limit young people’s prospects for buying and owning homes. What’s your advice to them? I would explain what this decreased affordability looks like: Borrowers will have to purchase properties priced at around 80% of what they could have purchased before. However, borrowers could have a co-signer or guarantor to help boost mortgage amounts. Additionally, and something we see more often, is that one or both parents can provide a gift to get to the magic 20% down. For those who do not have 20% down, or for those whose incomes were stretched to begin with, there’s not really much more we can do except work with the new lower affordability. That being said, based on our experience, young, highly paid professionals with large incomes are generally offered more than what they themselves are willing to borrow. That’s why it’s important to educate clients about two kinds of affordability: the kind that the lenders look at in terms of how much they are willing to lend, and a client’s own affordability based on cash flow and comfort. As an aside, with regard to the new regulations, I see hourly workers and clients with household income of less than $80,000 being drastically affected. What are your views on the stress test, considering that some borrowers would simply not qualify under the stricter requirements mandated by the new rules? I think the stress test is actually a good idea. In fact, for every client, we stress test the deal ourselves. We provide our clients with strategy guides that go over what would happen upon renewal if interest rates increase by 1%, 2% or 3%. The goal is for clients to increase their payments throughout the term so they don’t get ‘payment shock.’ What advice can you give to those who are just about to enter the real estate market? Talk to a mortgage broker, and don’t be afraid to go over your affordability. Don’t just wait for a mortgage broker to tell you, “This is what you can afford.” Make sure the broker explains affordability to you. Now more than ever, I believe that is the most important thing in this day and age.
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email mortgagebrokernews@kmimedia.ca
Time to prove your value In a time of great change in the industry, a mortgage broker’s value proposition to the client is human capital, writes Michal Lewandowski
THE MORTGAGE market has changed drastically in the past couple of weeks, and on a larger scale in the past few years. Change in any market or industry is disruptive and downright scary. These recent changes in the mortgage industry certainly place constrictions on the amount an individual applicant can qualify for or the number of options open to certain types of borrowers. At first glance, this constriction on qualification puts a whole new meaning to the term ‘stress test.’ In all of the panic and uncertainty, who can clients turn to for advice? And how can brokers adapt and still maintain their value proposition to clients? The fear in the market surrounding the newest qualification changes is somewhat beyond the control of the individual broker. The factors in the residential real estate market that brought about these changes have to be dealt with equally by everyone in the industry. If the changes feel overwhelming to you, imagine what they feel like to a borrower. The ability for an industry professional to identify the concerns of borrowers and give them a clear expert opinion will be the difference between success and stagnation in the wake of these changes. The most informed and professional experts will be the ones who benefit from this change, as their advice will be invaluable to the public to help them understand how the changes will affect mortgage applications and approvals moving forward. A mortgage broker’s independent access to products and technology leaves them better equipped to answer
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a client’s questions, and identify solutions, than any other outlet that provides financing. A broker’s motivation is different than many other players in the market, and their relationship with their clients is stronger. The spectrum of services a broker offers is more diverse, and they can rely on products from
because they aren’t sure how the changes will affect them. That which is unknown and unfamiliar is naturally uncomfortable and threatening. Mastering effective communication through technology can create comfort and satisfaction for the client. Technology enhances communication and efficiency; both are crucial in solidifying your place in your clients’ minds. Instinctively, the client will identify with the source that illuminated the unknown and created understanding. The client will have an increased bond with the broker as a resource for solving mortgage-related problems. Other outlets that offer mortgage financing will not seize this opportunity to increase the quality of communication with their clients. As a broker, you should spend time and effort on a positive and professional response to the changes for the benefit of your clients. Use the changes that have just occurred as a motivator to adopt the latest technology innovations to enhance communication with your clients. Reinvention through
“Showcase your expertise, leverage your relationships, and identify that you are the resource that your clients need more than ever” different segments of the market to work in unison to achieve results. The broker has access to the newest and sharpest technology to service their clients more effectively than others in the market. Brokers need to embrace every point that differentiates their services in this environment. Collectively, brokers need to diversify and solidify their value proposition in these challenging times. One way to do that is through technology, which continues to revolutionize how we communicate. Faster and better methods of communication create the efficiencies that a client requires in today’s world. A broker who uses technology in an effective manner has a better chance of flourishing in this time of market change. By choosing tools that enhance the quality of communication with their clients, brokers will have a greater chance of being successful. The latest mortgage changes have created fear in the eyes of certain consumers, partially
technology may prove to be the fastest path to maintaining and expanding client relationships in challenging times. Brokers have an opportunity in the wake of fear caused by these recent market changes. The changes are over-reaching, unfair and poorly implemented, but it does not change the fact that they are in front of brokers and need to be dealt with to maintain growth and success. Showcase your expertise, leverage your relationships, and identify that you are the resource that your clients need more than ever. The strength of your value proposition to the client lies in your own human capital as a mortgage broker and your ability to embrace change. Michal Lewandowski, the COO of Fundever.com, has held senior management roles across a variety of industries with an emphasis on logistics and developing efficient systems and effective processes.
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PEOPLE
INDUSTRY ICON
THE BROKER TURNED LENDER CMLS Financial’s Dan Putnam has seen the mortgage business from all sides, and he has a host of valuable insights on what the future holds for the industry FOR DAN PUTNAM, working in the real estate industry was a natural fit. “My entire family was in real estate in one form or another, and I was a young fellow looking to find a career path,” he recalls. “I was selling accounting systems, then got into automobile sales and other sales- and marketing-oriented roles. My Uncle Richard was a Realtor, and he suggested I get into the mortgage business and become a mortgage broker.” Putnam interviewed with a contact of his uncle’s and, although he was wary at first, realized the possibilities the industry could provide – so he jumped in with both feet. “The story he pitched sounded very, very attractive: If you were good, you could make a lot of money, and it was a great business opportunity,” Putnam says. “It all sounded good, but I was looking around at some of the mortgage agents that were working there, and they didn’t look successful. I basically took a 100% commission role; I was given an amortization book and was told to go out and get some mortgage business. There was really no training at all.” However, it didn’t take long before Putnam was hooked. “The one thing I realized when I took the role and sank my teeth into it – it was the only job I had taken to date where I realized, the day I started, that this was the career for me,” he says. “At the time, I felt I was getting paid for
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doing something that was really fun and helpful to people. I just got a real charge out of helping people finance their home purchases.” After cutting his teeth at his first mortgage job, Putnam, along with his father, formed a mortgage brokerage that still exists today as a Mortgage Centre. The brokerage found success, but Putnam eventually realized it was time for a change.
engaged with them to improve efficiencies and reduce costs.” A new company called Broker Systems was formed to deliver this mandate, which represented a major shift in how mortgage brokers did business. “At the time, virtually all mortgage business transacted between brokers and lenders was paper-based,” Putnam says. “This idea became
“This business has become far more complex than it used to be 25 years ago. Then, you got a rate sheet from lenders weekly, and hardly anything changed. Today, you need to be a student of the industry” Industry shift It was in his next role that Putnam was able to help revolutionize the mortgage industry and shape what it would eventually become. “I met up with Bob Ord, who was the VP of FirstLine Trust at the time,” he explains. “He told me of a technology he was working on getting the marketing rights to – the predecessor of Filogix – and that he wanted to get this technology in the hands of mortgage brokers and the financial institutions that
a game-changer for both brokers and lenders. In retrospect, I’m very proud of the fact that I was around and very much involved when the industry moved from a paper-based transaction to an electronic transaction. In my view, this was one of the single biggest events that has occurred in the mortgage brokerage sector.” From there, Putnam took on a few related roles, which included senior positions with Macquarie Financial and MortgageBrokers. com. While working as president of the latter,
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PROFILE Name: Dan Putnam Title: Senior vice-president of business development Company: CMLS Financial Years in the industry: 21 Career highlight: “I’m proud that I was able to, with the help of Bob Ord and FirstLine Trust, convince lenders and brokers that the future for them dealing with one another was via technology. It provided economies of scale for lenders and tools for brokers. I feel good every time I see a broker turn on a computer.”
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INDUSTRY ICON
he was involved in the acquisition of Mortgage Architects and Radius Financial. Finally, he ended up with CMLS Financial on the lender side, which is where he currently hangs his cap.
On the horizon As someone who had a hand in one of the mortgage industry’s first big technological changes, Putnam sees plenty more ahead. “I think the importance of the internet and social media is going to grow at a very fast pace,” he says. “The younger generation – our future customers – are becoming more and more comfortable making purchases without feeling the need to meet face-to-face. Younger
admits that the relentless pace of change is a major challenge for lenders as well, whether it’s regulation-, technology- or insurancerelated. Lenders, he says, need to continue to innovate to add as much value as possible for both brokers and homebuyers. “This business has become far more complex than it used to be 25 years ago,” Putnam says. “Then, you got a rate sheet from lenders weekly, and hardly anything changed. Now, you have pricing differences by product, loan-to-value, rate committal term and so on. Today, you need to be a student of the industry, and that’s a challenge for brokers. You can’t work in this business part-time and be successful. There
“I’m very proud of the fact that I was around and very much involved when the industry moved from a paper-based transaction to an electronic transaction. In my view, this was one of the single biggest events that has occurred in the mortgage brokerage sector” brokers completely get this, and the more seasoned ones are adapting, but both are going to have to continue to raise the bar in terms of using social media and other internet-based methods of attracting customers and developing relationships to stay relevant.” Putnam also believes diversification will become necessary for many brokers to stay afloat in an increasingly competitive environment. “To simply be a mortgage consultant may in some cases be enough, but in others, they will need more to attract future customers,” he says. “Today there is creditor life insurance, property insurance, etc. Some brokers are moving into the asset side of the balance sheet by offering financial planning services as well. Mortgage brokers will continue to evolve and innovate.” Putnam argues in favour of knowing your individual value proposition and targeting the clients you want to do business with. And he
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are material changes happening daily.” In order to be successful, Putnam says brokers have to continue to up the ante on providing great service. Brokers are efficient, quick and nimble – and that’s what sets them apart. He advises brokers to protect that reputation by under-promising and over-delivering on service. And he acknowledges that lenders, of course, have their own part to play. “I think lenders need to be competitive on the pricing side of things; they need to innovate for brokers,” he says. “In the case of CMLS, we actually launched a near-prime lending product called Aveo because we’re absolutely committed to the mortgage broker space and we wanted to offer our brokers another product to sell. So, again, this is good for brokers because the more mortgage choice there is out there, the more need there is for a mortgage broker.”
DAN PUTNAM’S CAREER TIMELINE 1990
1995 President Mortgage Centre Canada
2000
2007 President of originations Macquarie Financial
2008 President MortgageBrokers.com 2010
2012 SVP of business development CMLS Financial
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FEATURES
COVER STORY: SUPERBROKERS REAL MORTGAGE ASSOCIATES Compensation
SUPER BROKERS Competition has been ramping up among the industry’s broker networks. So what sets each apart? We give them the chance to tell you for themselves IT’S ALWAYS good to know your competition – after all, you never know when they might come a-calling. This year’s Superbrokers feature allows each of the industry’s largest companies to tell you, the brokers, what they have to offer. We called on Canada’s 10 largest networks to take part, and many of the major houses took advantage of the opportunity to showcase their specialties. So what does each network offer in
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terms of compensation, lead generation and ancillary services? And perhaps more important, what does the head of each company think about where the industry is headed? Read on to learn these and other pressing details about the country’s superbrokers. The following information has been submitted by the companies concerned. KMI Publishing does not endorse or confirm the veracity of the submissions.
• All franchises, senior brokers and affiliates receive 100% of commissions (finder fees and volume bonuses); no splits. • The cost of association is $750 per month, or a pay-per-deal program. • In 2014 we introduced a 90/10 split program as well. Then we went one step further and capped the programs at $9,000. Therefore, once RMA collects $9,000 from the 90/10 or the pay-per-deal of the flat fees, no more is deducted from the agents/brokers. The corporate volume bonus paying lenders qualifies you for an added 24 bps on average automatically as part of network membership. • We operate our corporate head office on the fees we get. We don’t charge for advertising or origination software. • RMA agents/brokers have access to an in-house commission advance program.
Broker model • There is no cost to purchase a franchise. Our licensed affiliates are not expected to carry and promote our brand. Their businesses operate under their brand names. Standard termination clause is 30 days. • Agents/brokers who don’t have their own licensed firm can join our corporate store, Real Mortgage Associates, under the same compensation model. • Agents new to the industry who are joining our firm must work with a manager/trainer. The manager/trainer’s compensation is tied directly to funding of mortgages by the new agents, ensuring the highest level of support for new entrants.
Ancillary services • RMA is in the process of integrating the Scarlett software system. Scarlett is what we call a ‘broker in a box’ and has all the following functions built in: broker and agent websites, mortgage application management, a CRM and deal management system, compliance, payroll, integration with Expert, digital and email marketing, and much more. In other
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words, it helps you run your business more efficiently, and most important, it helps you garner more leads due to its automated email and lead generation engine. • Some franchisees, affiliates, agents and brokers who fund smaller volumes don’t have access to all lenders. RMA’s Lender Access Desk opens a door to all lenders, including some with preferred/unpublished rates and compensation. • Consumer-targeted websites are available to agents and brokers to market themselves. The back end has an easy-to-use content management system to update the site. This service is part of the Scarlett software system. • Free semi-monthly webinars are conducted to keep franchisees, affiliates and brokers up to date on industry changes, new lender offerings and other ancillary products. Lead generation
Our commercial division handles commercial mortgage leads on agent’s behalf. Simply provide a name and phone number, and the referring agent gets 50% of the fee when the deal funds.
Two years ago in this segment, I spoke about a softening of the real estate market due to changing legislation. Well, we are about to see the impact of some aggressive changes made by the Government of Canada that some experts predict will soften the market by as much as 8% in 2017 – that’s down from a previous prediction of 6% growth. So what does this truly mean to brokers? As a broker, if all you need to earn a decent wage is to fund 40 to 50 mortgages, there are plenty of opportunities to do so. There are more than 7 million mortgages outstanding in Canada. Every year, a large number of these come up for renewal, need to get refinanced or paid out and replaced by another mortgage. If you can’t put a system in place to identify and fund 50 mortgages out of the millions of opportunities available, then you’re not working smart. Every tool you ever need to start, build, manage and grow a successful mortgage broker business is available to everyone – RMA has them all. Take some time this fall to look at what income goals you need to achieve and determine what tools you need to accomplish them. If you don’t know what you need to do, align yourself with a mentor who will coach you to success. Then get out there and do your job, and stop worrying about the changing rules. Ron De Silva CEO, RMA Financial Group Compliance and payroll
• File auditing and compliance services are provided for franchisees, affiliates and RMA brokers in Ontario.
• Payroll is direct deposit and conducted weekly for RMA agents/brokers and twice a week for franchisees and affiliates.
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FEATURES
COVER STORY: SUPERBROKERS MORTGAGE CENTRE CANADA Compensation • Mortgage Centre Canada collects a royalty fee based on the dollar volume funded by the lender; this fee is typically less than the average competitor, allowing franchises to use the additional revenue the way they want to grow their businesses. • Franchises retain 100% of trailer fees, which stay with them in perpetuity. • Independently owned franchises negotiate competitive commission splits directly with their respective agents based on experience, quality and volume.
Broker model • Each office is independently owned and operated within our franchise network. • New franchise cost is $16,500 plus HST. • Head office provides on-site and/or webinar support during initial setup, along with ongoing training to ensure a successful franchise launch. • Contracts with franchise owners are based on a five-year mutual commitment. • Mortgage Centre Canada has a presence coast-to-coast, except in Quebec, with approximately 95 franchises and more than 1,200 agents.
Ancillary services • A relationship with Dominion Lending Centres allows members to enjoy a significant discount on products and services not offered by other brokers. • Brokers have access to creditor life insurance via Mortgage Protection Plan – an ancillary revenue stream with multiple methods of payment (upfront and/or residual fees offered). • Unique mail campaign (Stay in Touch) allows members to offer clients or referral sources a personally branded hard-copy output every other month. • MCC Client Communicator tool gives members the ability to send a personal branded email newsletter to their database on a monthly basis. • Head office provides ongoing training,
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Q&A WITH MORTGAGE CENTRE CANADA What significant strides have you made this year in terms of helping brokerages, brokers and agents maximize originations in a slower market? This past year, MCC focused, among other things, on our social media strategy. We were able to increase our audience by making everyone in the network ambassadors of our brand. Social media links are integrated into our free agent websites, allowing agents to share content across platforms. MCC head office releases a social media content piece on a daily basis, with cutting-edge information for agent knowledge that can also be shared with their clients. By creating this intelligent and timely content that directs readers to The Mortgage Centre websites, Twitter accounts, LinkedIn accounts and so on, we are able to increase traffic, and in turn, increase referrals back to our network. Referrals are up this past year by over 150%. Traffic to MCC’s social media outlets is up over 250%. MCC head office also provides related social media one-on-one training, as well as monthly webinars focusing on various social media aspects and marketing tactics to fully utilize tools to streamline and produce content on a regular basis. A bigger online footprint and management is vital in preparing for the next generation of mortgage clients. The Mortgage Centre retention strategy encourages growth on a personal and professional level. We place a high value on brand equity, which remains the core strength of the company. A distinct advantage to MCC franchise owners is how our model is set up to encourage independence, yet has resources available to expand. A low-cost business model allows owners to reinvest in their own growth and development at the brokerage level without sacrificing the integrity of the operation. Exclusivity also plays an integral role, as our network has a gateway to mortgage products through mainstream lenders that many in the broker industry do not. Further, we are able to leverage the size of our network for group savings that are beneficial. Finally, retention begins with value. At The Mortgage Centre, we provide value to our brokers via constant engagement through our education and training. We offer this training on a one-on-one basis, which is unique in our space. We are always looking to upgrade our resources and technologies. We just revamped our Stay In Touch program, which allows our brokers to keep top of mind with their database. So many value-adds position MCC as a leader in the industry. New mortgage rules mean a new reality for the channel. What, if any, changes do you see as a result? As an industry, we have become accustomed to government changes over the last decade. The great part of these changes is that brokers, and their added value, become more important to the consumer. As a network, we need to educate them on, and guide them through, these new rules. Our brokers and agents are able to share these changes with their database and referral sources, ensuring they continue to be trusted, proactive advisors. Let’s face it – banks aren’t reaching out to clients! We have no doubt that these changes will create new opportunity and that this channel will continue to grow and thrive over time.
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BEING #1 MEANS
WE TAKE CHARGE
Within hours of the Department of Finance’s October 3rd announcement on industry changing mortgage regulations, Dominion Lending Centres had a representative IN the Parliament Buildings meeting with MPs and staff to get clarification on these new rules. Since then, we have sent out near daily communications highlighting changes and updates as they arise. Our “Change of Space: New Mortgage Rules” guide has been featured on mortgagebrokernews.ca, and is valued by our network for the up-to-date information that can be shared with clients. Over the following days and weeks our Chief Economist, Dr. Sherry Cooper and CEO Gary Mauris earned dozens of media interviews where they expressed the views of thousands of mortgage professionals. Where others saw crisis, we saw the opportunity to educate our members, clients, industry, politicians, decision makers and all Canadians. This is the power of being an industry leader. This is the Dominion Lending Centres advantage: We empower our members with the best information — when it counts the most.
Join the company that is always first to power its members with the best!
1-888-806-8080 | www.joinusnow.ca
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FEATURES
COVER STORY: SUPERBROKERS
•
• •
•
•
•
support and development via live monthly webinars throughout the year. On-site sales training and mentoring programs are available for new and existing agents. Secure intranet site offers a host of business tools, advertisements and templates. Additional programs include MCC Client Connect (CRM solution) and MCC Lender Connect (deal placement assistance). Annual conference for the entire network is focused on personal development and sharing of best practices. Property Valuation Tool allows members to access property information easily and quickly, offering more information, knowledge and statistics. Head office offers social media training and webinars, including one-on-one training.
Lead generation • Client prospect leads generated through our public portal are evenly distributed to franchise owners based on geographic proximity. • Agent prospect leads are handled and distributed in the same manner.
Compliance and payroll • Franchise licensees are responsible for provincial compliance requirements. • Head office provides ongoing training and support in accordance with provincial legislation. • Brokers have access to a policy and procedures manual, which was developed to govern franchises and assist in the compliance process. • Detailed reporting and payment are coordinated weekly through head office via EFT.
INVIS MORTGAGE INTELLIGENCE Compensation • Full-service brokerage offering a highly competitive compensation model with commission splits for those new to the industry up to the very seasoned highvolume broker • Splits on gross earnings, not after royalty or franchise fees
Broker model • Personal branding flexibility • Network partner model gives brokers the ability to work under their own brand/ licence at top commission split • No monthly fees, royalty fees or lock-in contracts
Ancillary services The biggest challenge our industry faces continues to be educating the consumer on the value-add of mortgage brokers. As an industry, we have done very well with market share versus the banks, especially with first-time homebuyers. We need to continue educating the consumer on what we do and why consulting a mortgage professional is the best choice when financing your home. With respect to the value proposition of our particular network, The Mortgage Centre is the longest-standing brokerage in Canada because of the quality of our people and brand. With pride, integrity and a lot of hard work, MCC has built many lender relationships over its 27 years in the industry, including preferred partnerships with various lenders. By building these relationships and establishing good business relations, MCC has brought ease to many processes, but more importantly, effectiveness and faster service to our clients. Canadians recognize and trust MCC because we are in communities across Canada, helping families with their finances and dreams. Our dedication goes beyond that which we show to our network and clients. We have taken it a step further in 2016 by partnering with Make-A-Wish Canada. This is a national initiative to adopt a wish and effectively raise funds to provide once-in-a-lifetime wishes to children suffering from various life-threatening illnesses and diseases. The Mortgage Centre is humbled and grateful for the opportunity to bring a moment of relief to these suffering children and their families. This is just one more reason to feel great pride in working for Mortgage Centre Canada. Eddy Cocciollo President, Mortgage Centre Canada
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• Experienced regional support for training, business and marketing planning, team-building, and feet on the street – they are there for our brokers and not just to recruit • Free placement desks so all brokers can enjoy top lender status and get access to product specialists to help with tough deals • Assistance with interprovincial deals so brokers can legally do deals in other provinces without getting a licence • Support from award-winning marketing department • Broker mobile websites with global feeds so rates, content and news are continuously updated, along with easy management of SEO • CRM options to fit each broker’s business model • Monthly webinars on compliance, insurance, Equifax, lender sessions and more • Video, content and image library for email and mail, blogs and social media • Automated weekly rate mail and Bank of Canada announcement/economic update email • Daily lender rate sheet with an economic
www.mortgagebrokernews.ca
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• •
• •
•
• •
update with articles for reposting and blogging Automated monthly newsletter Intranet site with branded materials for marketing and relationship management Realtor feature sheets that include purchase plus improvements Free HTML email program to customize and target messages with tools to assist with CASL compliance Reporting for business monitoring, including YOY by lender and team member, renewal opportunities reports, and more IT support Free professional development days with AMP credits and biannual national conference (to be held in Kelowna in 2018)
Our brokers are prepared and will show strong resilience going into 2017; they will continue to focus on excellent service to existing customers, and together we will seek out new opportunities. We thoroughly scrutinize all hires, and our focus is on quality versus quantity, which has given us average production per broker that is higher than the industry average. As a result, our core broker group is highly experienced, and we ensure new brokers are supported by their team lead, mentors and their regional manager, which greatly increases their ability to succeed. Now that brokers must put more attention on each file, they will increasingly rely on their brokerage for all the stuff that gets in the way, like payroll and compliance. To make them more efficient, we are expanding certain services, like our Access Desk, which acts as a product knowledge centre and provides deal coaching. More emphasis on client and prospect education is also crucial. Brokers will need to help clients earlier in the homebuying process, which means their value proposition becomes stronger. And better-educated clients and prospects save them time. I believe there will be a shift back to full-service brokerage. Now with the strength of Group Multi-Prêts behind us, we have a very powerful platform for long-term growth, and I couldn’t be more excited about our future. Cameron Strong, CEO, Invis Mortgage Intelligence
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FEATURES
COVER STORY: SUPERBROKERS • Forums to discuss deals and other business issues with peers • Corporate benefits program • Discounted E&O rates with premium coverage • Trade-show support with free use of booths and banners • Award-winning community and culture through national charity Angels in the Night
Lead generation • Easy-to-offer and competitively priced iprotect mortgage insurance builds a fantastic annuity income • Home and auto insurance referral fee program – just four referrals a month can give brokers $3,360 in additional income each year • Private-label WealthLine with excellent rates, features and ability to earn annuity income with automatic payment at renewal • Robust and compliant lead-generation programs through several established financial planner networks • Industry-leading corporate websites that get traffic and leads • Small business loan referral programs • Access to private and commercial lending experts
Q&A WITH INVIS MORTGAGE INTELLIGENCE What significant strides have you made this year in terms of helping brokerages, brokers and agents maximize originations in a slower market? In 2016, Invis Mortgage Intelligence became the largest full-service mortgage brokerage when the company was acquired by Group Multi-Prêts, providing a powerful platform for premium long-term growth, with plans to transform the mortgage lending landscape and tackle it from a position of strength. Invis MI brokers greeted the announcement warmly and enjoy meeting CEO Luc Bernard. Brokers look forward to strong technology investments, a broader suite of mortgage and insurance products, stronger industry leverage, and more. Our National Conference was held in Quebec City in October with 385 attendees. There was powerful networking among brokers, strong headliners, very timely contentrich breakout sessions that included successful brokers sharing best practices, and strong lender participation with rave reviews on the sold-out trade show and sponsorship success. It was a dream event from the perspective of location, learning, networking, entertainment and breathtaking venue. Our free Access Desk offers all brokers status rates, status service levels, full finder’s fees and designated underwriters. We also launched with Manulife Bank and do joint marketing with CHIP. The next generation of mortgage broker legends are here! We had eight of our brokers recognized as CMP Young Guns, and we received both newcomer awards at the Canadian Mortgage Awards – Best Newcomer Broker and Best Newcomer Brokerage. Brokers appreciate the strongest regional support team and most experienced marketing group in the industry. Full payroll and compliance continue to attract those who want to focus on deals and clients. Best-in-class iprotect mortgage life, disability and critical illness insurance helps build long-term annuity income. Our Unitas home and auto insurance program pays referral fees and provides the best E&O insurance in the industry. We continually look for ways to raise the bar by having highly regarded compliance standards. And we stand by our commitment of no long-term contracts and no monthly fees.
Compliance and payroll • E-compliance process through Expert exchange • Compliance required for all brokers, regardless of the model they are working under with the company • Excellent compliance protects brokers’ reputations and helps them stay ahead of changing rules • Weekly automated payroll by direct deposit with detailed statements and customized team setups – get paid on time, all the time • A key differentiator is payroll and compliance for those at the highest splits – not available at other brokerages
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New mortgage rules mean a new reality for the channel. What, if any, changes do you see as a result? There never seems to be less regulation, only more. The reality of today’s marketplace is that brokers have to spend more time on each client file. With new and continuous legislative measures (the latest are the seventh new legislative change in eight years), increased regulatory rules on both the lender and mortgage brokerage sides, and changing bank policies, it is becoming increasingly hard for the Canadian consumer to understand or even navigate the complexity of it all. Mortgage discount rate sites targeted to millennials are not the answer. We would argue this makes mortgage brokers more relevant as the go-to experts for Canadian homebuyers. Relevant, sound judgment and critical thinking from our brokers has incredible power to influence and benefit the Canadian consumer, and is needed now more than ever before. Invis Mortgage Intelligence has strong compliance and payroll units, an access desk, regional manager support, a professional marketing team, IT support, and the weight of Canada’s largest full-service brokerage behind us. Where would you like to be in these difficult and complex times, now and in the future?
www.mortgagebrokernews.ca
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FEATURES
COVER STORY: SUPERBROKERS TMG THE MORTGAGE GROUP Compensation
Lead generation
• TMG is a full-service brokerage offering compensation that is internally consistent and externally competitive. • Our progressive partnership with brokers rewards production – the more business, the larger the share of revenue. • There are no franchise fees, monthly fees or royalty fees, and no locked-in contracts.
• TMG offers a customer Data Deal Manager and CRM programs that brokers can use to manage client communications, leading to referrals and
Broker model • The 800+ brokers, associates and agents in TMG’s network operate under provincial licences across the country. This allows TMG to foster strong national relationships with regulators, mortgage associations and lenders, ensuring consistency across the country. • Powered by TMG The Mortgage Group™ provides independent brokerages the infrastructure to reduce operating costs, accelerate growth and enjoy all the benefits of a full-service brokerage.
Ancillary services • TMG-branded mortgage products help brokers preserve and protect client relationships. • TMG Mortgage Insurance offers mortgage insurance coverage, as well as term and permanent coverage for life, critical illness, disability and job loss. • TMG Commercial Mortgage offers a new, innovative product for business clients who want to own their property. • An industry leader in broker support and training, TMG TV offers leading-edge webinars and webcasts, while BrokerNet provides brokers with a secure intranet with daily interest rates, industry news, marketing tools, resources and more. • TMG’s paperless document storage platform, DOC Central, has regulatory compliance covered. • TMG’s dedicated Deal Centre provides brokers assistance with applications and exclusive promotions.
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increased business. • State-of-the-art broker websites assist with lead generation. • Active social media generates brand recognition.
The global financial crisis of 2008 seems like a long time ago, yet we are still living with the implications. At that time, mortgage regulators, policymakers and the government did not want to expose us to the same fate as the US, and introduced a series of regulations and policy changes to ensure prudent lending practices. And it seemed to work. Our economy, fuelled by a buoyant resource sector and low interest rates, helped keep our housing market robust – but we also saw housing prices and household debt continue to rise. Increases in home values have been most noticeable in Toronto and Vancouver. In the early winter of 2015/16, we saw the introduction of larger down payment requirements for higher-valued homes, yet nothing seemed to slow the pace of housing sales and rising prices. And now we have another set of changes aimed directly at qualification rules, which may result in lowering prices and reducing real estate activity. Our industry has come through so much, and I feel great pride when I look back over the last eight years. We have navigated through constant change with leadership and professionalism. The mortgage broker channel is still strong and offers the best option for consumers. To continue to serve our clients, we must keep up-to-date with changes. We must arm ourselves with continuing education and support tools that are vital for our success. Education is one of the pillars of TMG, and we are recognized as one of the market leaders in training. As a company, we constantly explore ways to use technology to help our brokers be more efficient and effective. Considering how much we view the brokerage industry as ‘relationship-centric,’ I am extremely proud when I say that TMG is its people. From the most dedicated and passionate staff to our professional, empathetic and caring brokers, TMG represents leadership in the broker channel, and strength and stability for consumers. As a broker, you have a choice. In a competitive environment, it’s critical that you align yourself with a company that supports you and gives you the tools to ensure your success. Your business is working with clients. Our business is helping you do just that. Working with a full-service mortgage brokerage company like TMG offers you an opportunity to focus on your core competency – originating mortgages. Our part of the equation is to effectively manage compliance, payroll, training and lender relations, work with regulators, and create sales tools. In the end, as a brokerage, we are completely aligned with your success. As you grow, TMG grows alongside you. Mark Kerzner President, TMG The Mortgage Group
www.mortgagebrokernews.ca
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• TMG offers a variety of automatic client communications, including breaking news, monthly bulletins and a quarterly newsletter. • TMG Design Services provides seamlessly integrated services, from advertising campaigns and exhibit graphics to websites and marketing literature.
Compliance and payroll • Our state-of-the art automated accounting and payroll system is centrally managed by TMG, at no cost to brokers. • Secure online compliance software is integrated within our DOC Central system, which also provides paperless document imaging. • Regulatory compliance, policies and procedures are monitored. • All data is secured and held in a sophisticated internal and external backup storage system. • Brokers are notified when payment is received by the lender. • Detailed commission statements are available on BrokerNet. • TMG offers state-of-the art reporting and goal-tracking technology.
ABOUT TMG THE MORTGAGE GROUP For the past 26 years, TMG has experienced steady growth in the Canadian market. Our driving principle has always been, and continues to be, supporting brokers and the clients they serve. All of TMG’s programs, systems, training and technologies are tested against that principle: Does it support brokers in their business, and does it assist the client? Through the years of continued and impressive growth, TMG has maintained and even strengthened its corporate family culture. During that time, we have developed some of the best lender relationships in the industry, which stems from a corporate philosophy that lenders should be treated like customers. Early on, we decided to grow the company organically. Today, TMG has nearly 800 brokers and agents nationwide. The company continues to attract like-minded, professional individuals by treating them with respect, providing good value and continually responding to their needs. “Our core values help promote an open, progressive, entrepreneurial environment,” says Mark Kerzner, president of TMG. “We think in terms of partnerships with our brokers and staff.” The company’s contribution has not gone unrecognized in the industry. In 2011, TMG was honoured with the Canadian Mortgage Awards’ top award for Brokerage of the Year. In 2012, the company was named one of the Best Companies to Work For in BC. TMG also was awarded with Mortgage Professionals Canada’s Partners in Excellence Award, as well as MBABC’s Pioneer Award for Lifetime Achievement. In 2013, the company won Employer of Choice at the Canadian Mortgage Awards. In the three years since the Mortgage Professionals Canada Awards of Excellence were introduced, TMG professionals have won an industry-leading eight awards. Here’s a sampling of what our brokers say: “TMG is a great place to work with competent back-office support, access to all the lenders and an excellent national brand that is recognized and trusted.” “The professionalism and level of support from TMG continues to exceed my expectations. I look forward to growing my business alongside TMG.”
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FEATURES
COVER STORY: SUPERBROKERS BROKER FINANCIAL GROUP Broker model • It’s personal and adaptable, from 80/20 to 99% revenue split, based on your choice of the relationships and services you require from BFG to complement your business model. We’re totally transparent and offer a solution that fits your needs.
Ancillary services • BFG Capital Mortgage
• • • • • • •
Creditor life insurance Life insurance Term life insurance Home and auto insurance Private funds Commercial funds Underwriting hub (access to all lenders and higher compensation) • Agent recruitment support • Training and development
Q&A WITH BROKER FINANCIAL GROUP New mortgage rules mean a new reality for the channel. What, if any, changes do you see as a result? With the recent announcement from the finance minister, introducing yet another set of measures to stabilize the housing market, there are many concerned that it could lead to a sharp slowdown in housing sales. In fact, many economists believe the new mortgage rules could lead to as much as an 8% drop in home sales within the first 12 months. These rule changes were made without any consultation with the mortgage industry. We can’t control what policymakers do, but we can be heard – it is extremely important to support your national and provincial associations and implore them to strongly represent and support our role in helping consumers with choice and advice on their mortgage financing needs. We must all get involved and do our part in supporting our industry and the consumers we serve. Volatility in our market has been constant since the financial meltdown in 2008. As an industry, we must continue to adapt and change to meet the needs of our customers. For the most part, the industry has done a tremendous job. This is evident with our continued market share increase throughout this period. We see these recent changes as another opportunity to help our customers navigate and understand what this means to them and to gain from these relationships by helping them with innovative solutions. For borrowers, the new rules essentially mean they have to adhere to a much more stringent financial stress test to prove they can afford a mortgage payment based on the BoC’s posted rate, which is currently 4.64%. This so-called ‘qualification rate’ can make or break many prospective homeowners. This will either lead borrowers to smaller mortgages or out of the housing market entirely. As mortgage professionals, it is our role to provide these future homeowners with financing solutions or a detailed plan on what they need to do to achieve their dreams of homeownership. Joe Rosati CEO, Broker Financial Group
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ABOUT BROKER FINANCIAL GROUP Broker Financial Group is Canada’s most recent broker network, established in July 2015. We’re growing rapidly, both organically and by acquisition, announcing our partnership with the Real Mortgage Associates network in September 2016. BFG is a full-service brokerage catering to all business types. Whether you are an independently owned and operated mortgage brokerage, a broker/agent affiliate or a team lead, BFG has a model to support you. Through Scarlett, an industry-leading mortgage platform developed by Axiom Innovations in consultation with BFG and its high-producing agents and brokers, BFG offers its network a highly customized version of the technology. Scarlett was put in place to help BFG mortgage agents and brokers be more efficient when dealing with a mortgage applicant or when reaching out and communicating with their network of clients, referral sources and industry partners. Scarlett is an all-encompassing tool that is fresh and modern for today’s mortgage broker. It includes agent websites, lead generation, file life-cycle management, automatic customer journey management, customer relationship management, deal management with D+H Expert and Marlborough Stirling integration, digital and email marketing, and compliance and payroll. Broker Financial Group is attracting a lot of attention with our philosophy of full transparency and a business model that provides BFG affiliates with the opportunity to maximize their compensation through a variety of ancillary products that create additional revenue streams intended to deepen relationships with their clients.
www.mortgagebrokernews.ca
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FEATURES
COVER STORY: SUPERBROKERS CENTUM FINANCIAL GROUP Compensation
• A 5% royalty plan is standard for all CENTUM franchises. Agent compensation is between the franchise owners and their agents.
Broker model • We are a 100% franchise organization. For the past 15 years, we have been the only mortgage brand that is a member in good standing with the Canadian Franchise Association (the Canadian governing association of franchise organizations) and adheres to their strict code of ethics and standards.
Ancillary services • CENTUM Mortgage® is a prime residential program built exclusively for CENTUM with an extensive range of products. This product has an exclusive renewal fee program on five-year terms. • CENTUM Primo® white-label program typically provides the lowest rates offered in Canada. This product has an exclusive renewal fee program. • CENTUM Primo Options® is a network of private and commercial lenders across Canada that provide comprehensive lending solutions for our offices. • Consumer lending: CENTUM offers consumer loans with competitive rates to help clients regain control of their finances by focusing on reducing their debt load over time. • Investment products: We offer consumers an enhanced experience, including GICs, RRSPs, TFSAs and syndicated mortgages. • Commercial leasing program allows the CENTUM family to offer solutions to its self-employed clientele, as well as alternative funding options to improve approval rates. • Mortgage Protection Plan provides consumers with the opportunity to protect their investment. • CENTUM OnlineOffice® provides a fully integrated back-office system to help
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manage your office, with multi-templated websites, training resources, reporting, lead management, communications, franchise administration, business operations, integration with social media and more. • CENTUM CustomerConnect® is a proprietary, fully intuitive relationship management system [CRM] with hundreds of regularly updated marketing pieces. With pre-programmable functionality, you can set the CRM to automatically stay in touch with your clients no matter the occasion (birthdays, anniversary dates, etc.). The system is fully integrated with D+H Expert and allows you to merge contacts seamlessly to manage your database with minimal effort. • CENTUM Customer Product Advisor® is designed to provide real-time solutions to CENTUM family members by giving
them access to the most up-to-date lender guidelines and lender comparisons to allow you to find the perfect mortgage for your customers. • CENTUM Financial Literacy for Adults is a program specifically created by financial experts to help Canadians deal with the new realities of consumer debt and cost of living; it includes a Guide to Home Ownership that helps customers make educated homeownership choices. This program is provided free of charge to all CENTUM members and consumers. • Score-Up is a consumer credit management program that provides consumers with enhanced credit management capabilities and exclusive Point Deduction Technology to better understand credit and how to effectively manage it. • CENTUM Business Benefits: We have
ABOUT CENTUM FINANCIAL GROUP CENTUM, founded in 2002, is home to over 200 franchised mortgage offices with more than 2,000 mortgage professionals across Canada. As a division of the Charlwood Pacific Group, our network benefits from over 40 years of global franchising expertise as accumulated in the development of several other successful franchise organizations in industries that include financial services, real estate, travel services and property management. CENTUM provides its franchises with proven systems, competitive technology, comprehensive training, ongoing support and the quality financial products necessary to have a competitive advantage and to succeed in the mortgage broker industry today. CENTUM is also a proud member of the Canadian Franchise Association. Our vision: To be the number-one brand of choice in home financing for consumers, agents and entrepreneurs. Our mission: To provide our customers with the confidence to make informed home financing choices. Our core values: • We are always ethical in all we do. • We respect our customers, our peers and our partners. • We operate with integrity. • We earn the trust of our customers, our peers and our partners. • We are more than just a franchise network; we are a family of like-minded professionals. • We are socially responsible and contribute to the communities that we serve. At CENTUM, we provide the security of knowing that we are always looking out for your best interest.
www.mortgagebrokernews.ca
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•
•
•
•
•
•
•
exclusive partnerships with industryrelated companies to provide CENTUM franchisees and agents with exclusive offers that dramatically lower their cost of doing business. Things like fleet programs, office supplies, technology and telecommunications are just some of the business benefits we offer. CENTUM Consumer Partnerships: Industry partners offer CENTUM customers heavy discounts on items such as furniture, vehicles, gasoline, moving and moving supplies, travel, accommodations, and much more. CENTUM Vision Awards and Conference: This one-day event focuses on education and recognizes the top performers in the organization. We focus on three key thoughts at each event: Inspire. Engage. Innovate. Careers Centre: CENTUM provides a fully integrated recruitment and retention program for franchisees to help them attract and retain top talent. We offer a Career Web Module, National Career Centre and CareerConnect recruiting program. University of CENTUM offers extensive training and webinars focused on our back-end systems and technology, lead generation, and growing your business. We also have dedicated training for owners in our Planning for Success franchisee training program, which is a key component in moving their business forward to achieve the office production goals they set out. Social media is done for you. We have a social media solution that is professional, engaging and designed specifically for each mortgage agent and enhances their online reputation with valuable content that is specifically designed to engage their followers. Purview for Mortgage Brokers has the property, neighbourhood and market intelligence your clients and lenders need. It is an online solution that provides quick and accurate property details on millions of properties. Underwriting service: Knowledgeable,
experienced underwriters are focused on closing deals with access to numerous lenders, private funds and exclusive promotions from lenders.
Lead generation • The 15 Minute Mortgage is designed to generate significant leads for the CENTUM family and our referral partners. The funding success on these leads, when managed effectively, has been over 80%. The best part? The leads are free. • Exclusive marketing partnerships: We partner with industry-leading companies to deliver bottom-line results for our brokers. • Aggressive online and social media marketing: We provide our brokers with free qualified leads directly through the industry-leading online platform CENTUM.ca
• Customizable marketing pieces and programs: We offer hundreds of marketing pieces for use in social media, online and print. • Lead management: Our back-office systems provide agents and franchisees with comprehensive lead management technology.
Compliance and payroll • Our centralized accounting service handles collection, reporting and distribution of lender/partner payments, with efficient same-day direct deposit to franchisees. • Our systems eliminate the need for monthly reporting, writing cheques for royalty or the marketing fund, or providing financial statements to us as a franchisor.
Not only does the real estate market continue to remain relatively strong across most of the country, but there have been some recent and significant mortgage lending changes announced that will very much influence the market going forward. The unfortunate thing about these announcements is that rather than help those who were already having difficulty getting into the real estate market, they will to make it even harder for them to qualify for a mortgage. This is where a qualified mortgage broker, especially those who are part of the CENTUM family, can prove their immeasurable value by ensuring they know the intricate details of the various types of mortgage products on offer so they can recommend the most suitable product for their clients’ individual circumstances. When you are part of the CENTUM family, you have access to some of the best tools and support in the industry, all of which allows you to remain competitive while focusing on providing top-level customer service. CENTUM allows you to focus on your immediate business development, while the team at head office develops competitive strategies to best deal with the significant mortgage qualification changes. It’s all about being in business ‘for yourself, but not by yourself.’ Over the years, many new rules and regulations have been introduced in our industry, and it is our responsibility and opportunity to help our customers navigate their way through these changes and secure the best loan product for their needs. Looking out for your best interest is not just our motto; we believe it is the responsibility of all mortgage brokers. CENTUM will celebrate its 15-year anniversary in 2017, and we look forward to continued growth and success. Martin H. Charlwood CEO, Centum
www.mortgagebrokernews.ca
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FEATURES
COVER STORY: SUPERBROKERS VERICO Compensation • New industry-exclusive opportunity that can increase revenue for every deal • No taxes (i.e. royalties) on commissions • No franchise or advertising fees • Full control of revenue streams and lender relationships • Full control of commission and agent splits • Proprietary loan products with trailer fees
Broker model • The first and largest true network model in Canada • Stringent application process that ensures the calibre of our members reflects the high standard of VERICO’s reputation • Helping owners achieve their business goals is the single focus of VERICO Canada, but you will find that we do it differently. VERICO supports members in all aspects of their business while fostering the entrepreneurial spirit
Ancillary services • Deal Assist, our new underwriting hub • BrokerBase, a suite of client-facing marketing tools that will get brokers more referrals, more renewals and more leads • Website Builder, Brochure Builder and Banner Ad Builder • Automated marketing program • Customizable client tip and feature sheets • Automatic newsletter program to keep your name top of mind with clients • D+H online and offline application that feeds directly into your Expert account • Exclusive lender relationships and privatelabel mortgage products with financial benefits • Trailer fees • Deposit brokering profit centre opportunities • VERICO Insurance for mortgage, life protection and critical illness • Wealth management • Education and training with worldrenowned Brian Tracy Group, 40 hours of
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ABOUT VERICO VERICO is Canada’s most respected network of independent mortgage brokers. During 2016, the VERICO network continued to grow with the addition of more than 16 new member firms, due solely to the tremendous value proposition we offer to brokers seeking support for their entrepreneurial goals. We are committed to an unwavering dedication to supporting the success of VERICO members, and we do so by responding to the constantly evolving needs of clients in the current market. Helping owners and agents achieve their business goals is the single focus of VERICO Canada. Large organizations and individual brokers alike continue to see the value offered by VERICO and choose to stay with the network – even in the absence of long-term contracts. VERICO consistently attracts 100+-agent firms and boutique brokerages, largely due to our philosophy of offering personalized solutions to every firm in the network, no matter their size or volume. As part of our mandate to support members and firms of every size, VERICO launched Deal Assist – a lender access centre – in September of this year. With rollout across all provinces slated for 2016/ 2017,we expect that Deal Assist will help VERICO members close more deals.
Q&A WITH VERICO New mortgage rules mean a new reality for the channel. What, if any, changes do you see as a result? [We want] to offer a reiterated voice of reassurance and confidence in our collective ability as an industry to adapt, enhance and succeed. This doesn’t suggest for a moment that we are enamoured with the policy changes or take them lightly. They are material changes. VERICO is not taking a defeatist approach and is not prepared to rest on its hands. VERICO will continue to work closely with its brokers to adapt and prevail as we put in place proactive initiatives to meet the changing landscape. We have the utmost confidence in the proficiency and professionalism of our brokers, as we do with those seemingly most impacted on the supply side: monoline lenders. Brokers have proven themselves to be resilient in the face of what appeared to be groundbreaking events since 2007, such as the subprime crisis, changes to LTV allowances, the exit of major lenders (i.e. ING and FirstLine Mortgages), increase in mortgage insurance premiums, tougher application of AML and KYC policies, introduction of B-20 and B-21, etc. Yet through all this turbulence, mortgage brokers have grown market share and have enjoyed record years in terms of volumes. As for the monoline lenders, we should not count them out. Their tenacity runs deep, as does their innate ability to meet the challenges of the marketplace. Let’s have faith in the ability of MCAP/RMG, First National, Merix, Canadiana, PQ, Radius, Street Capital and CMLS, to name but a few, to remain standing and quite stronger when the dust settles. It is an arduous and daunting task for borrowers to determine how they have been impacted. Mortgage brokers will prove to be incredible resources to help move borrowers through the mortgage process comfortably and seamlessly. The value of a mortgage broker has always been immense, but it has become immeasurably magnified.
www.mortgagebrokernews.ca
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* Source: LIMRA, Canadian Billion Dollar Baby Revisited, 2014. ** Source: Manulife Financial Advisors Focus Spring/Summer 2013. Mortgage Protection Plan® (MPP) insurance is underwritten by The Manufacturers Life Insurance Company (“Manulife”) and administered by Benesure Canada Inc. (“Benesure”). Credit Security Insurance Agency Inc. (“CSIA”) and its appointed agents provide insurance sales services. Benesure and CSIA are wholly-owned subsidiaries of Manulife. ® Registered trademark of Benesure Canada Inc.: used under licence. Manulife and the Block Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under licence. Manulife, PO Box 4213, Stn A, Toronto, ON M5W 5M3.
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09/2016 162210
The Manufacturers Life Insurance Company
2016-10-07 4/11/2016 10:02:144:51 PM PM
FEATURES
COVER STORY: SUPERBROKERS
•
•
• • •
training in the robust VERICO Academy video library, one-hour webinar sessions featuring top VERICO members and lender speakers, as well as training support from VERICO’s member services team Full resource centre offering branding, marketing and advertising support; PR and media outreach; an enterprise-level CRM system; and consumer newsletters VERICO white-label products to service the needs of clients through every stage of their lives – whether they are trying to move into a bigger home for an expanding family or wanting to cash in some equity for college funds, a VERICO mortgage can help clients achieve their financial goals In-house preferred suppliers, including Rogers Wireless, The Brick, Petro Canada Corporate leasing National and local events where members from across the country can network and take advantage of VERICO’s collective expertise
Lead generation • BrokerBase is a cutting-edge CRM system based on enterprise-level Microsoft CRM Dynamics. We transformed what was out of the box and turned it into a 24/7 automatic marketing machine that provides first-class service and regular customer touchpoints • BrokerBase outperforms the competition, turns clients into fans and gets the phone ringing, generating more repeats, more referrals and more renewals
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Compensation • All franchise owners receive a 95/5 split (on volume bonus as well). How they choose to pay their agents is up to their own business plans. Our average agent is doing $81,000 in annual commission, the highest it’s been in our 10-year history.
Broker model • We are a 100% franchise model.
Compliance and payroll • VERICO members operate their businesses using best practices and comply with regulations to the highest degree • Licensees retain full control of revenue streams and lender relationships • Lenders pay directly to licensees
VERICO has had another stellar year, having grown our network with the addition of exceptional mortgage professionals and launching several broker-centric tools during a year that included fierce competition and changing regulations. It was a challenging year, and 2017 will be no different. But I believe there continue to be opportunities in this industry, and VERICO maintains our commitment to support our brokers in capturing these opportunities. I am honoured and pleased to have been appointed president of Canada’s most respected network of mortgage brokers in September of this year. In my new role, I look forward to supporting our members by the high standards that VERICO has set forth. VERICO began with a simple idea: to unite top mortgage brokers and collectively create additional opportunities and value for this group of highly driven professionals. To this day, the number-one reason to join VERICO remains the same. We give you the opportunity to build your brand, not someone else’s. Our culture is predicated on growing our network of mortgage entrepreneurs and helping them grow their respective businesses while simultaneously looking to do well by the industry at large. The VERICO model puts the business, brand, lender and customer relationships back into the hands of the independent broker-owner. It is this philosophy that continues to attract mortgage professionals who want to achieve their entrepreneurial aspirations. This philosophy, in conjunction with providing an industry-leading suite of support and tools, is unrivalled in the industry and continues to put VERICO brokers in a unique position to win on their terms. Albert Collu President, VERICO
DOMINION LENDING CENTRES
Ancillary services • The DLC Visa Program consists of a line of seven DLC-branded Visa cards. This is another DLC first. • EnRICHed Academy is a financial literacy training program for young adults developed by DLC that teaches the fundamentals of finance in a fun and interactive manner through a web-based learning system and a workbook that students complete with their parents. • DLC is the first mortgage brokerage to also offer equipment leasing through our mortgage professionals via DLC Leasing. We purchased a successful leasing company in 2007 and rolled it out across the country. We even have our own internal credit department to handle the leasing side of our business and help agents with their deals. • Plan B Mortgage Services is a fully licensed mortgage brokerage specializing in Alt-A, B and private deals. • Exclusive line of white-label products through The Dominion Mortgage suite. This offering provides among the most competitive rates and commission payout – including both upfront and trailer commissions – in the industry. • Mortgage Protection Plan allows our agents to offer creditor life insurance to their clients. This is another excellent opportunity for our agents to receive both upfront and residual income as
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FEATURES
COVER STORY: SUPERBROKERS long as a plan remains in place. • We offer an abundance of free readyto-use templates, including articles, advertisements, client and referral partner letters and forms, website banners, and PowerPoint presentations, which we’re always updating to serve the needs of our network, as well as live weekly webinars on a variety of new topics. We also offer free custom work for advertising and communications. • The use of our Property Valuation System tool, which runs off Teranet’s Purview, has exploded. This incredible technology enables DLC brokers to search property addresses or a client name and pull a full property evaluation report based on the specific address before spinning tires with a client who may not be qualified. DLC head office is covering the costs and offering it free to the DLC network. No other superbroker in Canada has this relationship/deal with Teranet.
Lead generation • We are building on our previous award-winning national advertising campaign featuring Don Cherry with exciting new campaigns designed to entertain and engage the public. Our new “Our House” commercials will begin appearing on TV, radio, movie theatres, web and social media in November 2016, including the Grey Cup and Super Bowl. These 15- and 30-second commercials (in both English and French) feature the song “Our House” by Madness and highlight the different ways DLC can proudly say, “We’ve got a mortgage for that.” • The DLC Learning Academy – a step-bystep mentorship program for newcomers to the industry, as well as those with two years or less of industry experience – has helped bring in more deals for industry newcomers than any other program of its kind. • The DLC Marketing Support Desk is a one-stop email system for the entire network when they need assistance with everything from ad creation to help with
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DLC tools to everyday questions that require a quick response. The emails are assigned a number for tracking purposes to ensure they’re opened and resolved in a timely manner.
Compliance and payroll • Our constant focus on compliance ensures every mortgage professional in every region of the country has access to ongoing education and up-todate compliance information from
regulators and industry associations. We communicate this information via various means, including network-wide or province-wide communications. • We have a complete payroll reporting system set up for franchise owners and offer very detailed compliance procedure training. All of this is, of course, overseen by head office. Typically within 48 hours of head office receiving payment from lenders, agents receive their commission.
ABOUT DOMINION LENDING CENTRES It hasn’t been a slow market this year for DLC or our 2,625 mortgage professionals across Canada. We know, based on D+H Expert numbers, that the industry is up 5.3% year-to-date, whereas DLC is up 15.8%. Also, DLC went from 55,099 mortgages and $17.8 billion in 2015 to be on pace for 61,000 mortgages and more than $21 billion in 2016. We continue to provide ongoing education opportunities for our network with more than 150 live training webinars, Owners Universities (where 200 owners attended an intensive two-day training event) and our Agent University series, which saw 1,600-plus attendees and high-calibre speakers. DLC is the only mortgage company in Canada with a chief economist. Adding Dr. Sherry Cooper to Team Blue has led to $20 million (and counting!) in additional media exposure. Finally, our Property Valuation System is provided free to agents. This tool has all land registry data in the country and is helping our brokers qualify and connect with clients better.
At Dominion Lending Centres, we never stop learning. We are number one because we act like we’re number two – so while we celebrate our successes, we never rest on our laurels. This is the attitude we have had over the last 11 years, which have seen us grow from one mortgage broker to a leading network of more than 2,625 mortgage professionals from coast to coast. This is why eight of CMP’s top 20 small-market mortgage brokers, 44% of CMP’s Top 75 Brokers and 56% of CMP’s Top 50 Brokerages are Team Blue. These honours prove that we are always striving to be better. At DLC, we are innovative, we are thriving, and we are always seeking excellence. Our commitment to our families, clients, community, peers and building our businesses is unwavering. Dominion Lending Centres is stronger than ever. We continue to add tools, technologies, products and services that are better than any other mortgage company in Canada and, in some cases, are exclusive to DLC. We want our people to be the best, so we provide the best in all areas. Business should not be an ordeal. Business should be a relentless pursuit towards excellence – an adventure. Join our great adventure! Gary Mauris President, Dominion Lending Centres
www.mortgagebrokernews.ca
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83% OF OUR TOP 100 PRODUCING BROKERS USE
Find out more about our exclusive tools and services
JOINMA.CA/JOIN JOINMA.ca
© Copyr ight 2016, Mor tgage Architects Inc ., All r ights reser ved.
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FEATURES
COVER STORY: SUPERBROKERS MORTGAGE ARCHITECTS Compensation • Splits available for franchise and licensed agents • Six unparallelled compensation models, ranging from 90% to 97%
Broker model • The MA broker models cater to all business types, whether you are an independently owned and operated franchise or a broker who would like to be directly licensed under Mortgage Architects • Franchise programs for independently owned and operated brokerages – no franchise costs
Ancillary services • Central underwriting unit to help place deals with lenders you don’t have top-tier status and compensation with • Equipment leasing and accounts receivables purchasing • Commercial mortgages • Alternative Mortgage Solutions strategies to help place those tough deals • White-label mortgage product that offers industry-leading trailer commissions and/ or upfront compensation • Print and electronic CRM platform to help you stay top of mind with customers and referral sources • Strong focus on training and support
mortgage, including maturity notices • Access to customer prospecting campaigns at no charge
Compliance and payroll • Easy and seamless compliance via a document management system that is inte-
grated with intranet resources. This way, all docs reside within the application for future use while empowering our compliance officers to review the documents quickly and process payroll efficiently • Complete compliance management platform for franchises
Q&A WITH MORTGAGE ARCHITECTS What significant strides have you made this year in terms of helping brokerages, brokers and agents maximize originations in a slower market? This was a transition year for Mortgage Architects, and heading into the tail end of 2016, we are celebrating new growth. A new ownership group brings new expertise, experience and opportunities to Mortgage Architects brokers. We continue to provide our brokers leading-edge CRM platforms that help them keep in touch with prospective and past clients – so important in generating repeat and referral business. It’s not uncommon to hear our brokers praise our auto campaigns for helping to make their phones ring and bring new opportunities to their desk. In addition, we have a centralized underwriting desk that gives all our brokers access to the best rates and compensation from lenders despite their individual status. We also have a full suite of administrative support desks that allow brokers to focus on lead generation and doing business rather than mire in the pain of administering compliance and payroll. These are headaches that only take away from you earning more money. New mortgage rules mean a new reality for the channel. What, if any, changes do you see as a result? With the recent rash of consolidations in the mortgage brokerage space, it’s clear that scale is important for brokerages to continue to provide value. New customer acquisition will continue to be challenging, and more importantly than ever, brokers need to be able to wrap as many ancillary products and services to anchor the client for life, centred around the mortgage transaction. Talk to us about how we are making a difference here.
Lead generation • Prospecting training sessions that have a proven 20% return on your database • Broker websites that help brokers generate and convert leads • Search-engine-optimized, industryleading websites and mobile websites at no charge • Auto-triggered e-CRM for pre-, during and post-origination communications at no charge • Auto-triggered e-CRM to keep in touch with referral partners at no charge • Exclusive print CRM program to keep in touch with your clients throughout their
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Many don’t realize that Mortgage Architects started 11 years ago as a full-service brokerage and slowly morphed into offering franchise opportunities for those wishing to own and manage their own brokerage. Over these years, we’ve perfected and grown our suite of offerings that most brokerages cannot compete with. A robust CRM program, full payroll and compliance services are but a few things that we do exceptionally well. In fact, over 80% of our top brokers (both within franchises and under our full-service brokerage) leverage our value-added platforms and integrate them into their processes to be effective in what they do. In an environment of so much change, the value provided by your brokerage is so important, and I welcome you to compare to make sure you are getting the most from your brokerage relationship. Dong Lee, President, Mortgage Architects
www.mortgagebrokernews.ca
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CMP
NOMINATIONS NOW OPEN
BROUGHT TO YOU BY:
THE LIBERTY GRAND, TORONTO MAY 12TH 2017 WE WOULD LIKE TO THANK OUR PARTNERS
®
CANADIANMORTGAGEAWARDS.COM CMP 11.11_CMA17 Nominations Now Open Ad_Final.indd 1 24-45_Cover story SUPER BROKERS-SUBBED5.indd 45
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SPECIAL PROMOTIONAL FEATURE
REVERSE MORTGAGES
A broker’s guide to reverse mortgages In addition to helping seniors access needed funds, reverse mortgages can also bolster a broker’s bottom line
THE CANADIAN population is aging, and people are enjoying longer, healthier lives than ever before. While the positives of this are obvious, living longer does create some fundamental financial challenges that many retirees may not be prepared for. And for brokers, having access to lending instruments that allow older clients to access capital is essential. The older demographic can be a lucrative one for brokers, so any product that can help them provide the best possible service to older clients is a game-changer. One such product is HomEquity Bank’s reverse mortgage, a unique home equity product that allows homeowners aged 55 years and older to take up to 55% of the equity out of their home. “Ten years ago, I wasn’t so excited about the product because it was quite costly, but in the past four or five years, it has been completely changed,” says John Panagakos, principal broker at Dominion Lending Centres Home Financial. “It’s more affordable now, and the fact that it’s offered to the broker channel gives a lot more people access to the product. It’s geared to people in their senior years who are sitting on property with a lot of equity, but don’t want to move or downsize.” The reverse mortgage product is a great option for clients who need to either supplement their income, do renovations on their home or lend money to a family member,
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but don’t have enough money in the bank or in savings. The product allows a client to stay in their home and neighbourhood, in spite of any financial difficulties. Unless they choose otherwise, a client is never required to make a payment once they’ve received the funds from the reverse mortgage. Also, the reverse mortgage product cannot be called,
so her phone was cut off, and she simply couldn’t keep up with maintenance fees on her condo. “She went to her bank – one of the Big Six – who said they couldn’t do anything for her, so her lawyer put her in touch with me,” Panagakos says. “At the same time, I’d just been certified as a CHIP-certified reverse mortgage specialist. Getting access to money
“Every broker should get to know about reverse mortgages because sooner or later, they’re going to have older clients come to them in need of the help of this type of product” and at no point will clients ever have to requalify for the product. “My office is in Leaside, and we have a big aging population who own properties worth over a million dollars each,” says Panagakos, who has been a mortgage broker for 17 years. “But despite living in these expensive homes, these people don’t have the spare money to fix their dilapidated roofs or do other essential work that requires an upfront cost. Luckily, people are seeing that the reverse mortgage is available.” Panagakos recently had a call from an elderly client who was in serious financial difficulty. She couldn’t pay her Rogers bill,
had a big impact for her because she was in dire straits – her pension was just not enough to cover her monthly bills.” There are also many Canadian seniors who don’t have a pension to rely on – in the year 2000, 2.3 million salaried Canadians became self-employed, and many of this group are now in the senior demographic. Most do not have a defined benefit pension but are asset-rich. Although these seniors are not necessarily cash-strapped, many could certainly benefit from a tax-free reverse mortgage as part of their retirement strategy. With access to this product, brokers have the ability to create a new revenue stream by
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marketing to their over-55 client base. Panagakos believes having access to this sort of product is a major benefit for mortgage brokers. “The majority of a broker’s business is made up of purchases and refinances, so this can add another 5% to 10% to their portfolio,” he says. “Every broker should get to know about reverse mortgages because sooner or later, they’re going to have older clients come to them in need of the help of this type of product.” Despite the various positive aspects of the reverse mortgage product, some misconceptions remain – the most common is that it’s only of benefit for people who have heavy debt. Although the reverse mortgage is a good option for clients with debt issues, some elderly clients use the funds they receive for luxury purchases, lifestyle expenses, travel or as an alternative to a private second mortgage.
“Ten years ago, I wasn’t so excited about the product because it was quite costly, but in the past four or five years, it has been completely changed” “Sometimes, the reverse mortgage product is used by clients who want to free up money to help their children buy a property,” Panagakos adds. “I call it a pre-inheritance gift. Instead of having to wait until their parent passes away, the child is able to receive the money much earlier and begin the process of buying their own property with 20% down, rather than going high-ratio.” In offering the reverse mortgage product, Panagakos has built such a strong relation-
ship with HomEquity Bank that he struggles to partner with other lenders when they approach him. “The relationship has helped me to help more clients,” he says. “HomEquity is very accessible, and their back-end portal is great: You can do a proposal calculator with a client right away and see what’s available. Their underwriting team is also always available. It’s a great relationship, mainly because of the ease of working together.”
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PEOPLE
BROKER INSIGHT
Why it pays to keep in touch CMP sat down with mortgage broker Skye McLean to talk about navigating new regulations and her one simple rule for success
CMP: How did you get into the mortgage brokering industry? Skye McLean: I had worked in banking since I graduated, and was at TD for around seven years. All of my banking and lending experience set me up well for mortgage brokering, so it was a pretty smooth adjustment going from the bank – where I was a salaried employee – to being self-employed. It’s working out great; I love the flexibility. I was doing a lot of lending, and I was top of sales at TD. A couple of my colleagues went on to become mortgage brokers and convinced me to move over from the bank. My first role in the mortgage industry was with Atlantic Financial – I was with them for around seven years.
CMP: How would you describe your time in the industry? SM: I’ve enjoyed it. It’s challenging every day and continues to get more challenging, especially with announcements like [Bill Morneau’s announcement about tightened mortgage regulations]. It’s challenging but it’s manageable, and you have to move with the changes.
CMP: What are your thoughts on those recent regulation changes? Are they having any impact on your business so far? SM: It’s still too early to tell, but it defin-
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itely seems as though it’s going to decrease the amount people can buy, especially first-time buyers. House prices will have to adjust, which is equal to less sales for mortgage brokers. It’s definitely going to have an impact, especially in Alberta. It’s essentially bumping up the rate that people can qualify for by 2%. I’ve been getting calls from clients who want to buy properties right away in order to take advantage of the older rules. A lot of clients know it’s going to impact the economy, but how much, no one knows. I can understand what the government is doing – the rates may not stay this low forever, and we have to make sure that clients can afford payments in the future.
CMP: Where do you operate, and how has the market been performing there in 2016? SM: I work in Alberta, and overall, the market has been fine. We had a decent
first quarter of 2016, but I found that it has slowed down since June.
CMP: What’s the most challenging part of the business, in your opinion? SM: Rates are very competitive right now, and it seems as though AAA clients are getting more sensitive to rates. I find that a lot of the applications we’re getting are tougher; I’m not necessarily getting clients with one home and a good Beacon score. The deals are not as easy to get approvals for as they were previously. I lost a couple of deals for AAA clients last week because of rates. People are getting very competitive and buying down rates in such a way that they don’t get paid at all. Banks cap how much people can buy down rates, and I think brokerages should be stricter on that. The buying down of rates can impact our credibility because we may quote a client a rate, and then another broker quotes a rate that is 0.2% lower than us.
MCLEAN ON STANDING OUT FROM THE COMPETITION “I work for the customer, helping them to obtain the best financing available for their needs. Whether it is residential mortgages, home equity lines of credit, refinancing or commercial lending, I have the expertise to help. I am focused on customer service and results-driven. My repeat clientele, as well as numerous referrals from happy customers, speak volumes. I pride myself on quick responses, availability and being extremely knowledgeable.”
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FAST FACTS: SKYE MCLEAN Company
Axiom Mortgage Solutions Location
Calgary Total volume in 2015
$93,464,646 Loans funded
250
Place in Top 75 Brokers in 2016
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“Getting new clients is harder nowadays, so you have to keep hold of the ones you have. They need attention” CMP: What’s the secret behind your success? SM: Keeping in touch with all of my clients and referral sources, and getting back to clients in a timely manner.
CMP: What tips would you give to brokers who are looking to grow their business? SM: Staying on top of the market and keeping in touch with your clients are both very important. Also, make sure you keep
in contact with your referral sources. Some people finish one mortgage and then just move onto the next. In a downturn market, when people may not necessarily be buying properties, you can take advantage of mortgage renewals and refinances. It’s such a competitive market nowadays, so you have to build relationships. Consumers have access to banks and thousands of brokers. Getting new clients is harder nowadays, so you have to keep hold of the ones you have. They need attention.
Ranked as one of CMP ’s Top 75 Brokers every year since 2011
Fluent in both English and Cantonese
12 years of experience in the financial industry
www.mortgagebrokernews.ca
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FEATURES
PHILANTHROPY
The power of giving The act of giving is now expected of most businesses, explains John Sikkema, and you won’t just be helping people in need – your staff will feel great about it too
PHILANTHROPY WAS once considered a noble endeavour for the rich, but the social market has shifted. The new generation expects businesses and corporations to be socially responsible and engaged. Donating money is not enough – the expectations of businesses are now higher due to globalization and access to social media platforms. There are now an increasing number of new enterprises whose sole purpose is to make a difference in the world – but to do it in a profitable way, rather than purely exist for profit share. Businesses such as Who Gives A Crap, which sells toilet paper to fund developing world sewerage problems, is one example. They stepped into the consumer goods industry to gain market share from the corporate giants, with the goal of syphoning funds into the nonprofit sector while increasing the profile of the cause. Thankyou Water has shown that, by combining entrepreneurial flair with a noble cause and an existing product, you can persuade consumers and suppliers to switch from traditional brands, all because the profits are used to provide clean water in developing countries and allied philanthropic and charitable causes, as compared to traditional brands, which are solely focused on maximizing shareholder investment returns. Often people place philanthropic activity in the to-do-later basket, saying they’ll get to it “when I have more money or time, or when
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I’m retired.” What opportunities are passing you by? Melinda Gates’ mother persuaded Bill and Melinda to become philanthropic 20 years ago, saying, “To whom much is given, much is expected.” Imagine if they had not listened to her.
A life of significance As a success-driven business builder, I had a personal experience that shifted my focus. I realized I was focused on monetary success, and this was no longer satisfying. This, as outlined in my book, caused me to have a huge paradigm shift. I wanted to build a life of significance –one focused on others, not
the luxury of our five-star resort. I was unsettled and felt a deep conviction that we should be giving back to the community. As CEO, I shared my thoughts, and our team came up with the idea of building an orphanage in Thailand that would be run by a local NGO. In the space of an hour after
Melinda Gates’ mother persuaded Bill and Melinda to become philanthropic 20 years ago, saying, “To whom much is given, much is expected.” Imagine if they had not listened to her just myself. I took this on as both a personal and corporate challenge. How could my company become actively engaged with philanthropic opportunities? While in Phuket for our company’s conference, our team was transported daily between the hotel and the conference venue. We saw great poverty, an extreme contrast to
launching our plan, we raised the funds to build the orphanage from our franchisees and staff. I was surprised by the significant acts of generosity that came from several of the most hard-headed businesspeople in our organization. Over a decade later, whenever we meet, their first question is, “How’s the orphanage
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everyday small businesses and people. It begins with the heart of a leader to embrace the concept that to whom much is given, much is expected. A good place to start is by following these three principles:
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Align your philanthropic activity to your life purpose or life mission statement
What are you passionate about? What needs do you see around you, locally or globally, that get you angry, that others are not tackling sufficiently? What organizations exist that do good that you could help make better? Virtually every business has a business plan, but sadly I have found very few business owners or key leaders who have a clear personal plan for their life. By establishing your life purpose, it then becomes clearer which opportunities to pursue.
going?”, rather than how we grew our small business into a very successful national firm. If you embrace the practical power of giving, the personal and corporate rewards will astound you. It will take the culture of your company to a level well beyond where boardroom planning or HR programs teaching theoretical corporate values can take you. Here are seven reasons why giving will take your company to another level: Corporately unifies employees Creates a culture of collaboration among the staff Creates a corporate and individual purpose beyond themselves Broadens people’s horizons and experiences, creating excellent opportunities for personal growth Gives employees a conversation starter in varied social settings, which increases their connection with people around them Exposure to the difficulties that developing countries face creates a sense of gratitude and gives employees a realization of the
power they have to change the world Gives your business a leading edge among competitors to become an employer of choice I see personal transformation as the most powerful catalyst to become a genuine, giving and generous person, which ultimately will flow into the DNA of the organizations that you lead. Unfortunately, in our western culture, we have given away our personal responsibility to help those in need and expect the government to use our taxes to take on that responsibility. This means many people miss out – the task is simply too big! Thankfully, the tide is turning, and wealthy individuals such as Warren Buffet and Bill Gates are setting a great example. These business owners are pledging to give away 90% of their wealth to needy causes around the world prior to dying. There is now a healthy global movement where other wealthy individuals have been challenged to do likewise. This is cascading down to
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You will need to lead
3
Be prepared for change
Once you have a compelling vision in the philanthropic space, others will follow, but initially you may get some opposition. Maybe you are the only person in your sphere of influence who is committed to making a positive impact in the world. Clarity, communication and passion for your cause are needed.
The bigger the philanthropic project or cause you embrace, potentially the bigger the changes you will need to make. Risktaking, uncertainty and adventure are all key things to embrace as you seek a life that is fulfilling and meaningful. As children, we’re often encouraged to dream about how we can make the world a better place. It’s now time, as adults, to use our time, skills, personal and corporate resources, and a child-like attitude of sharing to make a difference in the world. Why not start today?
John Sikkema is a philanthropist, thought leader and entrepreneur. He is executive chairman of Halftime Australia, inspiring leaders to live their life purpose now.
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FEATURES
FEEDBACK
iCommunication: The way forward for organizations Georgia Murch explains how, by ditching annual performance reviews, organizations can finally press their foot firmly on the accelerator – and achieve progress
RESEARCH AND costing from Deloitte reveals that an annual appraisal for its 65,000 staff took 2 million hours. Expedia says it mostly wanted to ‘rehumanize’ the relationship between employees and bosses. A recent PricewaterhouseCoopers study conducted in Australia showed that 81% of companies had performance management systems that were only “somewhat effective” at achieving their goals. Global software giant Adobe estimates that their annual performance reviews were costing them 80,000 hours of managers’ time each year, the equivalent of 40 full-time employees. And after all that effort, internal surveys revealed that employees felt less inspired and motivated, and staff turnover increased. Increasingly, progressive companies are recognizing this. There are now more than 30 leading companies ditching performance reviews in place of feedback cultures and regular check-ins. Adobe led the way, soon followed by Juniper, Accenture, Microsoft, Deloitte, Zappos, Expedia, Dell and GE. It’s no surprise that these companies are the ones that attract the best and brightest employees, as they are receiving the feedback they need and deserve, and improving themselves and productivity as a result.
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Why don’t we implement powerful feedback cultures? There are four main reasons that get in the way of leaders and organizations creating these cultures:
1 Organizations don’t muster the courage to invest in their people and culture. They are stuck in the 1940s, and they just don’t get it. They fail to acknowledge that their biggest assets are not their products or services, but their people. As a result, these are not high-performing companies.
2 People think the change will be too hard and too disruptive. Creating a cultural shift requires effort, but without the investment, there will be no change. It’s like the frustrated lumberjack who continues to use a blunt saw to chop down the trees. He decides he doesn’t have time to stop and sharpen it. Yet all he is doing is making more work for himself. 3 We blame the organization and its leaders for failures in feedback and get stuck in what I call ‘the blame trap.' Getting stuck in the blame trap means we blame others, organiza-
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tions and leaders, and do not take any responsibility ourselves. It’s not a healthy space, nor does it allow anyone to move forward.
4 We think that ‘robust’ biannual or annual performance reviews will be enough. They won’t. In fact, the Corporate Leadership Council tells us that when informal feedback, given outside the formal review process, is delivered well, it can improve productivity by nearly 40%. It’s pretty compelling how well conversations outside the performance review work.
It’s time to move to the future The concept of ‘performance management’ was introduced about 60 years ago as a means to determine the wages of an employee based on their performance. It was used to drive behaviours to generate specific outcomes. When employees were solely driven by financial rewards, this tended to work well. In the late 1980s, not all employees felt rewarded, nor motivated, by financial gain alone. Many were driven by learning and the development of their skills. From here, performance management started moving into more frequent monitoring and reviews
with a focus on regular feedback outside the formal review process. As organizations put more regular conversations into the mix, there was a notable improvement in productivity and employee engagement – when the conversations were handled well. This still meant that the onus was on the person giving the feedback rather than the person receiving. Organizations that are in touch with the now – the high-performing organizations – exist where all employees, not just the leaders, are being taught how to give great feedback and also how to receive feedback with equal candour and grace. Organizations that do this are in their ‘feedback flow.’ But there are far fewer that are gaining this as their competitive edge. BRW cited that one of the important factors in creating these high-performance workplaces is that ‘the bosses saw issues from the employee’s point of view, and gave meaningful feedback and information.’ I know this to be true, as I work with many of them, and they are committed to improving the quality of their conversations. Then they improve collaboration with each other, and their customers, and drive better strategies and relationships. The great companies get
FEEDBACK FLOW MODEL
High profit
Productivity
Feedback flow
Low profit
Regular feedback
Performance management Low-performance organization
Time
High-performance organization
it. No wonder they are becoming the places that employees flock to and stay with. So, if we want to remain not only competitive, but ahead of the game, we need to move into the future and have feedback become part of our everyday tasks – part of how we flow. Creating a feedback flow is how progressive and competitive organizations get things done and create happy, fully engaged employees and customers. It is where we reverse the push of giving feedback and add to it the pull of receiving it, and alter systems to create an even flow.
Fixing feedback We need to make the changes to not only get ahead, but to stay there. Fixing feedback is about creating a cultural cadence. It’s more than feedback training. It’s about creating a self-sustaining flow that feeds itself and becomes effortless. It’s about moving to the future. The onus is on both parties: one to deliver the feedback in real time and the other to receive it well in the moment. The outcomes of this include: Eliminating dependence on performance management systems Significantly improving productivity Creating a culture of accountability and commitment Evolving authentic transparency and openness Allowing individuals to own their own development When we create a frequency of accountability that feeds itself, giving and receiving becomes an inevitable part of the way you do business. You and the organization are in your flow. You and your people become remarkable, and no one can stop talking about it.
Georgia Murch is an expert in teaching individuals how to have the tough conversations and creating feedback cultures in organizations. She is the author of Fixing Feedback and a highly engaging speaker.
www.mortgagebrokernews.ca
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PEOPLE
CAREER PATH
UP FOR A CHALLENGE
Frank Tucci’s willingness to take on new opportunities has led him on a winding road throughout the financial services industry Tucci counts the year he spent as a junior credit officer with Associate Financial as among the most important in his career, thanks to the mentoring he received from his branch manager “He showed me the importance of good customer service; those BEGINS lessons stay with me today. Financial charged 32% interest, and I CAREER WITH couldn’t sleep at night because of that, and I told him I was leaving. ASSOCIATE He said, ‘You’ve done a great job,’ and called his buddies at Canada FINANCIAL Trust. That’s how I landed there”
1982
1997
CHANGES STREAMS The move to Midland Walwyn, where Tucci took on the role of VP of marketing, required him to change gears in many ways “All of a sudden I went from the credit side of the business to private wealth management; it’s a different discipline. I learned so much. Then Merrill Lynch comes in and buys us, and all of a sudden we are a gigantic global firm”
2008
1983
MOVES TO CANADA TRUST Tucci’s jump to Canada Trust saw him grow with the company on both the asset and liability side. It was there that he met his second mentor, a SVP who, among other things, gave Tucci his first position as a branch manager “She had a keen interest in my career and counselled me, set me straight in terms of direction. In 1997, she left and went to work for Midland Walwyn and asked me to join her”
2001
IS PROMOTED AGAIN
GETS A WAKE-UP CALL After leaving CIBC and taking some time off, Tucci was vacationing in Florida when he experienced chest pains. The doctors told him later he had three arteries that were 92% blocked
“The heart issue gave me reason to pause; I clearly needed to make a decision as to whether to live or die. I decided I was no longer going to work for someone else” 2016
BECOMES CEO OF CANADIANA FINANCIAL This August, Tucci was invited to come onboard at Canadiana Financial to reassess the new company’s focus “Kathy asked me if I would consider taking the CEO role at Canadiana. She had enough faith in me to take on the role, and I couldn’t pass up the opportunity of another new challenge. We are trying to build Canadiana into a company that’s known for being consistent in its service delivery”
2013
The company is sold again, this time to CIBC Wood Gundy, and to Tucci’s surprise, the new owners not only kept him, but promoted him to head of marketing and product development. Among his most memorable achievements was the Investors Edge initiative, which provided clients with online services “There are lots of opportunities with a company like that. Those years were phenomenal; I got to learn all kinds of things about businesses I’d never been involved with”
JOINS PARADIGM QUEST For the third time in his career, a crucial mentor changed everything for Tucci. This time it was Paradigm founder Kathy Gregory, who was a colleague of Tucci’s in the ’90s. A fateful meeting at a dinner party led to a 30-day contract, which then became a six-month contract “And Bob’s your uncle, I was the EVP of operations of Paradigm for three years. I would not have come back to work for a company if not for Kathy”
54 www.mortgagebrokernews.ca
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE Email mortgagebrokernews@kmimedia.ca
WHAT’S COOKING? For broker Stefan Cherwoniak and his sideline in catering, the proof is in the pudding STEFAN CHERWONIAK’S thriving culinary career is directly traceable to his childhood allergies, which made a normal diet impossible. “I was allergic to everything – legumes, nuts, milk and lactose products, anything with preservatives,” the Edmonton-based mortgage broker says. Cooking for himself segued into working at a restaurant near his childhood home, a job that continued until his university days and evolved into “cooking for their catering [arm] and teaching some classes.” Quickfire Cookery, the boutique catering company Cherwoniak founded, was officially launched in 2011 after he spent three years working at a private club and building up a clientele just prior to getting his mortgage licence. “It comes back to my distaste for monotony,” he says. “If I was just a mortgage broker, I would get bored. Food is my artistic passion.” Cooking also provides Cherwoniak with the opportunity to do good in the community via initiatives like the Meals that Mend program for Ronald McDonald House, a commitment that involves cooking up to 70 meals for guests and volunteers on a monthly basis. His services have also been auctioned off to benefit the Kids Kottage Foundation for the last six years – at the most recent event, the winning bid of $6,000 was augmented by an additional $5,000 donation from the runner-up.
12
Age at which Cherwoniak started cooking his own meals
800
Number of meals Cherwoniak estimates he cooks in a year
$11,000
Amount earned from the charity auction for Kids Kottage in 2016
56 www.mortgagebrokernews.ca
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