New succession planning model for brokers to consider

Mortgage brokers have been struggling with the long-standing problem of finding alternative options for succession planning to avoid the sale of their highly valued loan book. However, recent developments in the industry may soon change the playing field for these professionals.

UFinancial, a privately-owned Melbourne-based financial services provider, recently rolled-out a new succession planning model. This sees them merge operations with independent mortgage broker, eSelect, to deliver broader services to clients and an optional ‘exit strategy’ for the future. Under the new arrangement, the broker will take up residence in UFinancial’s head office.

Succession plan ensures longevity
ESelect director, Jim Henwood, believes this partnership will go a long way in ensuring the longevity of his business and will guarantee that his clients are indeed clients for life. The positives from this, he says, make coming under a different entity worth it.

“I’ve been in the business for about 12 years now and although I’m not retiring in the near future, the thought of how I might eventually exit the industry has been on my mind for some time now,” says Henwood. “The truth is, I don’t really want to be outed or have to sell my mortgage book to another broking firm for twice or thrice it’s value, which I believe is still less than it’s true worth. I also don’t want to run out my book as it would be a disservice to my clients who’ve been with me for a long time.”

The only other real option would be to bring in a new mortgage broker to the business. That, Henwood says, comes with its own set of challenges, as you have to first find the right person and then train them up to your standards.

After getting into talks with UFinanacial, the eSelect director was able to find the missing piece of the puzzle. The newly launched succession planning model offers brokers an ‘out’ from being in a similar pickle.

“I can now continue working for another five or seven or 10 years, whatever it might be, but it means that my business can keep growing,” he says. “I can meet and assist more clients because of the additional support here.”

Maintaining their independence
UFinancial co-director Bryce Deledio explains that independent brokerages will still be able to maintain their independence and client database with the additional benefit of providing services such as financial planning and property advisory. 

“Offering a more holistic service to clients is extremely important now given the changes in the industry, the increased compliance requirements and the scrutiny that lenders put on the applications,” says Deledio. “It’s proving difficult for brokers to have enough resources on their own to process applications efficiently in the midst of increasing demands. This is why the model gives small and medium sized businesses the opportunity to consolidate and grow even more.”

Although brokers joining UFinancial have the opportunity to work remotely, Deledio believes the real growth lies in coming in-house, collaborating with similar-minded people and learning new solutions from the conversations around them.

Brokers who eventually decide to exit the industry will benefit from trailing income month on month; meanwhile UFinancial will take over the business relationships for the clients and profit from future business.

“We now have a model that is scalable and replicable for any broker,” says Deledio.