3 Comments 3 Commentsby Eric Frykberg
Nest Home Loans is a 20-strong broking company based in Hamilton.
Its scheme has the potential to provide new competition in a field dominated for now by Mike Pero.
It is pitching its bid for franchise sales on the need for mortgage advisers to achieve a work life balance, which is difficult now, with 60 to 70 hour working weeks common in the industry.
Nest Home Loans director Jeff Kerwin adds not just his firm, the whole industry needs to move forward, and capture more business, and he thinks it will.
“In New Zealand approximately 35% of mortgages come from mortgage brokers. In the UK and USA it is about 80%, so we are under half of international levels.
“But I think as time goes by, more and more consumers are going to turn to mortgage advisers instead of going straight to the bank.”
Kerwin believes this trend will be enhanced by the fact that would-be home owners going to a bank to ask for a loan can sometimes feel powerless compared with the bank manager sitting on the other side of the desk.
In addition, many banks are closing branches anyway, leaving customers with nowhere to walk into to ask for help, so going to a broker can be useful to them.
At present, most mortgage brokers are aggregated into groups, so banks can deal with streamlined organisations rather than having too many individual brokers that might clutter their operating systems.
Kerwin says his franchising operation will go beyond what aggregated groups can offer.
“The aggregators in New Zealand primarily only process commissions and supply a steering system, that is pretty much what they do.
“With us, there's the lead generation, that is taken care of. The next thing is the centralised admin office …. a lot of business owners don't like (the burdon of) admin, so we remove that.
“We have got a national marketing team, so there is national branding and we coach business owners on how to do local marketing as well.”
But Kerwin stresses the main advantage of franchising will be helping the work life balance of people in the industry.
“When I was a broker I was working 60-70 hours per week. My phone rang 100 times a day including the weekends. I couldn’t enjoy a weekend with my family because I’d be taking calls. I couldn’t go on holiday, and if I did I'd be more focussed on my laptop tending to emails than having a holiday.
“I always dreamed of creating a business with a team of advisers, in a fun, supportive and innovative environment, that stripped away all the bad parts of the role.
“I have now created that and want to offer it to others.”
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As any experienced mortgage broker knows customers come to you because of your own individual reputation and abilities, not because of the sign hanging on your office wall. YOU are the brand. It's not the franchisor who is clipping the ticket taking 30%+ of your own hard earned commission etc. You don't own your customers when you belong to a franchise and when you come to exit the industry your business is a heck of a lot less desirable to sell to another broker, if it's even saleable.
There's a reason why the aggregation model has proved so popular amongst the vast majority of mortgage brokers operating in New Zealand today but I agree with Kerwin that when it comes to aggregator groups 95% of them are nothing more than glorified pay clerks. This is why so many experienced mortgage brokers are opting now to become their own FAP and hopefully cut out the middleman in the future, just like insurance advisers can do already.