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For a fresh broker, an aggregator can provide multiple valuable services to assist them in getting off their feet and writing loans.
There are a variety of aggregators that offer tailored services. Things like marketing, CRM platforms, and lead generation can be attractive for someone new to industry.
For more experienced brokers, however, these offerings can fall flat, prompting the question of whether or not the services are worth it.
There are ‘low touch’ models that are more beneficial for those used to the industry, which come with a cheaper price tag.
One broker, speaking to Broker Daily, appreciates the option of the low-touch model.
“There’s two parts. There’s set and forget with brokers who know what they’re doing with a minimal fee model with low touch. If required, they can get involved. And then obviously there’s the business partner model, whereby they want to partner with you,” they said.
The broker noted that aggregator-bank relationship isn’t what it used to be. Now, for an experienced broker, the real value from an aggregator comes in the form of tech and compliance.
“It used to be the banks did what the aggregator said because those aggregators would send more deals to those banks and the relationship was stronger. Where now I see the aggregator as technology and compliance. So, we are a credit rep under their credit licence."
“They look after all of our compliance, which I like and I wouldn’t change. So, for me, them looking after the compliance, providing support from that end, making sure we’re doing the training adequate, making sure we keep appropriate in terms of what we do. I really like that piece. It’s a big tick.”
A reluctant relationship?
While there are some positives an aggregator can provide brokers, is it a reluctant relationship?
The same broker said “it’s a relationship built of more you have to do it rather than you need them.”
“I don’t want or need a best friend or business support. So, I don’t see the benefit in paying astronomical fees to kind of have someone sit in my office all the time. My business is running at a level where it doesn’t require that additional stuff. So, for me, we pay a fee to facilitate the relationship."
The value for money challenge was highlighted by founder and director of Broker Essentials, Jason Back.
“The broker just wants to know, am I going to get paid on time? Have I got a decent CRM? And, I want to be compliant. They’re the three main things. And then it’s evolving into what’s my support really look like? What does business support look like? And that’s probably the biggest challenge aggregators have is that they may not have the level of expertise to be able to cover enough of their brokers in a way that the broker would expect for what they’re paying,” said Back.
The broker-aggregator-bank relationship is commerce-based and as such is a “finely balanced relationship.”
“The banks don’t love the broker relationship, not because they don’t love what brokers are doing for clients and solving their needs. What they don’t like is that it’s a sales force that they don’t control,” said Back.
“There is a cost to distribution. They’ve changed their distribution model to reduce that cost and go into that digitised model. And therefore, but clients don’t want that yet. And they may never want that, which means that brokers are always going to play a part because people want contact.”
Much akin to the broker's comments on the relationship between brokers and aggregators, the relationships involved in this industry are not “born out of complimentary benefit all the time. Someone’s winning, someone’s losing. Everyone is constantly pushing and throwing.”
The future of aggregation
So, with what can be a somewhat volatile relationship, where does the future of aggregation stand?
Despite the friction, there is a place for aggregators and, when asked if he would deal with the banks directly if ever possible, the broker said “probably not.”
“I trust aggregators more than I trust banks. I feel if there was no aggregation, banks could do what they like and they can just turn on the tap and turn it off without any level of accountability. So regardless of anything, I would still prefer aggregation model over non-aggregation model, just because the expense isn’t huge and it does provide a level of security,” he said.
“I would never leave my aggregation company because if anything did go wrong, that wasn’t my fault. I know that they would support me no matter what. So, it’s that support if required, hopefully never will be required. But I know that they will have my back no matter what.”
Not all agree though, as Eva Loisance, head of broker at Finni Mortgages, said she’d jump at the opportunity to deal with lenders directly.
“Especially if it means we get a bigger cut of the commission, streamline the process and reduce time/costs. I do see lenders doing this in the future as a way to get more business from experienced brokers,” she said.
The US operates on a model of direct-to-broker relationships. However, efficiency and compliance could take a hit as it’s far easier for lenders to deal with an aggregation group over thousands of brokers.
The way forward may require more collaboration between the two entities. This could come in the form of increased transparency between the groups and brokers to allow for stronger relationships.
“Brokers don’t necessarily always see what is going on in the background. I’d love to see a little bit more transparency in relation to what that looks like. And I’d certainly like brokers to understand what the aggregator bank agreements entail,” said Back.
“That would be very interesting to be able to expose that documentation and say, here’s what the relationship really looks like.”
Despite this, some of the benefits aggregators bring are too good to pass up.
“I definitely feel like there’s always going to be a space for aggregators, regardless of anything. I think managing a credit licence as a broker is just way too much effort,” said the broker.
“Also, it’s very heavily unregulated. Once you have a credit licence, I don’t feel like there’s adequate care being put into the management of people who have that credit licence. So, people get a bit loose in regards to it, where I like the fact that I have to be accountable to someone to ensure that it’s always right and always compliant. For me, that’s definitely the space that I think aggregators will continue to play.”
While not all offerings hit home for brokers, there are positives to come from an aggregator relationship. For experienced brokers, finding a group that acknowledges low maintenance is key.
For new brokers, however, the services provided by aggregators can help those establishing a career develop skills and build client bases.
