Is the product worth the money?

I’ll miss you.  It’s not easy to say goodbye to an old friend.  Parting ways is always difficult. What makes it a little less painful is when the emotional attachment has waned or vanished completely.  Alas, that wasn’t to be in my case.  Thinking about all the good times and comfort the relationship brought me makes it difficult to do. But do it I must.  When I’m charged $5.58 for an extra hot, small vanilla latte, I’m left with no choice but to end the relationship.

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The family cruise to Alaska is coming to an end. As I write this blog we’re in Canadian territory, off the coast of B.C., on our way to San Fransisco, to head back to Toronto. Now that’s taking the long way home. Spending 12 days on ship is an experience, and it does take some adjusting. The biggest adjustment is being way from work for a prolonged period of time. It’s been close to four years since I’ve been away for more than five working days in a row. I’ve taken plenty of short vacations over the years but they’re usually four or five days in succession. The reason is simple, I can always come up with a reason why “now is not a good time to be away work”. Too busy or it’s too slow. There’s always a justification. If you’re guilty of the same thing here’s what I’ve learned, we’re not that important. I checked emails every morning, responded when I thought it was necessary but I made the decision that my family and this trip came first. MERIX wasn’t neglected in my absence because there’s a great senior leadership team in place, and they’re more than capable of taking care of the day-to-day tasks. If the business  consumes you that you can’t take a couple of weeks off, frankly, that doesn’t bode well for your business or yourself. Coming to this realization is an ongoing process, and I’m still working on it.

It’s interesting as a vacation draws to an end the work switch seems to get turned on. With every passing hour “work” issues enter your thoughts and I suspect it’s the minds way of preparing ourselves for what’s next. What’s next for me professionally? There’s been a number of changes at MERIX recently, and I’m really excited about the direction our company is taking. I’ll elaborate further about some of the changes in future blogs. I’m also looking forward to take on the challenges of being CAAMP Chair, effective this November. The next 16 months are going to be very busy, and I can’t wait to get started.

A a final thought relative to my trip to Alaska? Russia sold Alaska to the US in 1867. The land and all if its natural wonders sold for $7.2 million. That worked out to 19 cents an acre. As some of my Jewish friends want to say…”such a deal”.

Until next time.

Cheers

As per my previous blog, I will now address the second question I answered as a panelist at the VERICO Business Forum . “What is one thing that a lender can do today to ensure long term sustainability, and what can mortgage brokers do in kind”.

Simply stated there is no one thing that a lender can do today to ensure long term stability. Usually when we’re asked these questions, in a public forum, the answers are sprinkled with ambiguity, and a pinch of fluff. The reality is, if a business is going to be relevant tomorrow it requires careful planning, and a wee bit of luck.

Careful planning requires a full understanding of your customer’s needs.  Sales today is far different than it was years ago.  The customer is far more sophisticated today, as is the sales person.  At Merix we serve two customers, the borrower and the mortgage broker.  For too long in this industry the mortgage broker has been viewed simply as a conduit between the borrower and the lender.  This has to change.  The evolution of this industry requires that we change how we treat our customers, the mortgage broker.

I believe greater transparency is required between the mortgage broker and the lender.  Our dialogue and operating practice has to change.  We will not be able to thrive and grow our business if we continue to work in an environment where one entities profit is another entities loss.  Long term sustainability of our industry requires the broker owner, the mortgage broker and the lender to profit.  If one of these three is left out of the profit equation the industry is doomed for failure or at the very least stagnation.  Therefore, I believe lenders have to become more transparent about their own business.  If every conversation is about more VB (Volume Bonus) or higher finder’s fee, it’s a race to the end.  The challenge we face today is in understanding one another’s business. We’ll never get there unless we present the facts.  The only way we’ll all be able to grow is by giving each other a look behind the curtain.

In terms of what a mortgage broker can do to ensure long-term sustainability?
Be prepared to face two significant challenges, customer retention and increased competition from the bank’s mortgage sale’s force.

Customer retention is the nasty little issue that no one wants to discuss in an open and honest way.  So I’ll give it a shot. There’s isn’t a lender out there who doesn‘t believe that once a broker accepts the finder’s fee and VB, the customer belongs to the financial institution.  Mortgage brokers believe the lender is renting the customer for five years. I can assure you that every lender you deal with, including MERIX, is allocating more resources to customer retention.  Every lender will fight tooth and nail to retain the customer, and so far lenders have been very successful. For illustration please note the most recent CMHC survey relative to customer retention. The banks are winning the customer retention game, and they plan on keeping it that way.

The second significant issue mortgage brokers will have to confront is increased competition from bank’s mortgage sales force.  You’re probably familiar with the two banks that dominate the space today, but I can assure you that all the banks are either investing in that channel today or they’re about to do so.  I mean all of them.  The banks learned from the broker channel.  Subject matter expertise, and a focus on service, is a formula that works.  Imitation is the highest form of flattery, so mortgage brokers be flattered.  That being said, the banks are coming, and they have deep pockets.

Until next time,

Cheers