There is a lot of chatter on both sides of ‘the ditch’ about mortgage advisor commission. Should advisors be paid trail commission? What do they do for trail commission? Should the customer pay instead of the lender?
In New Zealand trail commission is coming back after being stopped by most lenders about a decade ago. While in Australia there is talk that trail payments should cease because advisors don’t do anything for these ongoing payments.
New Zealand mortgage advisors are paid a fee to ‘refix’ the clients fixed rate loan at the end of the fixed period. As a result, about 80% of mortgages in NZ are fixed rate loans, as opposed to about 20% fixed rate in Australia. Every two- or three-years the advisor chat with their clients, complete a quick review of the client’s circumstances and send the lender a refix form.
In Australia advisors are not paid for the refix service but they are paid trail for the ongoing management of the client. How many Australian mortgage advisors are actually checking in with their clients is unknown. As always there is a small proportion of very good, successful advisors who manage this service well.
Advisors from both New Zealand and Australia should be looking at ways to upgrade their client offering and add a client care regime to their business. The best way to do this is to implement a simple business process that your admin team can manage or you can do one day per month. The iLEND Commission system is the perfect tool to manage your new client care regime or system.
Over the past 15 years Finware has watched our clients with a strong client care process grow and prosper. Our clients that have taken the time (yes, it is time consuming process) to setup and fine tune their internal client care system reap very big rewards:
· Client referrals increase
· Average mortgage term increases
· Client dropoff rate decreases
These outcomes increase your businesses profit dramatically. Referred clients and clients that stay with you are by far the most profitable clients.
So what does all this have to do with commissions?
I’m glad you asked. Your client care package revolves around your commission system. Your monthly trail report is a treasure trove of information. You can see who is behind on their payments and which clients have paid down extra on their mortgage – these are the clients you need to have a chat with this week.
The commission system will also ensure your refix report is accurate. The refix report alerts you to those loans coming off fixed rates and interest only periods in the next two months. From here you can send out your standard template letter straight from iLEND CRM or simply call these clients.
With all the chatter about commissions and trails it is interesting to note that the large majority of mortgage advisors do not actually check their commission statements for accuracy! Every time we install the iLEND commission system, without exception, our clients are shocked to see the number of loans that are missing from their completeness report. These are usually trail payments that have simply “dropped off” your report and you are no longer getting paid for them – for no reason. Well actually, the reason is that managing large numbers of small trail payments each month is a time-consuming job. If a $22 trail payment is missing this month it is easy to miss. When you speak to the lender or aggregator they will usually say that is was just an admin error, but if you don’t chase it the payment will never be reinstated and you will loose that $22 for the next 50 months or more – i.e. over $1,000 and that happens just about every month in a large and small mortgage books.
So, before we get our knickers in a twist about commission changes that may or may not happen – how about we spend a little time and energy and focus on our own back yard and the commission that is already going missing from our bank accounts, right under our noses, every month.
Finware is so sure that when you setup our commission system you will find missing trail that we will refund you $100 if we find no missing trails!
Of course you don't need the iLEND commission system to achieve the same outcome. It can be completed manually with time. However there is no other software that can do this job. Your iLEND commission system can (1) import your lender or aggregator commission statement in a single click; (2) then reconcile the statements against previous months information; (3) then print your advisor and referrer payment statements (4) finally, your iLEND commission system can prepare your bank AFI file for the funds transfer. All-in-all it is a comprehensive end-to-end system built for mortgage advisors.