When I started my business some 20 years ago, I was often embarrassed to call myself a broker. When I left my job to become a broker, the looks of disappointment amongst my colleagues was very evident. Why was a promising banker leaving a credible profession to become a broker? Some even had the decency to ask me directly. Slowly but surely, the credibility of myself as a professional commercial finance broker, as well as the credibility of the craft itself improved. Commercial mortgage broking is becoming legitimate. The attention and importance we now obtain from the banks and lenders is encouraging and the type of new broker we now attract is increasing in sophistication.
I revel at how far we have come as an industry. But, I’m daunted by how much further we have to go to becoming a profession. A recognised, educated and qualified profession whose value is widely understood and whose services are just as required as accountants and solicitors. In the journey to professionalise, we will have only a few opportunities to take major leaps forward in this pursuit, and these opportunities need to be identified and exploited. We currently have such an opportunity! An opportunity to demonstrate to the lenders that duly qualified commercial finance brokers are an efficient and effective model for them. That we are a friend and not a foe. An opportunity to demonstrate to our clients that we are a cost effective and efficient vehicle to access vital capital for their business. That we have a deep understanding of their industry, their constraints, their pressures and because we have a unique opportunity to see so many transactions and gain ideas from their peers, we can bring innovation and an advisory service that goes beyond just tax reduction.
The threat we face to realising this opportunity is the emergence of the underqualified commercial broker. All brokers, regardless of experience, education or expertise are encouraged to source and write commercial transactions. For years, aggregators have been encouraging more brokers to start writing commercial mortgages without proper investment into developing them to be qualified. Aggregators hold occasional PD days which are marketed to help you crack into the ‘lucrative commercial broking’ sphere. Other broker associations do not have different tiers of accreditation for consumer or commercial finance. They do not have a distinction in CPD points for commercial broking or residential broking activities to renew your annual membership. I recently employed a dedicated asset finance professional in my business. A major bank’s accreditation process involved him obtaining residential mortgage accreditation in order to write asset finance and commercial deals even though he does not know the first thing about a home loan.
We need and want new professionals to join the commercial broking profession, but they need to be educated and have the requisite knowledge to do so. Proper education curriculums is the key to this.
The recent tightening in credit conditions has provided us a chance to increase our legitimacy and our profile. How we respond as an industry will define us for the next decade or more. So much of my work is the undo (or redo) of transactions that have been started (or worse, ruined) by home loan brokers with the best of intentions exercising the advice of their aggregators by trying to crack into the lucrative commercial broking business. These instances which are many do not help anyone. They don’t help the lender, the profession or the client. They diminish the opportunity professional operators currently have to legitimise their service proposition.
I call on the aggregators and the lenders to focus on professional development rather than just sales. The irony is, the better developed commercial brokers become, the more they sell. In recent years, some of the very same people that looked down on me when I became a commercial mortgage broker have sought my counsel as to how they can also leave the bank to become a mortgage broker.
By George Karam