Build a business that people want to buy. This seems logical. But the vast majority of mortgage brokers don’t do it. They’re caught up in their day-to-day transactions with little thought of building a lasting enterprise.
Calgary-based mortgage brokerage Boomerang Financial has taken a different tack. It just announced that Heritage Financial Group Ltd. (HFGL) has bought a 50% ownership stake in it. (Press Release)
The move lets HFGL generate revenue from referring out mortgage business to Boomerang. And it gives Boomerang a source of RESPs and mutual funds to cross-sell its clients.
But more than that, it provides Boomerang with an instant volume boost from HFGL mortgage referrals. That benefits Boomerang in two ways:
- It permits higher levels of volume-based status with more lenders, and
- It lets the company shift to a model that trades “…reduced compensation…for better rates,” says co-founder Wayne Kainu. Boomerang plans to offset that reduced compensation with its new higher volumes.
Kainu and his partner Chris Cabel started a relationship with HFGL five years ago. Then about one year ago they started looking for an equity partner to expand Boomerang’s business. HFGL was interested.
“I think the biggest opportunity for brokers today is to look outside the box and start to find these “non-traditional” referral sources,” states Kainu. “I believe these opportunities exist everywhere, and it’s up to brokers today to start thinking bigger.”
He adds that the industry concentrates too much on the 25% of Canadians who are presently using brokers. “…Too many brokers are focused…on that 25%, and fighting each other for it…Why compete in a market that is saturated when you can go and create your own market that’s virtually untouched.”
Rob McLister, CMT
What a brilliant move! This is what the Canadian consumers need – more mortgage options. All the best to Boomerang Financial!
Focusing on 25%, nice point. It is a good move to share the sources. Brokers should have some choices to offer. A number of clients ask for many other products – and that is where partnership helps.
Good referral sources have always been vital. Fortunately for those of us in the business, most bank staff and brokers have no idea how to cultivate them.
So…its another brokerage buying down rates in hopes of greater volumes to offset the reduction in compensation?
More work for less pay…interesting value proposition.
Heigh ho Heigh ho.