We’ve spent the last seven years advocating for mortgage brokers. That’s on the public record.
Why? Because nothing has replaced a skilled mortgage professional who can deal with multiple lenders.
But it would be foolish and self-serving to suggest that other channels, be they retail — e.g., bank and credit union advisors, online discount brokers or direct-to-consumer lenders — cannot provide the value that many consumers seek.
So how does the editor of a mortgage news site balance those two realities when now being part of a broker-centric organization? That question came up Friday in an industry forum and it deserves an answer.
It’s been said that this author believes the future of the mortgage industry is not the broker channel, but rather the direct-to-consumer (DTC) channel. That’s only partly true.
Yes, direct-to-consumer will blossom in time. But, DTC aside, the future of the mortgage industry involves banks. No challenger will overtake six titans, each of which averages over $1 billion of profit every 90 days. Banks control the funding market, they own the leading trusted brands and they have extraordinary intellectual capital. While competitors can win healthy slices of the market, banks will not give up dominance in mortgages.
Second, full-service mortgage professionals will always exist (in both broker and retail channels). Personalized one-on-one attention is essential for a range of homeowners including those who crave customized service, those without mortgage experience, income property investors, leveraged investors, credit-challenged borrowers and so on. This author remains a full-service mortgage planner because of a belief in that model.
When assessing the future of the mortgage industry, the more germane question is the growth rate of each channel. Rate wars will increasingly drive mortgage providers to find any way possible to lower costs. For that reason, streamlined direct-to-consumer and deep-discount broker models should lead the race for growth.
On Friday, Gary Mauris, the passionate and inspiringly successful co-founder of Canada’s largest broker franchisor, made his position clear: consumers are “best served” by full-service brokers, adding “I don’t believe someone who picks the consumer direct model should be the voice for the majority of brokers who believe in the full-service model.” (That’s in reference to this author, whose online firm lets consumers choose between full-service and “do-it-yourself.”)
That leads into another question: how should Canada’s association of mortgage professionals position itself? CAAMP’s plan, as we understand it, is to maintain meaningful dialogue from a range of informed views.
For that to be successful, no one industry participant’s voice should be the loudest, for it risks drowning out the voice that guides us, the consumer’s. Any messaging from a broker-centric organization that doesn’t factor in consumer demand for freedom of choice, today’s more educated borrower and the need for originator efficiencies will threaten that organization long term.
In business, the majority knows no more about what the future holds than the minority. The majority of stockbrokers pre-E*Trade supported full-service investing. The majority of accountants pre-TurboTax supported full-service tax preparation. The majority of travel agents pre-Expedia supported full-service travel planning.
The models we support today don’t dictate what models consumers adopt tomorrow.
Traditional brokerage models are now under attack, and their profitability is threatened like never before. There is no time left for protectionism, no time for infighting (which consumers see on the Internet, by the way) and no time for hypocrisy (e.g., banks can undercut brokers but brokers can’t undercut brokers).
There is only time for adapting to consumer demands.
This business is in dire and immediate need of more voices that prepare brokers for this changing competitive landscape. Voices that don’t impetuously label new models as “lowest rate at all cost” operations. Voices who understand that most of today’s new models rely on brokers, which is a good thing for our industry. Voices who understand that this is not mutually exclusive with promoting the benefits of full-service brokers.
CAAMP members are and always have been the owners of CAAMP. They have instructed CAAMP loud and clear to provide both them and consumers with “timely and relevant information,” and to be “the leading authority on mortgage issues.”
You cannot be an authority of anything without an open mind. In this context, that means embracing perspectives that might diverge from the majority of full-service brokers. With that approach, CAAMP will remain the premier voice of Canada’s mortgage broker channel and mortgage industry at large. This is the personal view of one who is by no means the voice of CAAMP, just a voice in CAAMP.