Canada’s most outspoken capitalist has pulled the plug on brokering. After a little over a year in the business, Kevin O’Leary’s mortgage operation has closed.
Alex Kenjeev, President O’Leary Ventures, told CMT this:
“After a careful trial and evaluation period, we have decided to exit the mortgage space. We will be focusing instead on other financial services businesses that we see as more compelling. Kevin is constantly looking at opportunities where he can add the most value, and we regularly assess and reassess which ones make the most sense at any given time.”
He added:
“That being said, we will keep an eye on industry trends and developments, and if the right opportunity arises we may revisit the mortgage space at that time.”
O’Leary’s model was to make mortgages “simple” (e.g., simplified products, process and paperwork). As we all know in the mortgage business, however, terms, legal disclosures and lender commitments are anything but simple.
O’Leary also tried to leverage his personal brand, which was likely a double-edged sword. Having a money-hungry persona isn’t necessarily reassuring to consumers ― who want to know that you’re looking out for their best interests.
O’Leary Mortgages also touted that it would help people find “the best possible rates.” But the proof in the pudding (actual mortgage rates, promotions or other pricing information) was nowhere to be found on his website.
In sum, O’Leary Mortgages was a pilot project that didn’t generate the returns O’Leary envisioned. The problem might have been that he treated it like a pilot and didn’t make the investment needed to grow consumer awareness and differentiate his offerings.
If anything, it’s a fascinating case study on how you can’t scale in this business without an unambiguous competitive edge. And that takes more than a famous name.
Related: Kevin O’Leary on O’Leary Mortgages
Rob McLister, CMT (email)
Cue some Dragon’s Den quick-cuts and an “I’m out”
He should have just invested in True North.
O’Leary Mortgages.. Fail , O’Leary Fine Wines (scoff) ..Fail , O’Leary Funds.. Worse returns than a GIC. Why is this irrelevant schmuck on tv?
Or not hired a ‘President’ with zero industry experience.
His avaricious persona certainly wasn’t the poster-child the mortgage industry needed.
Clearly it was not the best time to enter this industry without some distinct competitive advantage and O’Leary’s name certainly didn’t add any positive value
He is a true “cut & run” investor.That style may work in mutual funds, but the mortgage business always has & always will be a long term business, requiring a significant commitment of human & financial capital.We are a better industry without him.
…and for that reason……
I guess Mr O’Leary realizes now that being a broker is not as easy as it looks & there IS a lot more to our jobs than “the lowest rate” .
@ David Skinner…. O’Leary Mortgage never had anything near the lowest rate. Perhaps there lies the lesson. Although you are still quite correct, there are a lot more execution requirements in online mortgage marketing than just rate.
It’s all about good customer service!
If you’re not a people-person, and if you can’t build good relationships, it’s doomed from the start!
I told you so…
I don’t understand the people person reasoning for everything in our industry. Wasn’t ING successful for a number of years without branches or in face meetings? How about PC Financial (yes i know its owned by CIBC, but you cannot get help on a PC account at a CIBC branch). The market is moving towards other channels than in person meetings to develop “relationships”, thus reducing the need to be a “peoplee person” and if you don’t believe this, you are about to be left behind, if you haven’t already, and just don;t realize it yet.
His ‘style’ clearly doesn’t work for his mutual funds either. I bet Stanton Asset Mgmt aka O’Leary Funds is the next causality of the O’Leary touch.
Disintermediation. By definition brokers are middlemen. Some provide excellent advice. Some front run their clients with interest rates.
Clients can, if they choose to, educate themselves and use other channels. It is up to the broker to define their value within the chain.
O’Leary is a product of the arrogance of middlemen.
Regardless what someone may think of Kevin O’Leary, it’s never pleasant to see another virtual lender leave the mortgage market. We need virtual lender options especially here in Quebec. I don’t think O’Leary Mortgages ever made it to Quebec…but would have been interesting if they did. Like other commentators mentioned, I think they underestimated their web approach and not the best idea to bypass brokers. Their product doesn’t have the recognition that ING did…
O’Leary (failure) is a product of his own arrogance and incompetence. He was never a mortgage broker, he only played one on tv (along with being a successful businessman). The only reason (in my opinion) that he’s not in jail after scamming Mattel is the CEO was embarrassed that she got swindled. The rest is history and good riddance.
Licence surrendered March 31 in Ontario, and the BC licence looks to be done with also.
His business was doomed from the start. The value proposition was weak and the pricing for the segment he was targeting was not competitive. Consumers are quite savvy these days. They won’t eat manure because you sprinkle icing sugar on it.
Cocksure individual; but a promoter nonetheless, that sells his name to the highest bidder. Could never figure out why he was constantly being asked an opinion on any and everything, especially in areas where his expertise was clearly lacking.