True North Mortgage is a leader in the Canadian brokerage industry. It’s paved the way for countless brokers who target the online space.
So when we heard that its founding partner and Chief Operating Officer, James Laird, was leaving, it begged the question: why?
We spoke with James yesterday to pick his brain about why, and about how the online mortgage market has and will evolve. Here is that interview:
On why he’s leaving True North Mortgage:
“I enjoy really ground-level start-ups…When I joined True North there was one store with one employee out in Calgary. It’s that type of thing that really turns my crank; trying to grow explosively…That’s what we’ve done over the last six years…Whether it’s staff, number of stores, or volume of business, we’ve been more or less doubling each year. I like being part of organizations like that, and at this point we’re at 35 employees, nine stores in five cities and approaching a billion dollars of funding. We sort of reached a…stable type of environment. I guess what I’m getting at is, I don’t think we’ll be at 18 stores and 70 staff next year…And so, because of the state of the business, I think it’s an appropriate time for me to leave it with the management that’s in place and look for other opportunities.”
On the kinks he’s had to work out since True North started:
Laird cited everything from “online marketing to HR, which is a huge one and involves proper recruiting, effective hiring, good training processes, and then ongoing education so that your staff is always getting better…and then there’s technology. We’ve redone our site a couple times,” he says.
On what makes a good broker website:
“You know, we as industry insiders sometimes lose sight of what information that 31-year-old hipster is looking for. They see a rate [but] what do they want to see next? And so we’ve been tweaking and refining the education [aspect of our site] and the way it’s functionally presented.”
(Ed. Note: True North has put painstaking thought into the design of its website. If you’re a broker looking for ideas, it makes a great case study.)
On consumer adoption of online mortgage brokers:
“It’s just not what people are used to traditionally…The default is, you just walk into your bank…It’s a big step for some people to use a mortgage broker, and it’s a further step to use an online mortgage broker.”
On the primary online consumer:
“It’s not the 31-year-old hipster” that is the primary user of online brokers, Laird says. That customer has less experience so they usually “go to the safest place possible, which is the bank…compared to the 45-year-old who understands mortgages, understands credit, knows that they’re the cream of the crop, and knows they can qualify for virtually anything that’s available on the market….They have a little more confidence that whatever [mortgage] is being advertised online is, they can get it. It’s not really risky for them because they’re borrowing a few hundred thousand, not depositing.”
On the biggest change in the business since he started:
“Regulatory changes have been frequent and…fairly dramatic. When I was doing mortgages in Calgary that first summer, I was doing 40-year amortizations with zero percent down on rentals. But I can’t disagree with [the changes]…I think the finance department has done a great job.”
On whether lenders like online business:
“I’d have to say yes because they’re sure getting a lot of it…The guy who goes online and submits his application isn’t some guy who’s got a consumer proposal and is behind on his credit cards. They are AAA clients. They’re the cream of the cream. They go online because they’re confident enough to know that they can get that super rock-bottom promotion. They know they’ve got a good job. They know they have a good down payment. They know their credit scores.”
In terms of quality of business, it’s likely “better than other referral sources,” he says.
On how other brokers view online discount brokers:
“As industry professionals, we sometimes get caught up in our needs and what we think, and really all that matters is what the Canadian consumer thinks. What we all should be trying to do is figure out, how does the Canadian consumer want to go through the mortgage process and how can I as a business owner make that process better or easier or cheaper…We should spend all day every day thinking about how to improve the process in the eyes of the Canadian consumer.”
On the staying power of online brokering:
“…The most important thing is that it’s here to stay…The other viable business models should understand…how they fit in…with the changing consumer…What the Internet is doing is increasing the education and the availability of information for the Canadian consumer, [with everything] from rates to whatever…I don’t know anyone who’s getting a mortgage that isn’t going to Google to do some research right now…I think it will grow at a greater pace than the rest of the brokerage industry.”
On the importance of rate comparison sites to online brokers:
“Generating leads online is extremely challenging. It involves a great understanding of Search Engine Optimization and the ability to compete in that space. I’m not sure if there is any more competitive or challenging online space to get into than the [online] mortgage market. Maybe hotels or flights…But be it mortgages, flights, or hotels…if you look at the pay-per-click cost of [the keyphrase] “best mortgage rates in Toronto,” it’s insanely high, and the number of banks and rate sites and brokers trying to appear on the first page of Google is [also] insane. So you’ve got to decide: If you’re going to compete online, are you going to take on that very difficult challenge in-house? Or are you going to outsource the expertise to the RateSupermarkets and the RateHubs who have said, “You know what, we’re going to be the experts here, that’s going to be our business…We know how to compete in the online space. It’s one or the other.”
On the importance of brokers:
“I think it would be terrible for the Canadian consumer if the brokerage channel did not exist to keep the banks honest, to provide choice in the marketplace, and to push innovation and education. I think we are an extremely important part of an extremely important industry.”
On where he’ll end up next:
“I do see myself in this industry in some capacity going forward…for sure.”