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Banker to Broker – II

In this second instalment of our three-part series on bankers becoming brokers, we interview Scott Westlake from Dominion Lending Centres, Denova Group. Westlake started in the mortgage business in 2008 as an RBC mortgage specialist. He left the bank in 2011 to become a founding partner of Denova Group, a broker team that now originates hundreds of millions in volume. 

Here are his thoughts…

On why his team left the bank:

“To be honest with you, I love RBC, I think they have got a great product and a great brand. My issue was, I sat down with some of the senior people at RBC and I said, ‘Guys, we would never leave you to go to another bank. We think you guys are the best at what you do. So don’t get us wrong; we’re not leaving because we aren’t happy with the program you have. It is the fact that we are entrepreneurs and we want to grow a business. And we can’t do that in the banking environment. We need to be in the broker environment where we have access to different lenders, we have more choices for our clients, we have access to not just residential but commercial and private.’ That was the conversation we had with them. I think some people have it wrong when they think about banks versus brokers. The bank is a really great spot to be for the right person…They wouldn’t let us grow to our full capacity.”

On his biggest challenge in moving to the broker market:

“It’s a pretty big transition going from one lender, one underwriting policy to a bunch of different lenders, a bunch of different policies.”

On the volume drop-off his team experienced after leaving the bank:

“There definitely is a drop off if you [consider] our five partners were doing roughly half a billion dollars at RBC. Could we have emulated a similar number in the broker community? I feel like we could have…But…a big percentage of our business was now running an office, bringing in agents, developing them and building a different type of operation.

The builder business…would probably be a 10-20% drop off…We were doing 36- to 42-month capped rates here in Toronto. That business has completely dropped off for us. But all these guys that are issuing pre-approvals and builder caps, [to the extent that] those deals do not have a lot of merit (because, in part, the rates are uncompetitive), they are having a hard time completing them when it comes to closing, and now we are coming in and financing those clients.”

On what kind of bankers are cut out for the transition to being a broker:

“I think at the bank level, there are some people that really lean on a bank. So I would say that…if you are a specialist that really leans on the support of the institution and the brand, there is definitely going to be a natural drop off (in volume). If you are someone who is acting more as an entrepreneur, as an independent contractor, someone who has gone out and built relationships, then you should be able to take that over to the broker community fairly easily and see an increase because of the access to other lenders and other partners, and be able to utilize that to grow your business.”

On his goal of building a team:

“[The bank] wouldn’t let me get any bigger. They wouldn’t let me hire any more agents. They wouldn’t let me hire any more admins, and customer service became an issue. So when I got into the broker space [that part] was really important for me…I have hired six brokers in Oakville in the last 35 days. We are right now hiring about a broker a week would be an average. We are probably meeting three or four a week.”

On the main reason Denova moved from Mortgage Alliance to DLC:

Dominion-Lending-Centres“There was nothing negative at TMACC, we had a really good experience with them. I’m a big fan of Michael Beckett. The big thing for us, Rob, was growth. We really wanted to grow. We thought that DLC was doing a good job in the eyes of the consumer…and I don’t think that they fully get the branding and education in the broker space as they do in the bank world. When I was with RBC, one of the number-one brands in the country, the biggest mortgage-producing bank, clients see a certain [branding] and perspective walking into the branch, and I don’t feel like that is adequately displayed in the mortgage broker community. I was really happy with how DLC markets themselves compared to other brokerages in the marketplace. I also like what they do from a recruitment perspective and just how many people know their name. For us, as fairly new individuals in the broker space, it’s important to lean on brands, and they are the one brokerage…that is spending the money and taking the time to educate the community about what we do and how we do it.”

On whether economic incentives affected his decision to change brokerages:

“If you were to net $X, is that why you make a decision to go from one brokerage to another, for such a long-term play? It definitely is not, right? Anyone that is in the broker community knows that no one is cutting checks for two, three, four, five, six, seven, ten, twelve million dollars. We didn’t get acquired. No one bought us…There is just no number out there that really makes sense. I get why brokers and the general consensus would [think that]…but we make way more money by just doing deals.”

The final Part III of this series will run next week.

Rob McLister, CMT