Broker Financial Group

Empowering independent mortgage brokers.

That’s been the battle cry for two recent upstart broker networks. The newest is Broker Financial Group (we’ll call it BFG), which officially launches next week.

BFG is a new broker organization offering a

  • 95/5 split to independent brokerage firms, or a
  • Flat-fee model (similar concept to VERICO, RMA and others).

The point man behind the company is principal broker Jason Singh. Singh and his co-founders are launching the company to aggregate volume, build better technology and develop ancillary product offerings. “I figured, if I’m going to do it for my brokerage, I might as well do it for the whole industry,” he told CMT. So BFG’s co-founders went out and got commitment from “20 brokerages” to form a new organization.

Although he couldn’t name names, the group’s inaugural members include some headline brokerages, each doing in excess of $200-300 million in annual volume. Singh expects the network to represent $3 billion of volume “in year one.” (He couldn’t share names because “our brokers are working on their exit plans [from their existing networks],” he says.)

Broker Financial Group says its value proposition will include the following:

  • Full compliance and payroll (for brokerages on the 95/5 model)
  • Lender perks in exchange for higher efficiency (“If a $20-million shop can give us really good funding ratios, why shouldn’t they get the same commission as the $100-million guys. Lenders should be passing that on to the broker,” Singh says.)
  • Ancillary products (“Our ancillary products are a lot more extensive than other networks [and pay referral fees],” Singh adds.)
  • Custom deal management and CRM software (BFG plans to launch a full-scale version of its new broker platform in “3-4 months,” and says it will replace as many as 6-7 programs that brokers pay for currently.)
  • A white label private mortgage fund.
  • Agent training (led by Tina Francis—who is one of the most skilled underwriters this author has ever had.)
  • No minimum volume to join.

Singh says the company’s goal is transparency. BFG will fully disclose compensation and ancillary product revenue arrangements, and reinvest the proceeds in its member brokers. Currently, he says most of the profit that superbrokers earn on ancillary products is “usually kept by the broker network.”

This is the second new independent broker network to make headlines in the last seven months. The previous was the “Broker Coalition,” a broker group spearheaded by John Bargis. When asked if the two entities might team up, Singh stated: “I respect John Bargis. You never know what could happen in the future. For now we’ll concentrate on our own network.”

The company is setting its sights on industry giants. “We plan on taking market share from the banks,” Singh declared, stressing that BFG will offer a wide array of other insurance and financial products—essentially making it a “one-stop shop.” That’s a tall order, of course, as there are perhaps only a handful of broker brands that have even a fraction of the product breadth and brand power of the major banks.

In sizing up BFG, it is being run by an accomplished and highly driven team. The founders hope to supplement their leadership by hiring a CEO to lead and scale the organization. On top of that, the economics seem appealing (at least for the agents), and the cross-sell potential is certainly a plus.

But there are formidable competitors in the broker network space—the likes of DLC, VERICO, Mortgage Alliance/Multi-Prets, Centum, Mortgage Intelligence-Invis, Mortgage Architects, TMG, Axiom and RMA, to name just a few. In one form or another, they all offer ancillary revenue opportunities, CRM/workflow technology and efficiency-driven compensation. That’ll lead some to ask whether this is nothing but wheel reinvention. If you want to know whether BFG offers enough to make brokers pick up and switch firms, it’s got an open house next week where you can likely find out.

Sidebar: Broker Financial Group’s open house is July 8 at 5 p.m. to 8 p.m. Location: 7270 Woodbine Avenue, Suite 100, in Markham, ON. Or check out its website.

  1. This new start-up serves as further evidence that broker owners, whether part of a franchise or simply a large network, are getting much wiser about what they’re leaving on the table for those few network heads / franchisors at the top, for not much real value in return to the feet on the street. Broker owners are coming to the realization that the promises that their business will grow through rigorous solicitation efforts of the franchisor or the network they’re part of, are much more about fluff in the pitch, and not a whole lot in the delivery.

    Too many broker owners in the past didn’t take the time to do their due diligence by thoroughly reading their long 20-60 page contract, or to seek the professional advice of their lawyers before signing a NEW or RENEWAL agreement that in most cases contains surprises that come to light when it’s too late. – Thorough analysis of any document requiring a signature by a business owner should consult their lawyer, without bending to sales pitches and intimidation tactics. It’s simply SMART BUSINESS to seek advice and explore all options.

    Congratulations to Jason and his group for taking this on. I wish them well with their new venture, and I will see them at their open house this coming Wednesday to personally congratulate them. Their new start-up reaffirms that the industry is looking for change, which was the main catalyst behind the formation of CIMBC. That said, the Coalition of Independent Mortgage Brokers of Canada (CIMBC), which is well on its way now, is actually different than the newly formed Broker Financial Group (BFG) based on the outline described in this article. As has been publicly stated many times before, there are no 95/5 splits, monthly flat fees, or costs to any broker of CIMBC. It’s all about the member brokers and their agents building a solid business with real long term value, which is what a business should be all about.

  2. Jason should be congratulated, starting something brand new in our business is super hard and it should be appreciated for just how much work it is.

    All growth in the brokerage space is largely addition by subtraction because as an industry we don’t really grow our net headcount much to speak of every year.

    How will the old guard react, I don’t know but with compressed commissions from rate discounting and the constant pressure for higher splits it can be a painful time to own a brokerage. Eventually the 2 super hot markets in this country will start to slow down and competition will become even more intense. People often accuse rate discounters of hurting brokerage margins but it looks like that will not be the only force in play in our space.

  3. I think it’s great that new entrants are making the market more competitive. At the same time I wonder if they will survive. Most sizable brokerages are already on a 95/5 split or a flat fee. Their broker networks are living off of scraps already. I just can’t see how the new guys will be able to invest in their brokers and offer more value for less revenue.

  4. Jim

    I can absolutely assure you that you have it wrong by making the statement that the broker networks are living off scraps. How do you think they’ve grown and acquired?…It certainly isn’t from scraps….The 95/5 and flat fees is only the piece you see.

  5. I understand the concept that the superbrokers and networks receive overrides from lenders and payments from D&H and Morweb but the future of those monies is cloudy. Some day soon brokers will send applications directly to lenders, bypassing the intermediary and lenders will eventually revaluate the override system so there will be continued decline in those dollars flowing to networks and superbrokers. It will not happen tomorrow but it will happen eventually. The only certainty in mature competitive industries like ours is earnings compression. As for those who acquire other networks, they employ contracts that guarantee future profitability from the brokerages that join them. It’s just math if the contract is built right.

  6. You are also forgetting that even Equifax pays an overide to the Superbrokers head offices like DLC (as strange as that sounds) well as Credititor Insurance products and the list goes on…

  7. I guess most people don’t realize that there is no money in brokerages unless you are at $8.0+ Billion brokerage on a decent commission split.

    Let’s say Jason builds a Brokerage with $4.0 Billion in volume, forget flat fee model, even at 95-5% that’s only $2.0 Million in bottom line. Your CEO will cost you $200-250 per year. Your operation manager $150K, your VP of marketing $120K, your CRM development $200K year, you will need 3 RVP at least. That’s another $100K per RVP, you will need broker of the records for every province, your payroll, CRM, Compliance, graphic designers, your programmers,….. You will need a team of 10-14 people to manage this business. There is no margin and no profits!
    Why would a smart and reputable broker want to Leave profitable and stable companies like DLC, Verico, Mortgage Architects or Invis and join a risky start-up?

    All these brokerages have better and higher volume bonuses, CRM, better deals on life insurance, mortgage insurance and other ancillary products. Both Mortgage Architects and Invis currently give 97-3% splits on a full service model (payroll, compliance, Marketing,..)

    Verico, Mortgage Alliance, Mortgage Architects do not charge for their CRM! It’s completely free and these companies have spent millions and many years to build it! Even if Jason and his team start now to build it, it will take them 3-4 years to catch up.

    Why would an established and reputable broker want to join a start-up that is not approved by all the lenders or doesn’t get top volume bonus with all the lenders?

    The problem with Canadian Mortgage industry is lots of people can do a great talk but…

  8. I do not believe it makes any sense saying Jason is wrong, 100% of everyone told Art Trojan he was crazy when he started and we know how that worked out.

  9. Matt your post reminds me of an ancient Chinese proverb

    Roughly translated:

    “Haters gonna hate”

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