Feature / Eddy Cocciollo
Broker commissions have come under the microscope with two lenders deciding to cut them. Will broker commissions come under greater pressure and why? migration and why?
Cocciollo: Well, I can’t speak for other brokerages, but I can tell you MCC is still going strong and we just had a record-breaking year. We keep attracting quality brokers and have been growing year after year. One of our attractions is that with a MCC franchise, the owner has a protected territory. Because we respect our agreements, this limits us at times from accepting quality brokers from a competitor. Naturally, though, when someone leaves MCC, it also leaves a territory, which we have been consistently successful in backfilling. Brokers will leave and they will come. There are many different reasons why brokers leave and are attracted to certain networks. So now the question should be how does MCC retain our brokers and agents? The simple answer is, and what we are most comfortable investing in, is to offer as many tools and value-added products as possible, so the broker and agents can see the value. I can tell you that, naturally, MCC has lost a few brokers over time, but not because we could not compete with some compelling business offer. Recently we chose not to compete with a competitor’s un-economical short-term cash offer. The ironic part is that over time it would have been advantageous for the broker to stay. Simple math really, but it’s like winning cash for life – do you want the $1,000 a week or the big upfront payout even knowing the cash upfront casts aside hundreds of thousands over time?
naturally, such as the two lenders you are referring to that cut commissions by 5 bps are seeking to reduce costs. According to my quick calculations, the average agent (assuming $60K in commissions) will be out of pocket almost $4k a year assuming they did 100 per cent in 5-year mortgages with those two lenders. While hurting somewhat, it’s just not significant enough to really make a massive difference for the individual broker, especially if better margins for a lender, leads to more investment, and happier shareholders. We need our lenders to be happy. But if lenders start to take down commissions say by 20 per cent or more, then that would change the landscape significantly. I don’t see that happening, though.
CMP: Broker commissions have come under the microscope with two lenders deciding to cut them. Will broker commissions come under greater pressure and why?
CMP: Volume pooling has also been scrutinized and criticized by some lenders as an impediment to efficiency. Do you support volume pooling and why or why not?
Cocciollo: The simple fact is that since the financial
Cocciollo: Some national brokerages have these
liquidity crisis of 2009, lenders have not been able to consistently achieve their historical mortgage profits. So,
so-called “central desks” allowing the one-deal-per-year agent to get all the advantages that the loyal broker got.
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STATS
70% – avg. Canadian home paid off 2012 Source:
CAAMP