Gerard Hermens: Creating the perfect broker model
Hermens has been training brokers for the Diploma of Mortgage Broking at the Institute of Strategic Management for more than 25 years, and has been emphasising the importance of each broker finding their point of difference throughout that time.
He points to four brokers who have been through the ISM’s training and are now extremely successful, and credits their passion for their success. People will help with your systems and structures, Hermens explains, but you need to find your inner voice, the thing that you are passionate about – your point of difference.
Hermens points to six stages of a broking business journey:
The sticking point for most, he says, is the succession stage – many don’t plan for it, or dislike the idea of giving up a portion of their control or profit for the sake of planning for it.
Size, in this journey model, is not relevant. What is important is planning for the size a broker wants to achieve, and leveraging scale and perfecting processes so that they can focus on the $200/hour work while delegating the $20-$30/hour work.
The problem with bringing in people who can do this work, however, is that they may leave and take clients with them. Several solutions are possible, such as making them stakeholders or ensuring that they always have the option of walking away but must buy the book if they take the client with them.
Hermens’ solution is to ensure that clients connect with the business as a whole, rather than with their loan writers, and that staff at all levels connect with each client.
From here, leveraging scale and creating a ‘sticky’, or self-sustaining, book are key.
“Choose your segments and then identify your value proposition,”
Hermens says. An ideal place to start? “Find out what pain points your customer experiences.”
For FHBs, for example, pain points are not knowing anything about the process and dealing with misinformation. For SMSF trustees, a pain point is the need to make a decision and the lack of the knowledge to do so. Finding the solutions to these problems, then, provides that point of difference for a broker business.
Hermens agrees with the point about product numbers and client retention that Dominique Bergel-Grant discussed in her Round-table session: the more products a client has with a broker, the more sticky they are. The logic is clear: more products means more contact with the broker, and more contact with the broker increases retention.
Hermens also offers a logical progression to develop a business strategy, in which brokers identify nine core aspects of their businesses:
- Customer segments
- Value proposition
- Customer relationships
- Revenue streams
- Key resources
- Key activities
- Key partners
- Cost structure
To wrap up, Hermens outlined his idea of the perfect broker business structure: a principal with two loan writers, plus a packager, a tracker and a dialler. This structure, he says, ensures clients get brilliant service, and have enough contact points that they are connected to the business rather than the loan writer.