What happened to Broker Loyalty?
15 March 2011
Firstly, the important stuff. That was quite a weekend for rugby. Chapeau to the Italians for beating the French. They deserve it, having nearly beaten both the Irish and Welsh in the tournament so far. Commiserations to the Scottish, meanwhile, after a pretty valiant effort in Twickenham.
Not that the Scottish rugby team is making the headlines. That particular honour seems has fallen to one particular Scot, Peter Allan, the touch judge in the Wales/Ireland match....
Anyway, I'm getting carried away. Enough of the oval ball. Now to work matters. Today, I thought I'd address why we, at Drawbridge, do our work exclusively through key partners. It's something I get asked from time to time and so it makes sense to explain my thoughts on it.
There are a number of reasons why we deal only with key partners but probably the main one is efficiency. Bridging loans can be quite a lot more complex than conventional mortgages and so it saves time and stress for the client, broker and ourselves if the loan is packaged by someone who knows exactly what we require and how we work. Generally, adding more people into a process can cause problems but in the case of bridging too many cooks do not spoil the broth - they make it better.
Now, brokers are very good at what they do, don't get me wrong, but short-term finance is generally not something they get involved in all that regularly and so if they oversee the client application it can take longer to process. And in our experience, they are happy to work with niche players in the field if it means their deals pay out quicker.
It's also worth pointing out that because brokers may have to go to a selection of lenders before they find the right one, this can even result in an application being rejected if it has been touted around too much.
Master brokers and packagers, on the other hand, will know exactly what to do and which, of the specialist lenders, will have an appetite for a particular loan, which means it will be processed far quicker. In the world of bridging, where speed is of the essence, this is essential.
From a purely practical standpoint, the key partner route works for brokers. They don't want to be spending a lot of time and effort researching the market and reaching out to no end of short term finance companies. In our experience, they appreciate being able to pass their deals onto specialists who do all the hard work for them. If this still results in them getting a decent commission and fee, then why would they complain? They're getting the best of both worlds - a good fee with no headaches.
Another reason we choose to work with a number of key partners is service levels. Our priority is your client's satisfaction and so we only work with the most professional packagers. Your client will judge you on the type of service received by the packager and the speed with which the loan is arranged. In our experience, working with packagers results in happier clients and that is what it's all about.
On a final note, I have to say, I was quite surprised when I read yesterday that one new entrant into the bridging sector is looking to build a client base where, once the broker has helped arrange the first loan, the client will subsequently deal directly with the lender. In our experience, this approach is fundamentally counter-productive. Expecting clients to liaise with lenders directly over bridging loans will result in no end of complications. And there's also the fact that, from where we stand, it is fundamentally anti-broker. I will be interested to see how many brokers are inclined to use a service that will essentially take their clients away from them after the initial transaction. Beyond the practical issues of dealing directly with clients, what happened to loyalty?