What You Need to Know About Choosing an Aggregator
Last updated on September 21st, 2022
Mortgage brokers, choosing an aggregator could possibly be the biggest decision you make in your career. Here is some information on what you need to know about choosing an aggregator.
An aggregator is essentially the middleman between the bank and the broker. They are also known as “franchisors” or “dealer groups”, with the latter being more commonly used in the financial planning industry.
Some may overlook the benefits of getting an aggregator and dismiss it as something you need to do to start doing business. However, choosing the right aggregator is crucial if you want to be a successful mortgage broker.
Generally speaking, the best brokers have a roster of at least 10 lenders on their panel. In relation to this, an average aggregator has between 15 to 40 lenders on its panel. This is why you must choose the perfect aggregator for you.
What are the benefits of getting an aggregator?
Dealing with lenders means many compliance requirements, which can be overwhelming to an average mortgage broker. However, remember that the banks are providing the home loan products to your client. Your role is to assure them that you are continuously bringing in qualified borrowers.
This is when an aggregator will be valuable because of the benefits they provide, which include the following:
- Provides access to lenders and products
- Ensure you are paid on time and ideally, in full by managing the upfront and trail commission payments.
- Help you meet the continuing education requirements in your industry by hosting Continuing Professional Development (CPD) days.
- Guide you in your business growth by providing a Business Development Manager (BDM)
- Compliance support
- IT support
- Client Relationship Management (CRM) software
It is all the more important to get the right aggregator if you are a new mortgage broker. Through the years, compliance support has become more important, especially for a highly-regulated environment like the financial planning industry.
You should consider picking from the list of the biggest aggregators in Australia. MFAA already has a list of members, which you can check here.
Watch out for aggregator red flags!
The first thing you must do is to check the contract clauses on the following:
- Client ownership
- Continuity of trail commission payments. Put a focus on what will happen if you leave the aggregator.
- Permission to download CRM data and who has access and ownership to it.
- Are the breach clauses fair?
- Commission rates based on volume requirements.
It’s best to seek legal advice to ensure everything is in order before you sign the sub-originator agreement.
Next, you need to consider how the aggregator takes its cut. Choose an aggregator that charges a yearly fee over someone that takes a percentage of the trail. This is because the annual fee does not have any significant increase in relation to the compounding trail.
Another thing you should watch out for is when the aggregator does not mention diversifying. However, there are instances when diversifying becomes a necessary move. So, make sure that you pick an aggregator that is open to innovation.
It would not hurt to also talk to other brokers of the aggregator that you are considering for your business. Get their feedback and check if their experience aligns with what you’re looking for in an aggregator.
Due diligence is key when it comes to choosing an aggregator. Consider Makes Cents when making a decision.
Choosing an aggregator is no easy task. It is important that you get as much information as you can about the choices available to you. This is why visiting a comparison website like Makes Cents has become crucial.
At Makes Cents, we have information on over 35 lenders, from their interest rates to their roster of home loan products. You can get all the vital information you need in just a few minutes. Browse our website now to know more about home loans.
