Commissions: How much do mortgage brokers get per loan?

From multiple discussions over time with multiple people (in branches, back office and even the people running the surveys) regarding the CBAs incentives my conclusions are as follows:

* They're expected to sore a 9 or 10 out of 10, anything else is not considered acceptable.

* The surveys are done at random, but it's not hugely common. I'm guessing it's something like 1 in 10 customers are surveyed.

* Branches have instructions not to refinance broker loans, in fact the the CBA has a very clear, 'hands off' policy. I am aware of people in branches being fired for this behaviour. Branches can rework broker loans (and vise versa), but they need permission from the client (easy to get). If there is a pattern of this behaviour it can get both parties into trouble.

My comments are that I think the current system is a bit stupid. Personally I only give people a 9 or 10 if they provide an exceptional service, but a 7 or 8 means that they've done what I needed them too and I'm quite satisfied with this. If I ask someone in a branch how much interest I paid last year and they answer accurately, I'll be happy and give them an 8. I'll give them a 10 if they find a way to refund it!

I don't think I'm unreasonable, I think that there are unreasonable expectations on bank staff. I believe many bank staff feel the same way, which is why they often ask you to give them a 9 or 10 to recognise their work.

As for branches refinancing broker loans, there's always going to be some conflict between the two sales channels, but the CBA is trying at a corporate level. I still get annoyed when a client visits a branch to be told the broker did it wrong, let us fix it, but I find with good client education this tends to reflect worse on the person saying it, than on me.

Overall I think the CBA does work reasonably hard to be fair to both parties, certainly a lot better than some of the other lenders. What I don't think is fair is the legislation puts a far higher duty of care on brokers than it does on branch channels. As a broker I'm legally required to disclose commissions and incentives as both percentages and $ amounts. Brady has been generous in giving an overview of his incentive based renumeration, but there is no legal requirement for this (and Brady I'd love for you to share the actual figures :))
 
From multiple discussions over time with multiple people (in branches, back office and even the people running the surveys) regarding the CBAs incentives my conclusions are as follows:

* They're expected to sore a 9 or 10 out of 10, anything else is not considered acceptable.

* The surveys are done at random, but it's not hugely common. I'm guessing it's something like 1 in 10 customers are surveyed.

* Branches have instructions not to refinance broker loans, in fact the the CBA has a very clear, 'hands off' policy. I am aware of people in branches being fired for this behaviour. Branches can rework broker loans (and vise versa), but they need permission from the client (easy to get). If there is a pattern of this behaviour it can get both parties into trouble.

My comments are that I think the current system is a bit stupid. Personally I only give people a 9 or 10 if they provide an exceptional service, but a 7 or 8 means that they've done what I needed them too and I'm quite satisfied with this. If I ask someone in a branch how much interest I paid last year and they answer accurately, I'll be happy and give them an 8. I'll give them a 10 if they find a way to refund it!

I don't think I'm unreasonable, I think that there are unreasonable expectations on bank staff. I believe many bank staff feel the same way, which is why they often ask you to give them a 9 or 10 to recognise their work.

As for branches refinancing broker loans, there's always going to be some conflict between the two sales channels, but the CBA is trying at a corporate level. I still get annoyed when a client visits a branch to be told the broker did it wrong, let us fix it, but I find with good client education this tends to reflect worse on the person saying it, than on me.

Overall I think the CBA does work reasonably hard to be fair to both parties, certainly a lot better than some of the other lenders. What I don't think is fair is the legislation puts a far higher duty of care on brokers than it does on branch channels. As a broker I'm legally required to disclose commissions and incentives as both percentages and $ amounts. Brady has been generous in giving an overview of his incentive based renumeration, but there is no legal requirement for this (and Brady I'd love for you to share the actual figures :))

Who said I work for CBA?? ;)

I am just an employee of a bank, just an investor on this forum :)

I can tell you that CBA is heavily focus on customer service, which I believe directly relates to the performance in the Roy Morgan Customer Satisfaction Survey
http://www.roymorgan.com/findings/s...-lower-among-home-loan-customers-201305270629

Increasing from last @ 63.9% in June 2005 to first @ 80.5% in April 2013
 
Who said I work for CBA?? ;)

I am just an employee of a bank, just an investor on this forum :)

I can tell you that CBA is heavily focus on customer service, which I believe directly relates to the performance in the Roy Morgan Customer Satisfaction Survey
http://www.roymorgan.com/findings/s...-lower-among-home-loan-customers-201305270629

Increasing from last @ 63.9% in June 2005 to first @ 80.5% in April 2013

You told me you work for the CBA, when we met at an Adelaide meeting last year. :p

Sorry to rain on your parade, but you have also mentioned it a couple of times and many of your posts make it very clear (your posts are valued BTW, it's good to have a branch perspective here).

Most of the major banks have similar staff incentives to the CBA. I even once saw signs all over a Westpac branch requesting customers rate them a 9 or 10 if they are surveyed.
 
You told me you work for the CBA, when we met at an Adelaide meeting last year. :p

Sorry to rain on your parade, but you have also mentioned it a couple of times in your posts (which are valued BTW, it's good to have a branch perspective here).

Most of the major banks have similar staff incentives to the CBA. I even once saw signs all over a Westpac branch requesting customers rate them a 9 or 10 if they are surveyed.

Lol thanks PT.

I haven't mentioned who I work for before, but it's usually pretty clear to most.

Haha thats funny thats a big No-No with CBA
 
Based on previous posts I was actually guessing Westpac - you mentioned needing high scores in customer feedback. Im a Westpac customer and local branch always has posters up about expecting service to be 10/10.

Or maybe they're just all the same.:rolleyes:
 
Lol thanks PT.

I haven't mentioned who I work for before, but it's usually pretty clear to most.

Haha thats funny thats a big No-No with CBA

Ha! Made you admit it! You also have a tendancy to respond more to CBA specific questions.

You're right, Westpac puts signs up, CBA doesn't, neither does ANZ and I haven't visited an NAB branch in years. The front line staff at all the lenders who implement this system do verbally ask.
 
Sorry, so the brokers trailing commission is 0.15% per year on the balance of the loan &/or the life of the loan?

As a rough guide, yes. Can vary from .15-.35% depending on lender, customer retention etc.

It's based on current loan balance for the life of the loan.

If you use a broker, feel free to ask them specifics and they should be willing to answer these questions specific to any deal you are looking to complete.
 
Sorry, so the brokers trailing commission is 0.15% per year on the balance of the loan &/or the life of the loan?


0.15% of the loan balance p.a paid monthly for the life of the loan. So on a $300k loan, the trail would be $37.50 per month.

Then our aggregators dip their hands into as well.

Life of the loan is not 30 years either. Loans are refinanced and properties are sold.

Some lenders don't pay trail in the first year.

Some lenders have a growing trail that goes up in increments each year - usually up to a max of 0.25%

Cheers

Jamie
 
Sorry, so the brokers trailing commission is 0.15% per year on the balance of the loan &/or the life of the loan?

Calcualted on the balance of the loan. It's a nice earner, but most brokers loan books would run off significantly within 5 years.

You could argue that it's money for jam, and often it is. On the other hand we aren't paid anything else for loan maintenance such as top ups. For some clients it's easy money, for others it's hard earned.
 
Couple of things I'd like to ask after reading this thread.

1. I've read several times over the past few years in investment magazines about getting back your trailing commission on insurance and banking brokered products. I once asked here if the brokers ever lost their trailing fees when people claim them back or stop them via the sites that do this and take part of the "saving". Answer back then was "no". Has that changed, and how many customers would do this?

I've never wanted to do it, though I like the idea of getting money back into my pocket, but not at the expense of the broker who has worked hard to get us into a loan and I believe deserves the trailing fee. Same with our insurance broker. Our loan broker and insurance broker are there at the end of the phone any time I need to ask them anything. I won't be me clawing back the commission, but I'm curious if many people do this.

2. CBA staffer rings me reasonably regularly to see if we need anything. I find it more of an annoyance than anything, but I understand they have to do it and have a quota to fill. However, same bank, same branch are happy for me to stand at the front counter whilst they deal with one or more customers before me. Once, the front counter staffer was taking a personal loan (might have been credit card) application with very personal financial questions being overheard by everyone nearby. I would NOT have been happy if it was me being questioned, and would have insisted on being taken to an office.

I stood there probably 20 minutes that day, being told it wouldn't be long before they served me.

3. I went to NAB with my son to open an account with his signature, in his name but that he cannot access by card. He was given a higher rate for three months, after which it would drop to a very low rate. But I was told that if we came back in, that rate could be increased or the money put into another account to get the higher rate again.

We couldn't get there when the three months was up because he was in school. I rang to see if they could increase the rate over the phone or via email and was told my son must attend the branch. Then we got busy renovating and last week I took him to that branch. Eight months of low rates on $2.5K was bad enough, and I understand I didn't get him there, but we sat down, and the staffer clicked a few things on her keyboard and the rate is now up high for another three months. I questioned why my son needed to visit the branch as he hadn't had to sign anything. I told her I had tried to have this done over the phone. She gave me her card and told me that in three months I can email her to have the rate increased again after it drops back down.

So... I can have it done via an email from me, but that was not an option back when I asked about it, and they wouldn't do it over the phone. I've written to them seeking some back interest and an explanation and if they don't satisfy me, I'll take him and get his money out and put it somewhere where they don't inflate the rate for three months and then probably hope nobody does anything about it.

I'm a bit perplexed about the branches thinking they are doing a good job in the branches when my experiences have been far from good.
 
And no one has mentioned that the figures range from around 0.3% - 0.65% or maybe 0.7% is the upper range.

Also many lenders no longer pay trails in the first year - eg. Bankwest and homeside.

Also don't forget the clawbacks - if the loan is discharge within 12 to 18 months all the upfront commission will need to be paid back.
 
2. CBA staffer rings me reasonably regularly to see if we need anything. I find it more of an annoyance than anything, but I understand they have to do it and have a quota to fill. However, same bank, same branch are happy for me to stand at the front counter whilst they deal with one or more customers before me. Once, the front counter staffer was taking a personal loan (might have been credit card) application with very personal financial questions being overheard by everyone nearby. I would NOT have been happy if it was me being questioned, and would have insisted on being taken to an office.

I stood there probably 20 minutes that day, being told it wouldn't be long before they served me.

Is it the same staff calling you? If its annoying why not ask them to stop? I find that clients usually like it when I call them as shows that I care, most the time something's changed and they have been meaning to call me but have been too busy :)

You might find that the person at the front counter asked the client if they were happy to complete the application out the front or wait for an office. Try might not of wanted to wait for an office ;) some people aren't concerned and those that are I'm sure would be happy to wait to have privacy in an office.

Good to hear that they kept you informed, if they were serving people infront of you sounds like they were busy then.

What were you waiting for assistance for? Was it something that the staffer who calls you could of assisted with?
 
Ha! Made you admit it! You also have a tendancy to respond more to CBA specific questions.

You're right, Westpac puts signs up, CBA doesn't, neither does ANZ and I haven't visited an NAB branch in years. The front line staff at all the lenders who implement this system do verbally ask.

Haven't admitted anything ;)

I can tell you though that my mother works for Westpac and Father for ANZ ;)
 
The revenue isnt necessarily set by the lender but also by the individual business and its model.

The commissions vary also between brokers and aggregators. for example some brokers might pay 20-30%(?) to third parties / aggregators before they get any revenue in.

Generally I see most guys on a 10-20% to aggregator and 80%-90 to them (which to me is a bit.... last decade). If you're on that then I'd be swapping out to connective or DM'ing me lol.

With point of the pending clawbacks - we have it in our engagement agreements that client refunds the clawback to us, and set the fees out that we charge.

The flip side on the bank direct vs broker channel - here with the trail if the employee leaves the bank this stops. The broker / owner of the trail income owns the trail (generally speaking) as an recurring income asset which you can also then lend against. While the trail isnt 100% guaranteed (as during the GFC some of the banks just stopped paying it). But if you just kick back on your trail book and stop writing loans eventually others will take those clients on.
 
Is it the same staff calling you? If its annoying why not ask them to stop?

Each time they have called I have told them we are very happy with our arrangement and don't need anything, thank you. But they call every month or so. Perhaps next time I'll be a bit more outspoken and ask them to stop calling.

You might find that the person at the front counter asked the client if they were happy to complete the application out the front or wait for an office. Try might not of wanted to wait for an office ;) some people aren't concerned and those that are I'm sure would be happy to wait to have privacy in an office.

Good to hear that they kept you informed, if they were serving people infront of you sounds like they were busy then.

They weren't busy. There was one staffer (maybe a second one but both busy with other things). Actually, we were told once "we will be with you as soon as we can". We were not kept informed as to how long the application would take but we know everything about that customer, his assets, liabilities, income. It was pretty bad. Had we not had to have this dealt with that day, we would have walked out. When we were finally asked to start giving private information, I asked if we could move to an office, which was done. We were going to be asked some pretty personal things in the main area.

What were you waiting for assistance for? Was it something that the staffer who calls you could of assisted with?

No. It was to do with management of an estate and was complicated. But it is this sudden "they have money" situation that has prompted all the "can we help you" calls. Never heard from them before we were in charge of an estate worth some money. And we are both ex-CBA - 20 years and 28 years.
 
Each time they have called I have told them we are very happy with our arrangement and don't need anything, thank you. But they call every month or so. Perhaps next time I'll be a bit more outspoken and ask them to stop calling.

In similar situation I would ask the client if they would like to me continue to follow up with them on a regular basis, I find most like to have regular contact...

But in your case asking them to stop calling might be worthwhile :)

They weren't busy. There was one staffer (maybe a second one but both busy with other things). Actually, we were told once "we will be with you as soon as we can". We were not kept informed as to how long the application would take but we know everything about that customer, his assets, liabilities, income. It was pretty bad. Had we not had to have this dealt with that day, we would have walked out. When we were finally asked to start giving private information, I asked if we could move to an office, which was done. We were going to be asked some pretty personal things in the main area.

Wasn't there so hard to comment, but you said they weren't busy but were busy with out things? Again I don't know I wasn't there but I would be sure that the conseirge would of been making sure that all the staff were actually working. I am yet to see a conseirge that will let staff do other things besides work and leave customers waiting as the pressure is all on the consierge.

Again probably a little different to how I operate, if it had of been personal I would first ask if you would like an office.

But times are changing what use to be personal is not as personal, these forums alone have alot of personal information...

No. It was to do with management of an estate and was complicated. But it is this sudden "they have money" situation that has prompted all the "can we help you" calls. Never heard from them before we were in charge of an estate worth some money. And we are both ex-CBA - 20 years and 28 years.

Hopefully it was sorted out for you as best as possible.
 
Wasn't there so hard to comment, but you said they weren't busy but were busy with out things? Again I don't know I wasn't there but I would be sure that the conseirge would of been making sure that all the staff were actually working. I am yet to see a conseirge that will let staff do other things besides work and leave customers waiting as the pressure is all on the consierge.

I didn't explain well. We went in, one person at counter doing loan or credit card application (clearly it was going to take a looooong time), second staffer came over but was looking after someone else who was at the front counter. There was another person, who left with rolled eyes and that left us. Two people being looked after, but both took a while. We waited probably ten minutes to be taken into the office. Ten minutes is a long time.

Hopefully it was sorted out for you as best as possible.

It was, but if they want to be taking applications at the front counter (I was quite surprised at the personal stuff being asked in front of three strangers) and that leaves only one other staff member, they clearly need more staff.

The lady who looked after us initially, when we had to deal with the things required after the death of our mother knew her stuff, was fabulous, but she left soon after, and even the follow up of what she started was not done properly. Luckily we are both ex-CBA and have a bit of a clue how things should be done.

With this last episode of standing around like stale bottles of beer for at least ten minutes whilst some customers left in frustration at having nobody to serve them was pretty disappointing. I understand we have to wait our turn, but both clients being attended to had issues that were not quick, and I would not have dealt with them there at the counter when there were empty offices.

Perhaps it was because if they were both taken into an office, that left nobody at the front counter.
 
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