A personal view – why use a NACFB broker to action your commercial finance transaction
Throughout my days in the commercial banking industry it was often suggested that CFB brokers didn’t justify their fees and the work they put into any financial transaction did not warrant the ‘astronomical’ payments they would receive for completion. I think the general conception of being a broker was one of a lavish lifestyle, sipping champagne on a yacht in the Bahamas whilst everybody else picked up the slack. A few large deals each year and the broker could sit back on their sun lounger, check the bank balance with one hand whilst holding a pina colada in the other.
This stereotype is wrong! Let me tell you. As I sit here writing this piece at nine in the evening, having done much more than your typical nine to five, I know I have so much more to do. The main reason for this is that I care! I want the best for my customers. I want the best for the stakeholders in my business. And I want the best for the industry as a whole. Brokers throughout the land, led by the NACFB., invariably want the same. They often put all those around them first and strive to provide the best possible service. This often comes with personal sacrifices but anything other than a satisfied customer is not enough. I am sure if you asked any broker what is more important to them, a little extra fee or a happy customer, they would undoubtedly opt for the latter.
So what extra value do brokers add and why should they take pride in the commission model?
Like anything in life there usually is a way of doing things for yourself and saving a few quid. However, if one has a tooth ache you would go to a dentist rather than removing the tooth yourself. You would actively seek a professional to do the job for you. And that is exactly what a broker is, a professional in financial transactions. Brokers spend years and even decades honing their skill set, exploring the market and picking up on nuances each lender has. The hours and hours assessing transactions and working out a way forward put brokers in the ideal positon to pass their knowledge on to their customers meaning the customer not only has access to information that they usually wouldn’t but also saving the customer the time and effort of conducting their own due diligence. In today’s age of instant gratification it is imperative customers have quick results. A customer running their own transaction will probably not be able to achieve this in the same way a broker can. A broker knows which buttons to press and who to go to when a crisis occurs. Many have previously worked in lending institutions so understanding the background processes gives them the inside knowledge necessary to expedite transactions and deliver results in a timely manner.
Throughout the lending process, brokers are on hand to act as trusted advisers, not only offering their own guidance but bringing in other professionals around them. I often describe my role as the hub in the middle of the wheel with the different spokes extending off of me. Those spokes include the solicitor, the accountant, the wealth manager, the valuer and many other professionals. The broker is integral to the way the wheel moves forward.
So, why do us brokers feel awkward when discussing fees and the commission structure? In my opinion it is a legacy thing. The old stereotype has made it difficult to discuss but I believe that is changing. Customers are now acutely aware that the majority of fees are not earnt until the product has been delivered and they know that the commission is proportionate to the transaction they are involved in. We are extremely open about the fees we charge and make a point of providing the information upon our first meeting. We explain the full broking process and demonstrate to the customer what they are getting for their money. It is very seldom that we are challenged about the level of our fees. In fact it is my true belief that customers leave us feeling they have got value for money.
The broking industry, with the help of the N.A.C.F.B. has come a long way in the years I have been involved in the finance industry. The wheel will continue to turn and brokers will remain firmly at the hub. Brokers are the glue that holds the industry together and the fees they earn are most definitely justified.
Signing off from my yacht in the Bahamas…
This is an article by Marc Champ for the October edition from the NACFB magazine.