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Nest Home Loans moves to franchising model

The mortgage broking firm Nest Home Loans is aiming to go national with a series of franchised operations across 40 regions.

Monday, October 18th 2021, 6:00AM 3 Comments

by Eric Frykberg

Nest Home Loans is a 20-strong broking company based in Hamilton. 

Its scheme has the potential to provide new competition in a field dominated for now by Mike Pero. 

It is pitching its bid for franchise sales on the need for mortgage advisers to achieve a work life balance, which is difficult now, with 60 to 70 hour working weeks common in the industry. 

Nest Home Loans director Jeff Kerwin adds not just his firm, the whole industry needs to move forward, and capture more business, and he thinks it will. 

“In New Zealand approximately 35% of mortgages come from mortgage brokers. In the UK and USA it is about 80%, so we are under half of international levels. 

“But I think as time goes by, more and more consumers are going to turn to mortgage advisers instead of going straight to the bank.”

Kerwin believes this trend will be enhanced by the fact that would-be home owners going to a bank to ask for a loan can sometimes feel powerless compared with the bank manager sitting on the other side of the desk.  

In addition, many banks are closing branches anyway, leaving customers with nowhere to walk into to ask for help, so going to a broker can be useful to them.    

At present, most mortgage brokers are aggregated into groups, so banks can deal with streamlined organisations rather than having too many individual brokers that might clutter their operating systems. 

Kerwin says his franchising operation will go beyond what aggregated groups can offer. 

“The aggregators in New Zealand primarily only process commissions and supply a steering system, that is pretty much what they do. 

“With us, there's the lead generation, that is taken care of. The next thing is the centralised admin office …. a lot of business owners don't like (the burdon of) admin, so we remove that.

“We have got a national marketing team, so there is national branding and we coach business owners on how to do local marketing as well.”

But Kerwin stresses the main advantage of franchising will be helping the work life balance of people in the industry. 

“When I was a broker I was working 60-70 hours per week. My phone rang 100 times a day including the weekends. I couldn’t enjoy a weekend with my family because I’d be taking calls. I couldn’t go on holiday, and if I did I'd be more focussed on my laptop tending to emails than having a holiday.

“I always dreamed of creating a business with a team of advisers, in a fun, supportive and innovative environment, that stripped away all the bad parts of the role.

“I have now created that and want to offer it to others.”

Tags: Nest Home Loans

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Comments from our readers

On 18 October 2021 at 9:51 am Amused said:
Franchising might work when it comes to selling fast food but respectfully it doesn't work in the financial services industry.

As any experienced mortgage broker knows customers come to you because of your own individual reputation and abilities, not because of the sign hanging on your office wall. YOU are the brand. It's not the franchisor who is clipping the ticket taking 30%+ of your own hard earned commission etc. You don't own your customers when you belong to a franchise and when you come to exit the industry your business is a heck of a lot less desirable to sell to another broker, if it's even saleable.

There's a reason why the aggregation model has proved so popular amongst the vast majority of mortgage brokers operating in New Zealand today but I agree with Kerwin that when it comes to aggregator groups 95% of them are nothing more than glorified pay clerks. This is why so many experienced mortgage brokers are opting now to become their own FAP and hopefully cut out the middleman in the future, just like insurance advisers can do already.

On 18 October 2021 at 10:08 am Matron said:
@Amused you may well end up being surprised. This is perhaps the one option that will keep the independent mortgage Adviser model alive with the ability to bring on board new people to the industry with leads and off the shelf systems, processes, CRM etc.

As for brand? Well, do you want to buy into the corner diary or the golden arches?
On 18 October 2021 at 1:22 pm Amused said:
@Matron - you are 100 percent correct that this offering is being targeted towards new people to the industry because no experienced mortgage adviser would in a million years opt to switch across to a franchise model. As another mortgage broker said to me "you'd have rocks in your head".

There is a reason why the top 15 mortgage advisers at Mike Pero all tried to leave a few years ago. The numbers just don't stack up especially when you are paying 30%+ to the franchisor before tax.

Sorry but without been too derogatory I would question the intelligence of someone buying a mortgage broking franchise especially if they happened to be an ex-banker. People who go down this path haven't done their homework on what other models are available and as an industry we are really trying to move away from the days of where taxi drivers want to become part-time mortgage brokers. The lead generation from franchises is always over promised and underdelivered (fast food industry aside)

P.S. The future of the independent mortgage adviser model is safeguarded by those mortgage brokers electing now to have their own FAP licenses. Not everyone has been drinking the dealer group Kool-Aid about it being to hard to have and operate your own FAP. Advisers who are putting their customer's interests first shouldn't be afraid of licensing .

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Kiwibank - Offset 4.25 - - -
Kiwibank Special 4.25 3.69 4.35 4.69
Liberty 4.84 - - -
Nelson Building Society 4.95 4.29 4.85 -
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SBS Bank 4.79 3.95 4.49 4.85
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TSB Bank 5.34 4.09 4.74 4.99
TSB Special 4.54 3.29 3.94 4.19
Unity 5.65 4.15 4.60 -
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