How to Hire a Mortgage Broker - Part 2: Salary vs Commission

The second post in my ‘How to Hire a Mortgage Broker’ series addresses renumeration structure based on conversations I have in the field.

Hiring a broker on salary is deemed controversial by some as they feel it can encourage complacency and doesn’t ignite the same motivational drive that a commission-only model does. Whether you agree with this or not, it is industry standard when hiring to offer a broker a commission split rather than a salary.

In my experience, deciding on your renumeration structure and whether or not you will pay a salary or a commission split really comes down to your long term goals. 

I recently worked alongside a group who’s vision is to grow the lending arm of the business with the goal of eventually having a team of brokers that are not only servicing leads from the financial planning and accounting division, but are bringing in leads to refer back. 

To do this, they needed to develop a long term plan with a renumeration structure that encouraged and incentivised the brokers to go out and bring in their own business, as well as service provided leads. The idea was to bring in one broker, provide them with leads and a salary and commission structure that saw him earn more commission on self sourced deals. The plan: for this broker to eventually become self sufficient and slowly transition off of the salary and lead structure, allowing the group to hire another broker to take their place in servicing in-house leads.

However, this needs to be monitored closely, and preparation for the second broker needs to start before the first one gets to the tipping point. If this isn't managed properly the first broker may start to neglect the leads being provided to service the ones he gets paid more on. 

This is, though, a strategic way to build your lending arm. 

Alternative options that have worked for other groups include a salary of around $60-$70k and a cut of the upfront commission at around 20-30%. 

As with previous model, this has advantages and disadvantages. This will attract a broker that is motivated by security, is great at writing loans, dealing with banks and providing great customer service. This model would attract someone relatively new to the industry, that wants the support a bigger group can offer, as well as a salary. Such a low commission split does come with risks and I have found that brokers can get complacent or see how much others earn and decide to go it alone. 

I have also worked alongside building groups that split the commission on both upfront and trail. This has likewise proved successful. It appeals to existing highly experienced brokers that are looking for more leads but don't want the commitment and restraint that comes with a 9-5 role. They can still run there own show, and work from where ever they want as long as everyone from the sales manager to the sales agent to the customer is happy. 

In my opinion, it’s best to have the attitude of paying the right money for the right person. Being open minded to options and planning ahead will ultimately open the range of talent you'll attract.