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“The optimist sees the donut, the pessimist sees the hole” – Oscar Wilde
While it seems like tumultuous times in the financial services industry due to the Royal Commission, there’s two ways you can look at it - being an optimist or a pessimist. The pessimist would say “It may be time to move on.” The Optimist might say “It may be time to think of a different way of doing things.”
Some of the headlines regarding Brokers are around a decrease in revenues and cutting commissions. While this is very concerning, what if there was a different way of doing things that would allow you to flourish despite the uncertainty. Could this lead to the evolution of ‘The Broker of the Future”? Let’s evaluate this thought focusing on three main ideas – Effective use of resources, Capital reinvestment and Effective use of time. Simply, the most common resource for any Broker is capital, and time is the means by which they can generate more.
1. Effective use of resources
With their compensation under threat, an important starting point is cost savings which begins with how your business is conducted. In other industries, outsourcing has become an accepted way of operating and it is transforming the bottom-line for many firms. Why is outsourcing more attractive? Primarily due to the savings in wages. Any business experiencing growth will result in new hires to help sustain and continue that growth. Wages here in Australia include a lot more than just salaries as shown in the table below;
| Onshore Loan Processor Expenses | Offshore Loan Processor Expenses |
|---|---|
| Superannuation | Monthly Invoice from Outsourcing Provider |
| Workers Compensation | |
| Paid Leave | |
| Office Space Rent and Utilities | |
| Office equipment (computers etc) | |
| Reliable Internet Connection! |
Currently in Australia annual leave is 20 days per annum and sick leave is 10 days. That amounts to 30 days of paid leave every year. As you can see it adds up pretty quickly!
We recently created a case study comparing two brokers’ businesses. Both employed a loan processor, one offshore and one in Australia. The cost savings are staggering! When working with an offshore outsourcing provider, customers receive a monthly invoice which is fully comprehensive. Monthly fees include the office facility and equipment – which eliminates rent and utilities. In the Philippines, for example, paid annual leave for workers is 12 days, which results in a more productive outlay of financial resources. In summary, you’d be looking at approximately $50k in savings. Read more on our case study here.
2. Capital reinvestment
Based on this saving, what could your broking business do with $50,000? What would a $50K injection to your marketing budget mean for your business? While the term “Marketing” covers a lot of different activities, essentially it is a means of attracting new clients, creating a demand for your services and turning all of that into revenue!
As you create more demand for your business, you may need to invest in more people, and you’ll have the capital to do so! More importantly you can invest in yourself! One of the consequences of the Royal Commission may be new legislation with an increased focus on compliance. There’s never been a better time to invest in continued education and ensuring your qualifications are current in light of any new applicable laws.
3. Effective use of time
Lastly and certainly not the least is effective use of time. As a broker, an effective use of your time would include activities that are revenue generating. These activities involve building your client base; creating a network which will open doors and bring in new business as well as a focus on growing your business. In order to carve out more time to do this you can move process driven tasks abroad. Having an offshore loan processor will allow you to not only concentrate on activities that drive growth and expansion, it also allows you to improve and grow in your skills.
All three of these ideas provide a strong foundation for The Broker of the Future. The use of which will help you transform your business into an agile, cost effective and profit generating operation!
Want to learn more about how to send low-value tasks offshore?
Read our blog The Top 10 Tasks for your Offshore Broker Support Officer or schedule a free business consultation.
