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   ARTICLE   |   From Scotsman Guide Residential Edition   |   December 2017

Prepare for a Changing of the Guard

Recruiting the next generation requires a forward-looking strategy

At a Glance

Sales- and leadership-training company XINNIX surveyed 600 new mortgage professionals in 2015. The poll found the following:

  • Sixty-one percent of respondents had some level of prior sales experience.
  • Prior to joining the mortgage industry, the average new-to-the-business loan officer had spent six years in the workforce.
  • Thirty percent of those surveyed had 11 years of workforce experience.
  • Before joining the mortgage workforce, the average respondent had worked for three or more different employers.

The mortgage industry will need to replace at least 200,000 originators over the next 10 years as older professionals retire and younger ones enter the workforce. It could be an even higher number, if current trends continue. Right now, only 10 percent to 25 percent of new mortgage sales professionals stay in origination more than two years, which means that 200,000 number may grow substantially higher.

To make up for this, executives and team leaders are going to have to do what they have always done — recruit — but do it more creatively. The old ways of recruiting and coaching new originators must be completely transformed. This goes for multiple generations — from baby boomers down to Generation Z (those born after 1995). For experienced sales professionals, nonproducers currently in the industry and recent college graduates, things must change.

Contrary to the phrase “make mortgages cool again,” it’s not about a status. It’s about our intention and attention to bringing new professionals into the mortgage industry to better serve homebuyers. Most of us have heard of the “Golden Rule” — treat others the way you would like to be treated. Today, the market demands us to implement the “Platinum Rule” — treat others the way they want to be treated.

Simply put, it’s never been more important to deliver goods and services in the ways that potential homebuyers want them. To do that, the mortgage industry doesn’t need to be cool. Rather, it needs to deliver a great experience driven by the borrowers’ need to do business with people like themselves. So, where do we start? First, we must understand the next generation of homebuyers and originators.

New homebuyers

Millennials have officially entered the housing market. The most prominent homebuyer segment is now those under the age of 36. Not even tight inventory is stopping them as purchase loans have continued an upward trend among millennials in recent months.

What’s more, millennials now represent some 30 percent of existing-home buyers. And they aren’t just buying. A good share are already refinancing. Millennial refinancers accounted for 20 percent of closed loans in late 2016.

As millennials enter and take over the housing market, it is important to understand how they shop for homes and mortgages. A 2016 Zillow study found that they are savvy purchasers, thanks to their reliance on online research. And because they are educated, they expect real estate agents and loan officers to have everything covered. Because of this, housing professionals need to stand out by understanding millennials’ needs, utilizing technology and being flexible. The more you “get them,” the more successful you will be.

At the same time, don’t forget the “Forgotten Generation” (or Generation X) — which is sandwiched between the millennials and baby boomers. In 2016, they represented 28 percent of all homebuyers. The median age for the Gen X group — generally defined as those between the ages of 37 and 51 — is 43 years old. Mortgage originators in the near future will need to adapt more quickly to meet and exceed the expectations of all buyers in the market.

New originators

Millennials, as a group, are not the only opportunity target for retooling the professional ranks of mortgage industry. While recent college graduates are, and hopefully will continue to be, an important component of those entering the mortgage workforce, there’s more to the story. Mortgage companies should remember that many potential new originators may already have strong backgrounds in other industries and can bring crossover skills to the table.

Looking at characteristics of future mortgage originators, we likely will find a mix of what we are starting to see in the broader real estate industry. Younger professionals adopting technology will remain a vital trend as social and economic shifts drive changes in the market.

A shift in how mortgage companies recruit needs to happen now. 

As these shifts happen, recruiters will need to seek trained sales professionals with a variety of skills developed outside the industry. In the future, technology will simply be a fundamental part of how business is done, but the critical skills needed still harken back to the bread and butter of being an originator. New recruits will need past sales experience (or a desire to learn sales) and an understanding of what having the backing of a company can do for them, even if they operate independently.

They will have strong financial and communication skills as well, plus an entrepreneurial mindset and a desire to find the right career to make the best use of their abilities. In addition, of course, they will need a strong instinct for customer service to ensure an excellent homebuyer experience. A 2015 study by XINNIX found that the top four reasons people enter the mortgage industry include the following: professional development, independent working opportunities, higher income potential and the opportunity to help others.

Mortgage recruiting will continue to change as companies realize that compensation isn’t the sole driver of job satisfaction. To disconnect from the old way of doing business, mortgage recruiters must focus less on compensation. We understand everyone wants a good wage, but income is only one of many other top priorities, such as professional development, independence and helping others.

Mortgage companies should seek to offer training opportunities, avenues for growth and ways for new hires to work independently. Employers also should work on developing strong humanitarian/community programs that employees can participate in, which will make the housing-finance industry more attractive for new loan originators.

Emerging talent

Right now, the focus in the mortgage industry is on aggressively recruiting seasoned producers by any means necessary. Large retention or signing bonuses are examples of the many unsustainable tactics being deployed to protect companies against a loss of production. Recruitment efforts will need to build new populations to target for recruitment, and there are currently too few mortgage companies investing in these strategies for the future.

A shift in how mortgage companies recruit needs to happen now. The new populations of future top producers will start to come on board when mortgage companies offer opportunities that reflect the values of this new workforce, not the other way around.

Another strategy to recruit the best future loan officers is to focus on flexibility. Work schedules using mobile technology will allow mortgage professionals to work remotely and have control over their schedules while building their pipelines. Clearly outline what mobile platforms you have and if they allow for true freedom.

Companies also should be able to illustrate how job prospects can expect to deliver meaningful work. Reward producers — both personally and financially — for serving borrowers by being problem-solvers. State whether or not your company donates to charitable causes or allows employees to participate in volunteer work on the clock. Building a strong professional-development culture and the ability to focus on what is important to new-to-the-business loan officers allows employees to stay refreshed and continue to thrive well into the future.

•  •  •

Today’s mortgage companies should be able to showcase their ability to build human connections in a digital world. That will be key to their future success. Those willing to invest in newly qualified mortgage professionals to ensure they can better serve borrowers in the way those borrowers want to be served will bring about change to the bottom line. If embraced by organizations from top-to-bottom, this mentality helps further company goals involving community work and pushes organizations to create new initiatives.

The mortgage industry is at a fork in the road. Companies that understand how recruiting needs to change to fit the desires of the next generation of originators will thrive in this new marketplace.


 
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