LO Recruitment and Retention: Does your value proposition include more than just a Basis Points structure?
Written by: George DeMello, Senior Consultant
Residential Loan Officer recruiting and retention season is just around the corner. While it’s true that recruiting is an ongoing necessity to be conducted twelve months a year, it’s also true that the last and first quarters of every year seem to be the most active times for attracting new Residential Loan Officers.
There are many reasons for this seasonal frenzy. Some of those reasons are that Loan officer pipelines are typically low in the first quarter of the year. So, if a loan officer is enticed to move to a new company, they aren’t leaving potential income on the table. Another reason could be the new year’s strategic plan, which calls for increased volume and revenue that requires additions to the sales force. The MBA Mortgage Finance Forecast 2024 shows a 10% increase in 1 to 4-family purchase business and a 34% increase in refinances. However, the number of units in refinance activity is much lower than in past years. Or it could be the well-known adage “you either grow or die.” Lastly, there is the question of whether I have the right mix of loan officers (LO’s) that contribute positively to the culture I want to have and/or can my current sales force meet the financial goals established for the new year.
The obvious question is, “do I need to refresh my sales group?” Whatever the case is, you can be sure that the recruiting process has started and LO’s phones and inboxes are being inundated with recruiters.
So, I ask you, what’s your plan for recruiting and retaining your sales force? Some people believe it all comes down to basis points (BP’s) payout. If so, are those LO’s the ones you want? Paying for hired guns has always been an issue in our industry. If you stop and think about it, how did some LO compensation plans get to 120 BPS or even higher? We are all working to successfully attract talent in a very competitive industry by offering the potential for increased compensation. I understand the fundamentals and how it works, but there is so much more to compensation than the all-mighty BP. There are different compensation structures like a base salary vs a hundred percent commission or a combination of the two. There are layered compensation structures that meet LO compensation regulations.
At SCA, we understand that there is an organizational value that contributes to LO comp that stretches far beyond BP’s. We believe workflow, systems, technology, product, benefits, culture, institutional reputation, and secondary execution are all part of LO compensation. What I’m trying to say here is if your LO’s can’t originate loans efficiently (which today’s market demands) or close loans seamlessly, their commissions will suffer. Their reputation will become tarnished, resulting in reduced referrals and less income. In a nutshell…. 120 BP’s of loans that don’t close or don’t close efficiently is nothing, so my point is there is a lot more to LO comp than what they will make in BP’s.
If you are interested in discussing ways in which SCA can help you when it comes to LO compensation plans, please contact our Director, Bill Dolan. Bill can be reached via email: WDolan@scapartnering.com, or by phone: (617) 694-2617.
