What Are Your Financial Resolutions for the New Year?
by Bill Dolan, CMB, AMP
Now that the holidays are behind us and the New Year has rung in, many forecasters believe that 2023’ is going to get worse before it gets better, sooooooo………do you plan on sitting back and just waiting for things to change while your competition grows? Well, snap out of it! Some of us have seen and worked through far worse times than these, so get with the program and begin accomplishing your financial resolutions NOW!
Most analysts out there believe the first half of 2023’ will be at least lower than 2022’ with some improvement building in the second half of the year and that mortgage rates will run somewhere between 5.75% to 7.00%
Twenty-two years ago, Rick Pitino was coach of the Boston Celtics and ranted to his team that “Larry Bird was not walking through that door, and neither was Kevin McHale or Robert Parish. And if you expect them to, they will be gray and old.” It was up to the team to make it work.
The same holds true for mortgage interest rates and can be applied today. If you, your originators and operations team, realtors and most importantly, your borrowers think for one minute that rates are going to drop back down into the 2.00% to 3.00% fixed rate arena ever again, you are living in la, la land! Therefore, you have choices to make: a) sit on the sidelines, do nothing, and watch your competition grow, b) grab as much of the purchase volume as you possibly can, from a smaller share of the market, c) recruit former MLOs from companies that are exiting the market, change the MLO compensation plan structures from a draw against commission and adopt a salary plus commission model. This will allow the changes to be far safer from a regulatory perspective and it will reward your top producers.
Next, look at your expenses. There is a definite upside to having variable expenses within your budget compared to fixed costs because your institution has far more control over variable expenses which can be modified. Think about and ask yourself the following questions:
If my mortgage volume is “X” this year that I have budgeted for, why am I still maintaining the same number of staff I had during my greatest production years of 2020, and 2021?
Have you thought about outsourcing some of these business functions to reduce your expenses?
If you need to get something to a customer, do you use your employee to drive it over to them or do you put it in the mail, FedEx, UPS, or some other type of messenger service? Often than not, you use a service. The point is all companies outsource some things and you as a financial institution do some of the same for a variety of reasons.
At SCA, outsourcing functions such as Credit Reviews (underwriting) Quality Control (Pre/Post- closing) Compliance (HMDA, Fair Lending Reviews, Research and Consulting) Servicing (ARMs, Reviews, Investor Accounting/Recons) Technology (Software Application Implementations, Workflow Assessments) are just a minimal number of services our clients use for the following reasons:
SCA is able to perform these functions and services more efficiently and cost effectively than you are able to.
Our experience and expertise address what may be lacking within your organization today.
Your time is far more valuable focusing on other areas that will bring the highest value to your bank or credit union as well as your customers.
You can’t afford, nor does it make financial sense to retain resources to perform functions that are not required on a full-time basis.
Furthermore, when considering outsourcing your services to SCA, ask yourself whether the function under consideration is a core strength of your business and does it set you apart from your competitors?
The second question to ask yourself is am I devoting resources (highly skilled and high paid talent) to this function where they can and should be used in other areas of the company?
Thirdly, do you need expertise in some areas, but you don’t require them on a full-time basis? If so, you surely need to consider outsourcing to SCA. Bringing in highly compensated talent on a full-time basis when the function only requires a fraction of a full-time role is both costly and can create an environment where people are not fully utilized and begin taking on lower-level duties and responsibilities just to keep busy.
Outsourcing to SCA provides many of our clients the freedom and the convenience to have a third-party consulting firm perform certain functions and tasks when you don’t have the internal staff with either the experience, qualifications, or expertise, nor the time to train and bring your staff up-to-speed ultimately falling behind your competition.
Whether you’re interested in reducing operating costs, streamlining your organization, or stabilizing your workforce, let the experts at SCA help you curtail those fixed rate costs to variable costs improving your bottom-line, reducing stress and errors, allowing you to adapt quickly to changing circumstances.
Contact Bill Dolan, Director at SCA today to tell us a little bit more about your business and its challenges and SCA will provide the needed services and subject matter experts to complement the needs of your business today.
Interested in learning more? Contact SCA today at (617) 694-2617 or visit our website at www.scapartnering.com for a free consultation.
