For mortgage brokers, switching aggregators can be a strategic move aimed at improving business efficiency, increasing commission rates, or gaining access to better products.
However, one of the most significant concerns when switching is the potential risk of losing your trail book—the ongoing trail commissions paid for the loans you’ve settled. Losing these commissions can have a significant impact on a broker’s income.
Fortunately, with the right approach, brokers can switch aggregators without losing their valuable trail income.
In this article, we will discuss how to switch aggregators smoothly and strategically, ensuring that you retain your trail book. Additionally, we will cover how finding the best aggregator for mortgage brokers can help protect and grow your business.
Understanding the Importance of Your Trail Book
Your trail book represents a long-term income stream generated from the loans you’ve written over time. The commissions paid on these loans are ongoing payments made by lenders for as long as the loan remains active.
Trail commissions can constitute a significant portion of your income, especially if you’ve been in the business for several years. Losing these commissions due to a switch in aggregators could set back your financial goals.
What Happens to Your Trail Commissions During a Switch?
When you switch aggregators, your trail commissions might be at risk, depending on the terms and conditions of your agreement with both your old and new aggregators.
Some aggregators may hold onto commissions from loans you’ve written while under their banner, while others may allow you to retain your trail book as long as you meet specific criteria.
To prevent any financial losses during the transition, it’s essential to understand the policies surrounding commission retention before making the switch.
Key Steps to Switch Aggregators Without Losing Your Trail Book
Switching aggregators involves more than just picking a new partner. It requires careful planning and understanding of your current situation to ensure you don’t lose valuable trail income. Here’s how you can make the transition smoothly:
Research the Best Aggregator for Mortgage Brokers
Before making any decisions, take time to research the best aggregator for mortgage brokers.
A reputable aggregator will have a transparent process for transferring trail commissions and will outline how they manage trail books during transitions. They should also provide guidance on protecting your income during the switch.
Make sure to investigate the following when choosing a new aggregator:
- Trail book retention policies: Does the new aggregator allow you to retain your trail book?
- Commission structure: Are the trail rates competitive compared to your previous aggregator?
- Support for transitioning brokers: Does the new aggregator offer support for brokers during the transition process?
Understanding these aspects will help you choose the right aggregator that aligns with your business goals and ensures that your trail book remains intact.
Negotiate the Terms of Your Transition
Negotiating the terms of the switch is a critical step in ensuring that your trail commissions are protected. Discuss the following with your new aggregator:
- Commission continuity: Ensure that the new aggregator agrees to continue paying you the trail commissions for loans written while under the old aggregator.
- Agreement on loan transfers: Clarify whether your existing trail book will be transferred in full or whether you will need to provide documentation of each loan.
- Clawback agreements: Understand how clawbacks are handled in the transition process. Some aggregators may allow you to keep trail commissions even if a client refinances or repays early.
By negotiating these terms, you can safeguard your income and avoid any sudden interruptions in your trail commissions.
Communicate with Clients About the Change
Informing your clients about the switch in aggregators is an essential step to maintain transparency and build trust. Let your clients know that you are changing aggregators but assure them that their loan arrangements and service will not be affected. Keeping clients in the loop reduces the chances of them feeling unsettled, which may lead to refinancing or canceling their loans prematurely.
Retain Your Existing Lender Relationships
Some brokers find that the success of their trail commissions is linked to the strength of their relationships with lenders.
As you transition to a new aggregator, ensure that you continue to nurture your relationships with existing lenders. If possible, negotiate with these lenders through your new aggregator to maintain favourable terms and retain your trail income.
Having strong relationships with lenders can also help you secure more competitive loan offers for your clients, which can lead to better client retention and more trail income in the future.
Use Technology to Manage Your Trail Book
One of the best ways to protect and manage your trail book during the transition is by using technology. Tools like Track My Trail can help you monitor your trail commissions in real-time, track which clients you’ve gained or lost, and identify where you might be losing income.
These tools can provide you with instant insights into your income from existing clients and help you stay on top of potential commission losses.
Using a mortgage broker commission calculator can also help you estimate how much income you stand to lose or gain based on changes to your trail book.
These tools can help you make more informed decisions during the switch and ensure that you don’t miss out on valuable commissions.
Minimising the Risk of Losing Your Trail Book
While switching aggregators is a significant move, there are several strategies you can use to minimise the risk of losing your trail book:
Protect Your Clients from Early Repayments or Refinancing
Clients refinancing or paying off their loans early can lead to commission clawbacks. To avoid losing trail income, work with your clients to ensure they are satisfied with their loan terms and are less likely to refinance.
Offering loan reviews or competitive loan options from your new aggregator can also keep clients happy and reduce the chances of early repayments.
Negotiate a Trail Book Buyout (If Possible)
In some cases, brokers can negotiate a trail book buyout with their old aggregator. A buyout allows you to take your trail book with you and continue receiving commissions from the loans written while you were with the old aggregator.
Not all aggregators offer this option, but it’s worth discussing during the transition process. This ensures that your long-term income is protected, and you don’t lose commissions from previous loans.
Ensure Smooth Data Transfer
Data transfer is an often-overlooked but critical part of switching aggregators. Ensure that all client information, loan details, and commission data are accurately transferred to your new aggregator. This prevents any discrepancies or missed commissions from occurring.
Using software like Track My Trail can simplify this process by automatically integrating with supported aggregators and keeping track of your trail commissions in one place.
Frequently Asked Questions
Will I lose my trail book when switching aggregators?
It depends on the terms of your agreement with both your old and new aggregators. Some aggregators allow you to retain your trail book, while others may have different policies
How can I avoid commission clawbacks during the transition?
To avoid commission clawbacks, you should maintain strong relationships with your clients, ensure that they are satisfied with their loan terms, and inform them about the change in aggregators.
What tools can help me manage my trail book during a switch?
Using a platform like Track My Trail allows you to track and manage your trail commissions effectively. These tools provide real-time insights into your income and help you identify any lost or gained clients, which is crucial during the transition between aggregators.
Conclusion
Switching aggregators doesn’t have to result in the loss of your valuable trail book.
With the right strategies, such as negotiating terms with your new aggregator, maintaining strong client relationships, and using technology to track your commissions, brokers can make a smooth transition while retaining their trail income.
By taking these steps and choosing the best aggregator for mortgage brokers, you can grow your business and protect your long-term earnings.