The opt-out process is simpler than you think, however there is one caveat – when you sell your trail you don’t sell out your client.
When we buy a trail, we are not buying your clients. All we are purchasing is the right to receive a trail from an agreed group of loans. We do not talk or deal directly with the client. That is the broker’s duty. In fact it more than a duty, it is your duty of care. If you want to sell your entire business we can assist with that, but if it is just your trails, you must maintain the relationship with your clients. In doing so you will maintain favour with both your clients and the aggregator.
What we do is enable the broker to access funds by selling an agreed group of loans. We want t help you free up your cash flow and we hope you use this cash flow to grow your business, rather than buy a speedboat – which you are entitled to do if you so wish.
How it works
The broker supplies Trailer Homes with the most recent trail commission statement. Trailer Homes then looks at it and agrees on a purchase price. Typically the price will be a multiple of annualised trail income. The last month is taken and multiplied by 12 to get the aggregated price. It is usually one and a half to two times the amount, however sometimes Trailer Homes pays 2.5 times the amount just to receive the trail of agreed group of loans. When a price has been agreed, it is documented and the aggregator is approached to assign the loan or the associated trails and a lump sum payment is made up front. The process takes about two to three weeks.
Trailer Homes buys the annuity stream off an agreed group if loans. However, what must be brought to mind is that if a deal was struck today and one of the clients was to contact a broker the following day and it is associated with the loan that has just been purchased, the broker is obligated to do the right thing and refinance the client. We expect the loan that we had bought would be discharged and the trail we would be potentially entitled to would stop. Brokers would then put in place a new loan and the aggregator would pay an up front commission and trail on the new loan, depending on what has been agreed to.
This could create a churn mentality, but we discourage that completely. It is not good practice and not good for the client. Which is brings us full circle. Look after your clients, because loyalty as much as anything else helps you build your business and your reputation.