New brokers need to have their wits about them when engaging a mentor, but professional associations should not get involved in pricing, believes an experienced mentor.
Therese O’Neill, of Alpha Broker Mentoring, firmly believes new brokers get huge benefit from being mentored by qualified, experienced mentors.
She has never heard of new brokers being deliberately “ripped off” by mentors, but has heard of cases where the new broker thought they learnt nothing over 12 months of mentoring.
Finance Brokers Association of Australia CEO Peter White spoke out yesterday to warn that some new brokers are being ripped off by so-called mentors charging exorbitant fees but delivering little.
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FBAA has been told of mentees being charged up to $38,000 value to be mentored, with many mentors charging an initial large fee, plus a percentage of the mentee’s upfront and trail, and then a quarter of the trail for the life of a loan even after they stop mentoring, says White.
But O’Neill says while the mentor may have started out with “the very best of intentions”, some have not thought through what it really means to take on a less-experienced broker under the wing every day for two years.
“It’s a bit like getting a new puppy,” she explains. “At two weeks everybody loves the puppy, but six months down the track once it’s chewed up your shoes and nobody wants to walk it, it’s a different story.”
Even if a broker has done a mentoring course, it is up to the individual’s inclination and aptitude as to whether they will make a good teacher, and new brokers looking for a mentor should do their research, she says.
But O’Neill, who has run Alpha Broker for five years this month, is reluctant to say professional associations should be keeping a closer hold over who can be a mentor and what is charged.
“I don’t think [associations] should get involved in pricing. In our case, Alpha Broker doesn’t take a cut of trail, but that’s not to say that’s a bad model.
“If you’re being mentored and paying money but not seeing the value of it six months on, then you need to walk with your feet.”
O’Neill suggests having a contract which allows mentees to give a period of notice if the mentoring is not working out.
Alpha Broker charges a new broker up to $18,000 over two years for “intense” every day mentoring, and chooses its mentees wisely, she says.
White has faced some flak online for speaking out against a practice of “scandalous” overcharging.
Today, he says he was compelled to speak out over unethical mentoring practices because the association has an obligation to protect the industry – and the overwhelming response from brokers has been positive.
“A little personal criticism doesn’t faze me because this issue is more important than me or any other individual. We can’t be afraid to tackle the tough issues even if it might offend someone.
“It is the conversation the industry must have, and after we raised the issue, we received even more examples of brokers who are distressed at the damage this is causing.”
However he emphasises the FBAA is not opposed to brokers charging for mentoring.
“Mentoring is an important part of the process for new brokers and no one expects experienced brokers to do this for free.
“The issue here is new and often young brokers being duped into thinking they have no choice but to pay exorbitant prices because the mentor may have done a short course and uses the term ‘certified’.”
‘Certified’ is not a legal or regulatory term, neither does it mean anything officially, he says.
The FBAA has worked to develop a genuine career path for the industry, which includes promotion of the sector among university students, free student membership and a pending apprenticeship scheme, he says.
“We are not going to remain silent and see our work undone by practices that hurt the industry’s reputation.
“We want to encourage new industry participants, not take advantage of them.”
He urges brokers to act responsibly and ethically and says new brokers could contact the FBAA for advice.
Therese O’Neill’s top tips for a new broker looking for a mentor:
- Ask about payment structure and fit it in with your budget over the next two years
- Find a mentor which suits your personality. “You’ve got to get on and like each other – it’s an intimate relationship.”
- Ask how many mentees the broker has mentored before, and ask whether you can speak with them to get their experience.
- Ask what plan or structure the mentor has for imparting knowledge over the next two years.
- Ask yourself whether broking is really what you want to do, right now. “Sometimes the kindest thing you can say [to a new broker] is ‘stay in your job for two more years and then come back once you’ve got some savings'."
