Winning vs. caring
The difference between competing to win the client's business and doing your best to keep it.
Every bank and broker tries their best to attract new clients and win the business. On each occasion, it is in the bank/broker's best interest to put forward the best strategy, product, and interest rate to match the client's needs.
Once the loan has settled, you'll find a huge difference between banks, most brokers, and myself.
If you have a home loan through the local bank branch, you will basically never hear from them again. A lot of brokers are the same, in that they don't maintain regular contact after settlement, nor have a process in place to renegotiate existing clients' loans.
I decided to make caring a big part of my business years ago when I realized 2 things:
1. The banks would offer new potential clients a much better interest rate than they offered existing loyal long-term clients.
It made no sense to me how the banks would fight hard to win the business, but then expect clients to accept paying more than new clients. I would take calls from existing clients telling me that when they login to the bank's website, the new interest rates are published and they are better than my clients had.
You see, it is more profitable for the bank to only offer a better deal for clients that ask for it (the minority) rather than lower all client's rates when better ones become available.
We had a client recently who only settled their loan a year ago, and received the best deal at that time, and when we renegotiated, they saved $8,000 per year in interest from the lower rate.
2. My clients are generally very busy people and simply don't have the time or process in place to ask the bank each year for a better deal.
In fact, as I am paid to manage the loan on an ongoing basis, it was really on me to put a process in place and renegotiate every loan each year.
When I talk to new potential clients who are considering a refinance and I look at their current interest rates, which are often terrible, I know most often than not, the loan has never been renegotiated.
Our solution was to invest in a full-time staff member to get in touch with every client on the anniversary of their loan settlement (around 50 every month), gather all of the required information, and then try to renegotiate on the client's behalf with their current lender.
We have had some tremendous wins, where clients are now saving up to $25,000 per year in interest, along with plenty of other clients who save between $1,000 to $3,000 per year.
That's the difference between competing hard to win the business and providing real long-term benefit to the client.