Last week, I talked about how creating a successful mortgage team is not exactly like fantasy football. Of course, I used this metaphor because it was the start of the NFL season and everyone I know was trying to draft the perfect fantasy team. Let the record reflect that I am one of them, and that I had a great draft and that I had the high score in week No. 1 of my neighborhood league, pounding my teenage nephew's team in my head-to-head battle. That millennial kid needed a little humility and I was happy to be the nice uncle to deliver it to him.
Speaking of millennials, working with this generation is going to become more important for all of us as they become, over the next few years, the largest part of our workforce. So, I'm happy to do my part.
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What is already readily apparent to most in the industry is that we are not doing a great job of recruiting and retaining young people. At the same time, we are not doing a great job of getting young people to buy homes and take out mortgages. We are seeing that in the increase in renters and the drop in first-time homebuyers.
I would like to propose that those two issues are sort of related — we are not doing a great job recruiting millennials to work in your industry and, as a consequence, we are finding ourselves hard-pressed to get millennials to take out loans and join us old folks in living the American dream of a new home and a big mortgage. What is wrong with this generation?
Well, rather than focus on what's wrong with them, I wanted to spend a column talking about what's right with them and, more importantly, how they can help us grow our businesses in the future.
The first that is "right" about millennials is that they are a large and growing group. Recently, Forbes magazine ran a cover story on these kids where they revealed that by 2025, two-thirds of the workforce will be millennials. They are the first generation since World War II that gets saving. These kids spend less than the older generations and are controlling trillions in assets now. And that number is growing.
The second thing is that they are marketing machines, not necessarily because they love to sell but just by virtue of their extensive social networks and their willingness to share anything and everything that impacts their quality of life. If you are successful in attracting and hiring millennials, you will have the ability to leverage them for marketing and referrals in ways that will go far beyond your traditional referral network. And you'll get a more diverse pool of new business, as well.
Consider this: we pay big money to purchase LOs that can develop relationships with real estate agents and drive referrals. This is hard to do and expensive, but we all do it because we need those purchase money deals. A good purchase generator often costs 100 basis points or more per loan, and that really puts pressure on the ability to be profitable in the long term.
Compare that to a millennial who has thousands of Facebook friends, and probably an active blog or Twitter network. These LOs tap into a totally new group of referral sources, drawing leads to them from all of their established networks. This can create a source of business that is not totally reliant on real estate agent referral partners and is likely to be far less expensive, in terms of basis points, to maintain.
Of course, the company that embraces such a solution is going to have to also embrace the concept of their LOs and other employees demanding far more tools than the ones the lender typically provides. Making those technologies available to younger LOs may seem risky (what if the employee says the wrong thing on Facebook?) but also offers high rewards (what if they can generate monthly leads on Facebook?).
Another benefit millennials bring to the enterprise is that they are naturally more attuned to and appreciate diversity. So while they are likely to bring you the business of other millennials like themselves, they are also more likely to be successful in generating volume from the growing minority homeownership population.
But to really make this work, there is a whole cultural shift that companies need to be prepared for when attempting to embrace the millennial employee. I don't have the space to write about every aspect of this, but here are a few things you should keep in mind.
First, millennials are highly connected and highly interactive, but they can also be unreceptive to the old methods of teaching and training. A stale policy manual dropped on their desk is not going to be nearly as effective as a series of short videos, training with immediate interaction and, even better, the ability to collaborate and learn from and with others.
I hired and trained hundreds of loan officers when I started and grew my dot com company, back in the last century (yep, it was before the millennials), and I would have loved to have had the tools available today to train all these newcomers to the industry. A video, followed by an interactive quiz that then leads the learner into the next section would have been much better than having agents sit in a conference room and listen to me rattle on for hours. Plus, I could have saved up all those jokes that I used to keep them interested to use in my articles.
We knew nothing about gamification back in those days, but companies that don't put a bit of that into their training efforts will see a diminishing return as the millennials take over the workforce. We have to make it a game and if we do, these young people will do whatever it takes to win it. That's what they do.
And while we're talking about training millennials, let us also understand that we have to train our older managers on how to deal with them, too. Millennials demand immediate feedback and recognition, because they are more used to that in their daily lives. The reason many of them post so much on Facebook is so that someone else on Facebook can tell them how great their posts were. Waiting around for the end of the month top producer report or the next far off promotion will not serve as a great motivator for this segment.
The good news is that they are less money-motivated, so you don't have to pay them as much (so you can begin to chop away at the 100 basis points in sales expense). That said, you do need to set up a process that allows them to get the feedback they need more immediately. Consider a possible mentorship program, perhaps where an older experienced LO mentors on the business while the millennial mentors the other on social media.
In the end, drafting a great team of originators that includes some millennial power is likely to be more difficult than putting together a winning fantasy football team (something I'm proud to say I make look easy). Winning in the future is going to depend upon our ability to do this and lenders should start thinking now about what they are going to have to change to make it happen.
Garth Graham is a partner with Stratmor Group and has over 25 years of mortgage experience.
