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ILMB EP51 CEO-MARK KERZNER

VO Intro:

I love Mortgage Brokering Episode 51.


Where the best mortgage brokers get better. I Love Mortgage
Brokering with your host, Scott Peckford.

Scott Peckford:

Hi broker nation. Scott Peckford here. I want to share with you a


new series Im doing called the CEO series, where I am
interviewing the CEOs, all the major brokerage houses. There
are two goals to this. The first goal is to find out who these
people are and what makes the tick and how they ended up
leading a national brokerage. The second goal is to find out
where there company is headed and what makes their
brokerage unique. Basically, why should someone choose their
company in light of all the options available.
I am excited to share this interview with you. Hopefully, you are
going to get some awesome stuff from them and you can find
them all at ilovemortgagebrokering.com/CEO.
Hi broker nation. I am thrilled to introduce our guest today, Mark
Kerzner. He is the president of TMG. He has been a president for
the past five years. They have eight hundred agents nationally
and I am absolutely stoked for this interview today.

[START OF PODCAST]
Scott:

Mark, are you ready to Rock?

Mark:
Scott.

Absolutely. Thanks so much for having me this morning,

Scott:

Awesome! I always like to ask a little bit about you personally. So


can you just tell us about yourself and how you got into the
mortgage business?

Mark:

Yeah, sure. Personally, I consider myself a family man. Im


married for almost nineteen years, three kids, two girls and a
boy. I consider myself a sports junkie and a hockey fanatic. I
often apologize for being a Leafs fan. I was born that way I have
no choice. Ive got nothing to show for it right now but they
made some changes yesterday with the head coach, so lets see
what the future brings there.

Scott:

One of my friends is a Leafs fan, so I always give him a hard


time. Do you know what does a Leafs fan do when his team
wins the cup?

Mark:

I am not sure all I ever know but, what do they do?

Scott:

They turn off their Xbox and go to bed.

Mark:

There you go. Thats like my son, so I can relate. No doubt about
that.

Scott:

So how did you get into the mortgage business? Nobody started
out. You did not start out saying, Hey, I want to be a president
of a national mortgage brokers with 800 agents. So what was
your path to get there?

Mark:

Yeah. I have an eclectic background probably like so many


people in our industry and so many people you have talked to.
When I graduated from undergrad, I had no clue what I wanted
to do. I probably called work ADD. I had five jobs in four years. I
did whatever I could to earn a couple of bucks, then I went back
and I became trained as a high school history and special Ed
teacher.
There were 14,000 unemployed teachers in the province of
Ontario, when I graduated from that, I am just not the type of
person to sit around and wait for something to happen. I told
you I was a sports junkie. I actually started up a sports poster
publishing and distribution company with a buddy of mine. It still
exists today which is fun and then I went and got a real estates
license and sold real estate for a few years here in Toronto.
At some point, I decided, I needed to find myself in a business
sense. I went back, did and MBA at UFT, met a guy name,
Brendan Colder at a cocktail reception. The bank was told to go
out and find some MBAs and I had no interest in working for a
bank but the two of us met, hit it off and then the mortgage
career started at that point.
So it took me a long time to find myself. When I got into the
mortgage business, I really loved it and then careers progressed,
I worked at CABC for a number of years, moved to Paradigm,
worked there for a number of years in an executive roll and my
heart was always at the front end of the business.
I loved the broker business being at first line--if you dont love
the broker business, you are definitely in the wrong business but
I missed the fun end of it when I was in the ops side of the
business and an opportunity came up to work with Grant and
Debbie and TMG was at a place that they were essentially had to
decide what they wanted to do with the organization. Did they
want to remain a western focus forum or did they want to grow
it? It was a great meeting and relationship at that time.

Scott:

I know. Yeah, right, thats awesome. Its interesting youre going


to be a history teacher and then through various other career
paths and choices, you ended up in the broker business.

Mark:

Yeah. I was trained as a history teacher. I worked in a couple of


schools here in Toronto and had my teaching degree but it didnt
work out and sometimes one path closes and another path
opens. It sounds clich but thats pretty much exactly you what
happened.

Scott:

You have to keep moving.

Mark:

Absolutely.

Scott:

Before we dive more into your story, I always like to ask about a
success quote because I personally love quotes. I love how they
are portable and memorable you can take them with you. Can
you share a success quote that has had an impact on your life or
business?

Mark:

Yeah. There are two. They are both short and sweet but theyre
not from books; they are from my life, experience. One is
actually from Brandon Colder himself. He used to say, You
either grow or you rot. And that always stuck with me.
The other one is I worked briefly at Microsoft during my work
ADD period and they used to talk about flawless execution and
that stuck in my head as well for all these years.

Scott:

Right. So all those two quotes maybe like the flawless execution,
how have you applied that recently to anything that you are
working on at TMG?

Mark:

Yeah. On the flawless execution side, what I would say is there


are tons of great ideas. We all have great ideas but people dont
usually buy an idea; they buy an ability to deliver, to execute
and get results.
So, focus on that execution in our business whether its TMG or
anyones individual business. This is paramount. So what we do
at TMG is we test all of our business investments and we have a
big backend and do a lot of training and a lot of education. We
come up with innovative products and programs or this lead
thing or whatever else but we always test those investments
against the notion of whether or not we are enhancing the
clients experience.
Are we making the brokers life easier? Are we providing them
with better access, better information, better knowledge and are
we empowering them with respect to the customer?

Scott:

Right. So can you give me an example of something that you


have recently launched that went through this testing process,
the initial testing, is it working and can you share something
that you are excited about thats been working?

Mark:

Absolutely. Its probably the least sexy of all topics but one of
the things that we have introduced over the last year is a really
incredible payroll and reporting system.
On the reporting system side, a broker is able track their
expenses, almost like you would look at a Visa statement, you
can sort it by category, you can sort it by month, you can sort it
by type of expense, you can track it back to a deal. They can
also review their source of business, their lender distribution. So
they got a dashboard in front of them which isnt necessarily the
dashboard that we think about when we talk about how many
deals did you submit, how many approvals did you get, how
many funded deals do you have--we have the ability to track
really how they manage their business and how they see the
business, where is the business going, what type of business is
it?
Is it a first time home buyer business, renewal business? Is it
first mortgage or second mortgage, commercial mortgages?
That is something that we are really proud of.

Scott:

Right and thats awesome and definitely in our business, the


payroll. I know for me being a franchise or independent is that
having payroll that is easy to understand and make sense is
always a big thing for me.

Mark:

You know Scott, sometimes we learn at the experience too.


When you think about the payroll, one of the things that
resonated thats our people and our payroll system is we
actually send a notification to our agents as soon as we have
received the funds. So we have an electronic notification system
that sends the agent a note saying, Scott, we have received
$1752 on MGRP, blah, blah, blah. Please make sure your files
compliant and to have that notification knowing that we have
received payroll and it is very predictive.
They know as long as the file is compliant. We review the
compliant that they are going to be paid automatically on such
and such a date and that keeping them in the loop is really been
a valuable tool for us.

Scott:

Thats awesome and I am going to switch gears and talk about.


This is something thats a success for you but I am going to ask
about failure.

I know that for me as a business owner entrepreneur, I have


definitely failed at stuff but looking back, theres always a lesson
and I can learn something from it.
Can you share something that you failed at in business and what
you learned from it? It doesnt have to be necessarily a TMG
failure but just a business failure in general.
Mark:

I guess this is the question everyone loves to be asked the most.


Its funny. One of the things, I guess the failure-- when I was at
first line, my department was sales and marketing but we did a
lot of product development also. I remember that we were once
looking. Demo had this project which was a 18 year term and we
decided we want to be innovative in the broker channel and
there was a lot of pressure, I can tell you at first line to continue
to be innovative because our predecessors where seen as very,
very innovative. I joined right at the beginning at 2001. There
was this notion to come out with a long term mortgage. The idea
was the only mortgage youll ever need. So if you do accelerated
payments, then you could pay down in eighteen years but we
could do a term as high as twenty five years.
I used to sit in at the Alco meetings which were the Asset
Liability Committee Meetings for CABC mortgages at the time
and we had to bring a business case and the business case
would have said, This is how much business we are going to do;
this is how much volume we are going to generate. I can tell
you we never met our sales target on that product; never came
close to meeting our sales targets and had to do a new product,
we had to have it on site in marketing and it took a lot of
resources. But the interesting thing that I learned is a friend of
mine who was one of our top brokers, John Parkers, actually in
BC

Scott:
Mark:

I know John.
He used to have a store front and I remember going up visiting
him once and he was advertising the 18-25 year term and if I
recall correctly, he was probably one of our top brokers on our
design on the matrix mortgage product. I was like, Why are you
not marketing us, and he would say, This is a conversation
starter with people but no one else has. Thanks, other than
Demo, no one else is offering this term. So people are stopping,
they are looking at this window, he has got something different,
he has got something unique and it was one of my first
realizations that the purpose obviously of introducing a new
product was to generate volume but the outcome was we create
a lot of good will for our brokers at the time, we are seen as
innovative and we allow them to have a conversation present

something unique with their clients that they really otherwise


would not have had.
Scott:

Right. Thats cool. I actually have often thought one of the things
about the US system that I really admire the US mortgage
system is they do have those fifteen and twenty year mortgages
and the rates tend to be pretty good. I wish we had something
like that here but so you come from a lending background, how
come you dont have longer terms that we just cant price it in a
way that is competitive or there is no interest or whats your
thoughts on that?

Mark:

I think its just interest rate sensitivity. Look at the market right
now. Every other question is about buy downs and we are talking
about an interest rate environment when 289 is not good
enough, so we got to buy it down to 284 or 282. If we are
introducing a term that is going to be longer on the yield curve
then the ten year and if the ten year, I honestly, Scott, dont
know what the ten year is at now. Say 419?
If we are going to introduce a product thats 459 in an
environment where five basis points seems to be so important
on the lower end of the curve of five years, how is the consumer
going to respond there?
The other thing is in the US is; they dont have the same
penalties that we have, so they are able to refinance without the
same penalties they do it with fees but they have got the
interest deductibility on a mortgage payment so they are not as
interest rate sensitive. I dont think as we are because they have
got the right off of some of the portion. I mean it is a good
question if someone had a peace of mind security for all that
time at a price that was equal to lower then the benchmark rate,
then, you are qualifying clients now four-year terms, maybe it
would be a good option for some people.

Scott:

Yeah, who knows? Anyway, I digressed because it was just a


background I thought Id ask you and sounds like you were a
creators of one of the creators of the twenty-five year mortgage
at first line so.

Mark:

It was definitely a team effort; there is no doubt about it.

Scott:

Id like to ask about the early daysso, TMG has been offered
for twenty years so where did the idea for TMG come from and
at what point did you enter into the process?

Mark:

Yeah. First of all, I am so proud that this is our 25 TH anniversary


year coming up. TMG started in 1990; really it was started by a
serial entrepreneur group Grant Thomas and Debbie Thomas.

Debbie was a teacher beforehand and she was been our broker
record in DC for probably 23 of the last 25 years.
They initially started as the Equity center and I think they had
four franchises in DC and I dont know if you recall, Scott, that
Equity center was the precursor to Mortgage Center Canada.
Scott:
Mark:

I dont know that.


It was and Grant would have had a conversation at the time with
a gentleman named Dave Chapman who started the Equity
center and had some interesting technology and Dave Chapman
then went on to become one of the executives and founders at
Fologics
They had an interesting technology at the time and they took on
a number of these franchises in BC and while they were
probably attracted to technology and Grant is a serial
entrepreneur, they quickly became a tomb and dealt with the
brokerage business.
Its a business where a lot of people tend to really find a fit. They
become passionate for it, committed for it and they really found
a great home with it. So they became really entombed and
attuned to the broker business.
They parted ways with the Equity Center Mortgage center
franchise and started TMG up, after a number of years after that.
TMG was really strong in Western Canada for a number of years
and it has grown very steady and slow, methodically over the
years, bringing in business partners in regions to help lead those
regions and that growth over time. So first, it would have moved
to Prairies and back to Alberta and then to Ontario and
eventually, over to Atlantic.
When I joined TMG, the fall of 2009, TMG was really just starting
to move into Eastern Canada, Ontario and Atlantic. I am out of
Toronto. Our head offices are in Vancouver and its been a really
great fit since that time.

Scott:

I am going to ask a question. I dont know you have been there


for five years. Can you share whats one mistake that you think
that your brokerage TMG has made in the past? If you want to
be fair, in the last five years, or yeah, just in general, what do
you think you guys have maybe made a misstep on?

Mark:

I have no doubt over twenty-five years that we have made our


share of mistakes. We learn from mistakes all the time. I think
one mistake that we are guilty of but I think its actually
systemic in the industry and we talk more about it or not is fine

but there has been a great margin erosion in our business over
the last ten years and what I am talking about is on the
brokerage side of the business and the erosion of margins for
the companies whose really changed the focus of companies to
really look for volume because volume compensates in many
respects for loss of margins and at TMG, it is something that we
bear in mind all the time. It is a balance on desire to grow the
business and making sure that we do with quality and efficiency.
So being part of that whole margin erosion over the last ten
years has really changed the face of our business now.
Scott:

Yeah. It definitely seems like the industry has changed a lot and
become more competitive and more even on the brokers side
but the brokers side commissions getting squeezed and so how
does a company like TMG or any of the other guys run their
business model and everybody wants to pay nothing basically.

Mark:

That is exactly it and we look at our business very much as a


business. In many respects, we look at our business differently
than what people would perceive a lot as our competitors to be.
We are a brokerage business. We make money and earn revenue
in our incomes only when our brokers are successful. That is how
our revenue model is derived.
It creates great alignment with our brokers at the end of the day
and it allows us to go back on what we were talking about earlier
is making sure that the investments and the tools the we are
creating for our brokers are really in tune with helping them
managing and grow their business.

Scott:

Right. So with all the options that are available, there is


definitely five or six maybe major brokerages. So what makes
TMG in your mind, what are the couple things that make it
unique?

Mark:

Not to beat on a dead horse but first and foremost, we are a


brokerage. I know that common language out there is our
competitors and their brokerages but what we are and what our
business is the way we are set up is actually is a brokerage. We
are licensed with the regulators; we handle payroll and
compliance for our brokers. We are not a network, we are not a
franchise company, we are a brokerage company and that does
create a really significant alignment between us and our brokers
and our desire to fit and grow their business.
I guess this is kind of my favorite question because I am so
proud of what TMG is. It is rare in our industry that you would
have a company that has been around for 25 Years. It has got

the strength and stability of that longevity combines itself with


innovation and entrepreneurship.
Scott, every year we do an internal broker survey and one of my
favorite comments I remember reading back on the broker
survey was one of our brokers says, Attending a TMG event is
like going to a family reunion but only when your cool cousins
show up.
Scott:
Mark:

Thats awesome.
We talked about TMGs culture and caring. I love it when we
have our Christmas parties and we are celebrating ten, fifteen,
we had 320-year anniversaries this year at our DC Christmas
party. The culture here is supportive. Its aligned from training
and our green screen broadcast studios to our awards and
recognition programs and trips that we still run. I could go on
forever and the people are beyond phenomenal. I think I have
the best leadership team that I have ever had with any company
and the best leadership team in the industry and I guess the
cool thing for us is when the industry recognizes us.
Four out of the five [20:39 Capital Awards of excellence]
winners this year were from TMG. We are the only brokerage in
the last seven years to win the employer of choice award at the
CMP awards. We were the number two ranked financial services
company for the employment award in BC the year before last.
So its cool to be recognized by the industry for that stuff as
well.

Scott:

Right. Thats awesome. Can you share an example without using


names but of a recent person or company that joined TMG and
what was their reason for joining you guys?

Mark:

We have been really successful lately at recruiting a number of


former bank sales force reps, mortgage sales force reps, which
makes me really proud because I am hoping to grow a broker
channel as well and it also makes me proud because what we
will hear from them is also that the culture of TMG, the culture of
the company reminds me of what it used to be like here. That to
me is a great compliment: the rewards and recognition that
training and support, the reliability, the underwriting support,
the business and alternative lending, whatever it happens to be
but they love our lender access.
The lender access that we have and the way we actually think
about our lender relationships the fact that I come from a
lending background and so many people within our company
come from that lending background. We almost think of our

lenders as our customers and when you think about of what a


customer is they are the person that pays you and so I think as
an industry, if we all think of our lenders as our customers at the
end of the day, they give us a product and they pay us. Maybe
they are not customer 1A but they are pretty close 1B and as a
result, it has let us to have great, great lender relationships
which results in access lender support; our efficiencies are
higher than average in the market place.
We are a very analytical company so we will look at our portfolio
performance wherever we can, wherever we have access to
information, they like our supportive culture, they like the
training programs that they have. They like the fact the we are a
brokerage that our business is running a brokerage at the end of
the day which means they dont have to worry about the
administrative and regulatory aspects of the business but they
can focus on the sales and the customer aspects of growing
there business.
I guess the last thing that I hear is they like when they call our
references and we are happy for them to call any lender, any
supplier and there is a great alumnae of MG folks is the industry
where for whatever reason, it just did not work out. I have no
issues that they call those people as well but it is cool when the
references align with what we have told them. So, there are a lot
of people out there in the industry in Canada whether they are
with us or not. Well have a lot of great things to say about what
we are about and what we do.
Scott:

Right. Thats awesome. I am going to switch gears and talk


about the future for a little bit. So where is the opportunity for
the big brokerage houses in the next couple of years?

Mark:

I absolutely believe that there is a huge opportunity and for a


couple of reasons. Number one, for the longest time, the broker
value proposition was predicated on getting a lower rate and
when I was at first line, we had the basic points program and
banks were using published rates with discretionary pricing and
cash backs and all kinds of stuff. Brokers had a rate advantage
compared to the branches, compared to mortgage sales, force
reps. A lot of that rate advantage has either disappeared or
disappearing.
To me, the number one value proposition that a broker has today
is choice. The fact that we can shop the market, the fact that we
have access, the fact that we can direct a consumer who has
unique needs to a lender who has unique products, so a large
brokerage has more choice and has better access. A large
brokerage usually has support, has deal support, training

support, which allows our brokers to facilitate those deals more


practicably with their client.
Scott:

Right, yeah.

Mark:

The other thing I'll tell you, the more regulatory changes, the
better it is I think in some respects for the business because
consumers already in headlines and getting their feeds. Who
would you rather speak to? Would you rather speak to an
educated broker at the end of the day than to speak to a
journalist? I think that as a brokers decision professionals, they
will get more in that business.

Scott:

What do you see is the biggest risk of the broker's business in


the next couple of years?

Mark:

Going back I guess what we've started what we talk about


earlier, one of it is to continue to marginalize our value. That's
probably the biggest risk companies, that gets happen with
companies in the form of additional margin erosion or it has to
be money for the house to be able to reinvest back in the
business and thats the case where assets of national service
mortgage brokerage or self as a franchise owner. There has to
be money to invest that back in the business in order to provide
support and mentoring whatever oversight for the brokers.
The same would hold true, Scott, for the individual brokers. If
they marginalize their value for the sake of growing their
business. I had a pleasure privilege whatever you want to call it,
a camp spending time with the Australians and we talked about
the model here or sometime but one of the things which really
an eye opener for me is that they're now over 50% of the market
share and they never really discuss rates. I had a hard time
understanding that. Rate is not an issue. It's not part of our
discussion and when rate is part of the discussion here and it will
get to buy down and youre talking about twenty days for
commission for five or 10 for 40. That's the time for the industry
that were willing to buy down the rates for 10 points of deal. To
me, that's a risk to our business models at all.

Scott:

For sure.

Mark:

I can usually go down tangent. So cut me off if you want.

Scott:

Finish what you're going to say. What was the other thing you
were thinking?

Mark:

The last one is I guess, this is the pet peeve of mine. I like social
media, I like reading the blogs and going online and going a
Canadian mortgage trans and mortgage broker news and your

site and thing what people has to say. I guess one of the things
my pet peeve is bickering amongst us, amongst one another in
public forums.
Im a huge fan of debating issues and having discussion about
the issues. Our clients are going on these sites and they're
reading it and I'm worried about the lack of professionalism
thats displayed when were bickering with one another in all
these public forums I just think it makes us look back in the eyes
of our clients.
Scott:

It's like fighting in front of your kids. In a lot of ways, if youre


going to have a discussion with your wife, it shouldnt be in front
of your kids because your kids like, Oh my goodness. Maybe
sometimes these public forms are not the place to have those
discussions especially when people hide behind anonymous
name, right. They dont even display their names. It's really easy
to be nasty in a lot of ways.

Mark:

My question is for what purpose? Just like to call for someone


else, pick up the phone and the call about. You're right. The
parents example is a great one. This is one is of my pet peeves.
I think its bad for our industry.

Scott:

Right. Here's my final question. What's your BHAG for your


company for the next five years or your big hairy audacious
goal? What do you want to see TMG?

Mark:

I guess like all my other answers, I got more than one answer,
For TMG, we're going to double our sides again. Weve doubled
our sides in the last five years. We're going to double our sides
again. There's no question about that.
In addition, TMG is taken on a tremendous philanthropic
initiative of working with the breakfast clubs in Canada. I had to
pleasure of interview of Daniels Charmaine who's the present
founder breakfast clubs. Our people have done tremendous work
with them. We actually spend we have TMG day at the schools
where we work to help give out breakfast to students across
Canada. It really is maybe the former teacher myself and for
Debbie to know that there's 1 in 7 kids in our country, the
greatest country in the world. Go to school hungry is mind
blowing.
So for us to have impact there, our goal is to continue to
increase our fundraising by 50% every year. That will be a
tremendous amount over the next five years. And I guess the
third thing, so many industries stop talking about, Scott, where
broker market share is going and one thing I'd love to do is

reignite that conversation. A BHAG for the industry and TMG will
benefit from it, well get our share of it and we'll be a player in
that but I really think what we need to talk about how do we get
the 50% market share and for me, that was reignited when I
have conversation with the Aussies who are at 51% now.
Let's figure out what we need to do to get the 50% marketer.
Let's work together where we have to, to make sure that
consumers know that their choice is paramount for their benefit.
Even if they don't use a broker, having choice in the broker
channel, theyre likely to be better deal from their bank.
Scott:

Right.

Mark:

I'd love to re-raise that topic of 50% broker market share.

Scott:

I'm with you there man. That's part of the reason that I started
this podcast because I feel any of the problems that we're
having as the brokers business, somebody has already solved
them. The challenges is figuring out how do I find that solution
when I need it and if we shared more, I think theres plenty of
business out there for all of us and ultimately, the banks are
competitor not one another. Maybe we have 70% market share
different but we're not.

Mark:

Right.

Scott:

Anyway, I really appreciate your time today. Where can we find


you online?

Mark:

So pretty active on Twitter, so @kerzner. They can find me there.


They can find me at LinkedIn and just type Mark Kerzner and
find me there or they can email me mortgagebrokering.com or
give me a shout, 416-645-7411.

Scott:

Awesome. Mark, I hope you rock the rest of your year and
thanks so much of your time.

Mark:
Thanks Scott.

Appreciate the conversation very much. I enjoyed it.

[END OF PODCAST]
VO:

Where the best mortgage brokers get better. I love Mortgage


Brokering with your host, Scott Peckford.

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[END OF RECORDING]