How Loan Officers Can Partner with Financial Advisors to Drive Referrals w/ Gibran Nicholas, HomeQB

Hello, everyone. We're here for another episode of the Loan Officer Life podcast. I'm here with Jebron Nicholas. He's going to talk to us a lot about the financial advisor space and how loan officers can work there. So I'm just going to start off, Jebron. Why work with a financial advisor as a loan officer? Well, thanks for having me on today, Chris. I appreciate it. You know, I think working with financial advisors is something that loan officers should really consider. I've found a lot of success with it early on in my career. We've had over 10,000 students who've found success with it over the past 20 years. And I think the main reason why is to diversify your referral sources. You know, every loan officer and their brother and their sister and their cousin is calling on realtors right now. And if you think about the financial advisor space, you're talking about insurance agents, CPAs, wealth managers, attorneys, there's an entire blue ocean of opportunity to build relationships in the advisory community. So number one, I think diversifying your referral sources is the number one reason. And number two, the opportunity to, from a financial standpoint is simply incredible. I mean, when you think about the average advisor, they might have a hundred clients that they work with on an annual basis, a CPA or a financial wealth manager, and they talk to their clients annually at least once, twice, three times, four times a year. And statistically 10% of that database is going to be buying or selling a house in the next 12 months. So if you just have five relationships, that's a database of 500 clients, 10% of whom are going to be buying a house in the next 12 months, that's 50 purchase transactions just from that one pillar of business. And you don't need 50 relationships. You only need maybe five relationships, maybe two wealth managers, one CPA, one insurance agent, one attorney, and boom, you've got 50 purchase deals plus refis. So in the next 12 months, if you expect interest rates to drop, then you take that database of 500 people that these advisors have access to. Not only do you get those 50 purchase transactions, but you get all the refi business. And it's not just rate and term refis, it's strategic refis. Maybe somebody's going through a divorce. Maybe somebody needs a debt consolidation loan. Maybe somebody wants to buy a second home or vacation home or investment property. There's a lot of reasons why somebody would want to refinance their house if they're working with a financial planner. And so that's the second reason. So first reason, just diversification, diversify your sources of business is always a smart idea. The second reason is the financial opportunity is quite incredible. Yeah, that's great stuff. And you know, it's just a kind of light bulb went on because when I think of financial advisor, I'm thinking like my own financial advisor, you know, manage my 401k and that kind of stuff. And there is, it's just, it's just such a larger space when you start talking about your CPA, because you know, a lot of people do have CPAs and insurance, if everyone needs insurance. Right. So that's, that's a different eye opener for me. So how did you get started in this space? Like getting so passionate, I guess, about the financial advisor space. So 25 years ago, that kind of dating myself, I was 20 years old, just starting out in life, didn't really know much about things. Somebody said, you know what, you're good with money, you like money, you should go in the mortgage business. So I said, okay, fine. So I got into the mortgage business, got my mortgage broker license at that time. And I said, so now what do I do? I said, well, you got to call in realtors, everyone, you know, tells you to call in realtors, call in realtors. So I went to a realtor meeting. Every other person at that realtor meeting was a loan officer. I said, this is stupid. Well, what am I doing trying to sell to my competition? And so I went back to my mentor, I said, well, why am I going to these realtor meetings? What's my unique value that I can offer these people? He said, well, if you're concerned about that, why don't you try working with financial planners, go to a financial planner meeting, just kind of experiment. So I went to my local financial planning association. My first meeting that I went to, there were 50 financial planners in the room. And I was quite literally the only loan officer. So I said, now we're talking, this is kind of a cool idea here. So there's 50 potential referral partners, and I'm the only one in that room. Now I can see the value of networking with these people. So then I said, well, now what do I do? So now I'm in the room with these people, what is my unique value? So then I started learning about the things that they do. You know, they learn about tax planning, it's like their common language, taxes, they're always learning about taxes and how to save people money on taxes. They learn about retirement planning, college funding, estate planning. So then I just started learning the stuff that they talk about with their clients, because that's the first step, you can't sell somebody a solution, unless you understand what the problem is that you're trying to solve. And so the first step is, if you want to work with financial advisors, learn about their business, you know, what are the things that they're talking to their clients about every single day? And where do you fit? Where's your entry point? And the entry point is going to be in their planning conversations and the transitions that their clients are having in their life, whether it's college funding, retirement planning, selling a business, getting a divorce, you know, people live life and they go through transitions and they oftentimes ask their financial advisors to help them with those transitions, whether it's their tax advisor or their attorney or their wealth manager and where you fit in is you think about housing wealth as an asset class, you know, housing wealth in America currently is a $35 trillion asset. There's $35 trillion of home equity. When you compare that with all the stocks that trade on the New York Stock Exchange, the total aggregate value of all those stocks, $40 trillion. So excluding home equity from a conversation that a financial planner has with their client is equivalent to telling their clients not to invest in a single stock that trades on the New York Stock Exchange. That's financial malpractice. And so where you fit in is you become the housing wealth advisory arm of the financial planner's team because a lot of these financial planners, they work in team environments where they have a CPA, they refer their clients to an attorney and an insurance agent and you become their go-to mortgage planner or their go-to housing wealth advisor that can help them create value for their clients in this arena of housing wealth, of real estate investment, mortgage planning, that sort of thing. And so that's what I did. I started networking with these advisors, learning about their business. I even taught a CE class. I taught my first continuing education class. I was 23 years old. And that's the entry point for you as a loaner. If you want to get involved in this space, what I would suggest is network with advisors and offer to teach CE classes. So that's one of the things that we can help you with is we give you a bunch of different CE classes that you can teach to advisors to illustrate your value proposition. But that's, to answer your question, Chris, that's how I got involved. I understood that I had to diversify my referral sources. I can't just work with realtors because everyone else is doing that. And then if I am going to work with financial planners, I have to speak their language. I have to create value for them and their clients based on their business model. That's great. We were talking before, but I talk with loan officers every day and I see the ones that work with financial advisors, and it's a very fruitful relationship from what I hear just directly from the loan officer. But I hear a lot of folks that say, I should be working with it, or I'm trying to work with financial advisors. And you go back to what you were saying about the realtors. I saw a stat last week, and the far majority of licensed real estate agents do less than five transactions a year. And there's reasons for that. People have those as kind of a side gig or whatever, but when you're talking about a financial advisor, that's what they do every day. That's how they make their money. I am curious though, when I think about financial advisors, I didn't have financial advisors until I was later in life until I actually already had my first condo. Do you see first-time homebuyers coming out of this financial advisor space, or is it more that well-established client? It's more of the move-up type of homebuyer, but we are starting to see that, especially as one of the business challenges that financial planners have is they want access to the next generation of clients. It's called the wealth transfer wave. You may have been reading about this. You may have heard about it. There's trillions of dollars that the baby boom generation has that is going to be inherited by the younger generations as these individuals age and God forbid, they begin to die. Everybody in life dies at some point. This older generation of clientele is starting to get to that age where they're going to be passing on, and this presents a dilemma for the advisor because the advisor makes their money by managing money. They charge what's called an asset management fee. If a client has, let's say, a million dollars that the advisor is managing for them, the advisor is earning anywhere from 50 to 100 basis points on that money, so figure $5,000 a year. You might get a $5,000 commission on a loan. It's not an annual thing. Well, the advisor makes their money every single year. It's $5,000, $5,000, and so as they're managing money for their clients, they're concerned that once their clients pass on, the younger generation is not going to want to choose that advisor to manage that money, and they're going to lose that income stream. So this is a dilemma, a business problem that the advisory industry has right now, and so you could be that bridge to the next generation of clients. In fact, we have a CE workshop. It's called How to Create Value for the Next Generation of Clients, How to Ride the Wealth Transfer Wave, and what this does is it demonstrates to the advisor why offering mortgage planning and housing wealth management as a part of their practice is essential for them in their business because it gives them a bridge. It gives them something to talk about with the next generation, and I think the stat was like 30% of first-time homebuyers use gift money for a down payment. Where's that gift money coming from? It's coming from mom and dad who are helping them buy their first home, and the advisors are the ones who have access to mom and dad. So teaching the advisors about things like the gift tax and how gifting money works when somebody's buying a first home and why gifting money to help their kids buy a home is a good investment. That could be your entry point to get access to the next generation of clients and therefore start working with some of those first-time homebuyers. And I got to imagine as a loan officer, if you're doing this right, a lot of times the person's first purchase or home purchase is their biggest asset, and then so from that, it's like, okay, I've locked in my house. Now, what do I look towards the future? I mean, you know your house is going to grow well. That's presumably why you bought it, and you get a stable monthly payment, but I would imagine that coming out of that, there's like, what's the logical next step? A loan officer then can refer some business to that financial advisor. Is that a correct assumption? Exactly. So once you begin taking this approach in your business, it's more of a consultative approach. You know, getting referrals from realtors is very transactional. You're only as good as your last closing. Doing work with financial planners is very relationship-driven, and so as you begin taking this consultative relationship focus in your business, then you can begin identifying opportunities to refer your clients to advisors. For example, doing annual review calls for your clients. It's a great idea and one that our clients have a lot of success with because it becomes another entry point where you have an annual conversation with your clients, you learn about what they're facing, what changes have occurred in their life since the last time you connected with them, and then you use that as an opportunity to A, get a referral to an advisor that they may be working with, or B, refer them to an advisor that you may be working with based on the circumstance that they've outlined for you. So when you coach your clients, your loan officer clients, where do they start? What's the place to start? Maybe someone new to the business. I don't have any financial advisor contacts at the current moment. Where do you start? My first suggestion would be to learn, right? So it's like going to Spain on vacation. Let's say you want to go to Barcelona or Madrid on vacation. Understanding a little bit of Spanish could help you navigate. Understanding how to read the menu or ask where the bathroom is, that sort of thing. So if you're going to work with advisors, the first thing you want to do is learn their language. Now we have a course that helps you do that. It takes, it's called the CNPS course. It's a 15 module course that once loan officers take the course, they understand about taxes, they understand about retirement planning, they understand where they fit with the advisor's practice. But let's say you don't want to take the course. What you can do is you go to a local meeting of your financial advisory associates called the Financial Planning Association. You can just Google Financial Planning Association in Atlanta or in wherever you are, and then go to a couple of their meetings, learn what they are learning about, and then you can discover where you fit in with their business model. That's great. So keeping in front, like the outreach, when you talked about learning, so after that, is it phone calls directly to these financial advisors? Is it getting your presence out there on LinkedIn? Like is it kind of a combination of things? How do you see best success with it? Or is there not a scripted model that works? You know, we have a scripted model in our coaching program, and it's really, there's three opportunities, three entry points. The first entry point is your annual review calls that you do with your own clients. This is where you are able to generate warm introductions to financial planners and CPAs that your clients already are working with. And so we have scripting on how to do the annual review call, how to get that referral, and then how to reach out to the advisor once you get that warm introduction. The second entry point, and one of my favorites, is teaching CE classes. So we have seven one-hour presentations that you can give to an advisory firm or a local association of advisors, and you become a presenter. You teach them what it is that they need to know about mortgage planning. How can their clients ride that wealth transfer wave? How do they help clients going through a divorce? How do they help real estate investors? How do they manage their clients' housing wealth? So we answer all of these questions in our CE presentations, and so certified financial planners all need 30 hours of continuing education every two years. And so if you're brand new to the industry, even, and you don't have any clients, this is one way you can get involved in teaching advisors CE is, that's how I got started, right? So I taught my first class. I was 23 years old. I got in front of a room of about 100 advisors, and as a result of that, I grew my entire mortgage business using that model. And so teaching CE classes is the second entry point where you can begin building relationships with advisors in your community. The third entry point is cold outreach, and we give you scripts and templates for that as well, where we show you how to download a list of advisors in your area, how to reach out to them, what to say, how to conduct your meeting with them, what is the scripting that you can use to uncover their objections, overcome their objections, and there's a whole system that we have step-by-step for all of that. So again, first entry point, annual review calls, you get warm introductions. Second entry point is teaching CE classes, and then third entry point would be cold outreach, which you can do as well. That's great. So talk to me a little about, we were talking before we started recording this, but talk to me a little bit about the monthly kind of digest that you offer to some of your clients that kind of co-brain with that financial advisor. Sure. So there's a couple of resources that we provide in addition to the training and the coaching. The first is we have an entire library of articles and content that you can share with advisors on social media or that you can print out and bring with you to your meetings. Things like how the gift tax works or why mortgage planning is compliant with their regulations. So we give you an entire library of articles and content that you can use to equip yourself when you're working with advisors. And then the second thing is we provide you with a, it's called HomeQB housing wealth report. And it's very similar to a HomeBot or a MyHomeIQ or that sort of thing, except it's focused on co-branding with advisors. The challenge that we found with some of the other systems that are out there that send clients an AVM of their home value is it's really geared toward realtor co-branding. And there's nothing in our industry that is geared toward financial advisor co-branding. The report itself is geared toward things like, hey, you know, with some of these other systems, it's like, what if you turn your house into an Airbnb and that sort of thing? Well, that has no relevance to a financial advisor and their clients and what they're talking to their clients about. So our report is an AVM of the home value that's co-branded with the advisor or the CPA or the insurance agent. You can co-brand with anybody you want, even realtors. But the things in the report are how they can use their home equity to grow their wealth, like debt consolidation opportunities. Should they use a cash to do home improvements or should they use a mortgage? So it's the types of conversations that are relevant that an advisor would have with his or her clients. And that's what makes our report a little bit different than some of the other ones that may be out there in the market. It can be co-branded with advisors. And then the information in the report is relevant to the conversations that an advisor has with his or her clients. So in your experience, seeing some of your clients that have done this, getting established, they have a network of financial advisors that they're working with each other, referring business to each other. Do you see that actually grow the realtor referrals in future as well because of just being a stronger base of what you offer? Absolutely. I mean, the challenge is most realtors don't know how to work with financial planners either. So if you can get this down, then you begin building an entire ecosystem when we call it like being the quarterback of the client relationship. When somebody works with you, they get access to not only you, but they get access to the realtors you work with, the attorneys you work with, the CPAs, the financial planners, they get access to your entire team of advisors. And a realtor can certainly be an important member of that team. The difference is you get to pick and choose which realtor you want to invite to your team. So it's not like you're calling on realtors, begging them for business. You have this very elite advisory team that you're building by invite only. And you're only inviting the top realtors in your market to join you in your ecosystem. And that becomes the difference maker. Yeah, that seems like very powerful stuff. I really appreciate you sharing all this knowledge. I've definitely learned some things. Any other things that we missed that you think the loan officers listening to this could benefit from? Yeah, I mean, I think a lot of loan officers might hear this. They say, oh, yeah, sounds really cool, really cool. But I'm like, they don't take the next step to actually do it. And that's the challenge is a lot of times you might hear about an idea, but then you don't feel like you're confident enough to actually go out there and implement that idea. You know, what value do I provide that could possibly get me in front of these advisors? You might be wondering, like, how do I have this company? Where do I start? And my number one suggestion is this. You are an expert in your industry. You know about mortgages. So you might be dealing with PhDs, with MBAs, with people on the advisory side of the business who went through 20 years of college or whatever. You don't have to be intimidated by them, because what you know that they don't know is you know about mortgages and housing. And that's the value that you can provide to them. So you become an integral part of their team. You have value to provide. Now it's up to you to go out there and provide it, right? Are you actually going to go out there and do these annual reviews for their clients? Are you going to help them manage their clients' housing wealth? Are you going to show them a blended interest rate and why it might make sense for their client to give up their 2.5% mortgage and do a debt consolidation loan? Are you going to show them the value of paying 30% of buyers today pay cash for their houses? And a lot of times, it's not a smart idea, especially with mortgage rates in the 6% range. If people are deducting their mortgage interest, the after-tax cost of their loan might be 4%, 4.5%, depending on their tax bracket. And so are you having those opportunity cost of money-type conversations with your clients and with the advisors and their clients and empowering those advisors to help their clients better position themselves by bringing mortgage planning and housing wealth management into their practice? So I guess the thing that I would say in closing is don't be intimidated by this new era of new area, new genre of business, working with advisors. Instead, think about where you fit, how you can create value. And the where you fit and how you create value is all about managing housing wealth and having those high-level financial conversations with the advisors and their clients. Yeah, and providing value, I think, is just a great lesson that we can all take in all aspects of our business. I mean, when I look at just our technology that we provide, one of our biggest questions we ask ourselves is when we're developing something is asking the consumer to do something. What value are you providing to the consumer? When they're asking, we're asking them to do something, what value are we going to return back to them immediately? And because you have to give some sort of value to get something back, at least we're big proponents of that. I did have one more question. Sorry, I know we were about to wrap, but just curiosity. So loan officers out there, they can see who are the big player agents who's only doing one transaction a year. Is there a similar type of source for financial advisors to see who's like the top dogs and who's really only doing a little bit of business? Yeah, you can look for that. You can like Google top financial advisors in Atlanta or whatever, and it tells you the rankings of the wealth management firms based on the assets they have under management. That might not be the greatest metric because what you're looking for is a specific type of client that's going to benefit from your loan product. So for example, if you do a lot of non-QM loans, then you want to specialize in working with advisors who work with business owners and CPAs who work with business owners who are transitioning, maybe who just sold their business or preparing to sell their business, that sort of thing. And that might not be reflected in some of those rankings. And so if you work with divorce clients, you want to make sure that you target divorce attorneys in your area and financial planners who do wealth management for clients going through a divorce. If you do a lot of work with reverse mortgages, you want to focus on advisors who focus on retirement income planning and how to use reverse mortgages as a tool to do distribution sequencing strategies and that sort of thing. So the rankings are not going to be as useful to you in the financial planning space as they might be in the realtor space. But what will be useful is understanding the niche that your advisor is focused on and whether that niche resonates with the types of loan products that you excel with. And in our coaching program, we show you how to do that, how to filter the list based on the niche that they specialize in and how to target them based on creating value for that specific niche. That's very helpful. So we're going to post your information here. But if someone just is listening to this, if they wanted to just inquire more about your services and offerings, where would the best place be? It would be homeqb.com. So like home as in home and then QB as in quarterback. It's like you're the quarterback of the client relationship, homeqb.com. All right. Well, I really appreciate the time, Siobhan. I think this has been very helpful. I learned a lot and I know our audience will. So I really appreciate you. Awesome. Thanks, Chris. Appreciate it.