Mortgage Connects an MGIC Podcast

The untapped referral opportunity of financial advisors

• MGIC MI

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Unlock the secrets to expanding your referral network by harnessing an often-overlooked partnership! Stephanie Budnik interviews Gibran Nicholas, founder of Momentifi and creator of the CMPS designation, on the untapped potential of financial advisors as high-quality referral sources for loan officers. Gibran discusses:

  • Why financial advisors are an opportunity for high-quality referrals
  • How to approach financial advisors about partnerships
  • How to prove your value to financial advisors
  • How to earn financial advisor referrals by offering CE credit classes as a CMPS-certified instructor

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Stephanie Budnik:

Welcome to Mortgage Connects by MGIC, bringing you the latest insights from top mortgage professionals around the industry. I'm your host, tephanie Budnick, and in today's episode we're going to explore an often overlooked but a very high potential referral partnership the synergy between loan officers and financial advisors. With us today to help us on this topic, we have Jabron Nicholas. Jabron is the founder of Momentify and the creator of a CMPS designation, which is the number one certification in the mortgage industry that helps loan officers stand apart from their competition and close more loans from financial advisors and other high-quality referral partners. More than 10,000 top producers have graduated from Gibran's training and coaching programs. Gibran is also the best-selling author of the Storytelling Adventures, which helps you and your team use examples of storytelling to stay inspired, to find more meaning in your work and to grow your business. Gibran lives in Alpharetta, georgia, with his wife, mandy, and their three children. Welcome, jabron, I'm so happy to have you here today. I am really excited to go into this untapped market that I think a lot of people underestimate.

Gibran Nicholas:

Well, thanks, Stephanie. I appreciate you having me on. I'm super excited about our time together. I think this is going to be super useful to a lot of loan officers right now who are wondering how to grow business as we approach 2025.

Stephanie Budnik:

Yeah, I know that that's a big question and with you know, with how much things continue to change, it's good to have a couple different strategies in your back pocket. And so, as you know, we kind of talked about at the beginning of just the episode, we're really going to look into a high potential for how loan officers can partner with financial advisors, and so the first question I actually wanted to ask you was what makes financial advisors a really great referral partner source for loan officers today?

Gibran Nicholas:

Well, great question and I think it really boils down to the quality of the referral that you're going to receive from a financial advisor versus any other source. When you think about who uses financial planners is people who have money to invest, people who own businesses that have taxes they want to save money on and they're calling their financial advisors, they're meeting with their CPA, their financial planner, and they're trying to figure out ways of saving money and they're going to take the advice that the advisor is giving to them because they're paying for that advice. So if there's an opportunity for that client to save money, the advisor looks like a genius. By connecting the client with you, they do their client a fantastic service and it's a higher quality referral because the client's not going to shop you around because they're already paying the advisor for their financial advice. So when you think about the average financial planner, let's say they might have 100 clients in their database that's in any given databases 10% of that database is gonna transact on an annual basis, whether it's a purchase loan or if you're in a refi market. Numbers go through the roof of people who are trying to get refinances. But figure 100 clients in a financial planners database, 10% of them 12% of them are going to buy a house this year, the next 12 months. Who are they going to talk to about their mortgage? It should be you. Why shouldn't it be you?

Gibran Nicholas:

And that's the beauty of working with financial planners is, number one, the referral quality is a lot higher than you would get otherwise. The client's not going to shop you around. And number two, the opportunity is untapped because most loan officers are approaching realtors and they're calling on realtor doors or every other. You go to a realtor networking meeting, every person there is a loan officer, right? So that's what you call a red ocean, whereas working with financial planners, it's like a blue ocean. This comes from the book Blue Ocean Strategies, where a red ocean is a highly saturated market, lots of competition. People are very price sensitive and you're going to get crushed. You're going to get eaten by the sharks. It's a red ocean because of all the blood in the water. There's a blue ocean huge opportunity, not as much competition, and you're going to be one of the only people in your market who are going after this great referral source.

Stephanie Budnik:

That's why we're so excited about it to diligently save and work with somebody like a financial planner to get to the goals that they want. You know it's that, isn't the obstacle that you're having to overcome, maybe as much to start the process, you know, starting a less up hill battle.

Gibran Nicholas:

Yeah, I mean when you think about it. National Association of Realtors says that last month, 26% of home buyers paid cash for their house. These are people who have assets, they have great credit and they're wondering, hey, should I liquidate my investment account, take a million dollars and put it into the real estate market? Or what should I do? And if you could be there offering the financial planner like a cash versus mortgage analysis on any one of their clients who's thinking about paying cash for a house? That's 26% of the market that your competition is ignoring right now? Right, these people don't even have you on their radar screen because they're going to pay cash. What do they need you for? But if you can help them understand the value of using a mortgage versus paying cash and you're not the one necessarily selling the deal to the customer, the financial planner is almost talking them into it because it makes sense financially, from a tax standpoint, from a cashflow standpoint, and so you work as a team with a financial advisor to benefit the client in a market like this, I mean it's almost like a no-brainer. I'm surprised more loan officers aren't doing it.

Stephanie Budnik:

I understand the great opportunity here and I think one of the first questions that might come to mind for a loan officer is how do you approach a financial advisor to develop this type of relationship and to get on their radar per se?

Gibran Nicholas:

That's another great question, because a lot of loan officers don't even know where to start. This is a new market. We're not used to it. We're used to working with builders or realtors Whoever thought about working with financial planners, right? So where do you find these people? Great question.

Gibran Nicholas:

Two ways that I would suggest that you do this. The first way is you can join your local associations. There's the Financial Planning Association, FPA. There's NAFA, national Association of Insurance and Financial Advisors. There's NAPFA, national Association of Personal Financial Advisors. There's your local CPA associations. There's all these groups out there that have networking events for financial planners. So you can go out there. You can join the local group in your market and one thing you'll probably find is that you'll be one of the only loan officers in your market who's part of that group, so you might get 50 financial planners in a room. You one of the only loan officers in your market who's part of that group, so you might get 50 financial planners in a room. You might be the only loan officer, which is a fantastic way for you to stand apart, build some relationships. So that's option one. Option two that I would suggest.

Gibran Nicholas:

We've had a lot of success. You know I started in this business 24 years ago and I did this in my own personal production. I grew my business to the point where I was doing about 15, 20 loans a month and we've trained over 10,000 loan officers over the years to do what I'm going to share with you next, and this is where you can actually conduct continuing education workshops for financial planners in your market. So they all need CE credits, right. So CFPs need, I think, 30 hours every two years of continuing ed. Cpas need continuing education. So what if you could go out there and teach them a one-hour class that is approved for continuing education, where they learn case studies about why they should refer their clients to you and they get continuing education for it? So, for instance, when I first started in the industry, what I did is I taught a class. It was a one-hour class and it was case study.

Gibran Nicholas:

So Jane and John are getting a divorce. Should she refinance the house and buy out the ex-husband or sell the house or so-and-so? Is thinking about pulling cash out of her retirement account for a down payment? Should she do that or should she use PMI or so-and-so? Is thinking about putting 50% down on an investment property? Is it better off to do 30% down. So you do these case studies, three or four of them in a one-hour presentation, and you get it approved for continuing education.

Gibran Nicholas:

Now the awesome thing is you don't have to start from scratch because we already do this. One of the things at my company that we do it's we have the certifications called CMPS or certified mortgage planning specialist, and you join our group and you get eight done for you presentation. So eight hours of CE that you can teach. You don't have to do anything other than you pull down the PowerPoint from our website, read the script and teach the class and we report the CE credits under our school. So again, two ways you can find advisors and work with them. Number one, you can go out and join their associations. Or, number two, you can teach them these CE classes. And if you work with a group like ours, we've already got these done for you, classes that you don't have to start from scratch. We already did a legwork for you.

Stephanie Budnik:

But in addition to these CE classes, how else can a loan officer continue to provide value? So it is really a mutual relationship. The partnership has grown between the two and how can they, you know, play off of each other to continue to provide that added value?

Gibran Nicholas:

Another great question. So, once you meet with the advisor, what do you say at the meeting to get to turn that meeting into a referral partnership where they have value and you have value and it's a great relationship over time? And my best suggestion is that you create what's called a real estate wealth under management program. You see, financial planners are taught to manage their clients' investments, their bonds and their stocks and their insurance and save money on taxes, but no one is teaching the financial planners how to manage the client's real estate equity, whether it's a primary home or a vacation home or an investment property. And so if you can offer to do a free annual review for every single one of the financial planners' clients and build that into the financial planners' service that they're offering their clients, this becomes their way of differentiating themselves and setting themselves apart from their competition and growing their business right.

Gibran Nicholas:

So financial planner is struggling right now with you. Know how do they differentiate themselves versus all these robo-advisors and AI this and AI that? And financial planners are also struggling with you know what service do we provide that makes us unique versus all of our competition? And the one thing you can do that they're not doing right now is, you can help them build into their process a real estate wealth under management. Where you sit down, you do an annual review for every single one of their clients review their assets, review their liability, their real estate assets, their mortgages, their debts, their cashflow and then give the advisor a one page plan for each of their properties.

Gibran Nicholas:

And that's something else that we can help you with at our company. We provide that to you so you can do like an annual review. Provide that to the advisor where it becomes a part of their service that differentiates themselves from their competition and this becomes, you know, their reason for working with you. Because you know a financial planner sees themselves like a, like a quarterback on a team, and they're the quarterback of the client relationship. So they work with estate planning attorneys, they work with CPAs, they work with insurance agent. It's like a resource that they have on their team, right, and so you become the mortgage planner on their team and the way you do that is you got to build your service into their process so it becomes a part of their service that they're providing to the client. That makes them unique in the market.

Stephanie Budnik:

And I think that's kind of twofold from a consultative approach, we talk about that a lot as a way that you can be a trusted advisor, whether that be a loan officer or a financial advisor, and I think that the approach that you talk about allows that opportunity to happen naturally, so that they can get that trust in them and feel that there is value both ways, because I would definitely see that as something that you could, based on what you said, stand out amongst the crowd and really grow that partnership.

Gibran Nicholas:

Yeah, I mean they're always looking for ways of creating. I mean, think about how they get paid right. A realtor gets paid based on a transaction, so they're very transactional in their focus. A financial planner, on the other hand, gets paid over the lifetime of that client relationship. So they get paid in one of two ways. Either they charge fees for advice, so like, for example, I have a CPA, I pay my CPA X amount of thousands of dollars every year. He does my books every year and I've had that relationship for 20 years. So figure, if I pay him three 4,000 a year for 20 years, that's my lifetime value to that CPA.

Gibran Nicholas:

Same thing with a financial planner they get paid over the lifetime of their client relationship where, let's say, they have a client who has a million dollars invested with that financial planner, the advisor charges an asset management fee, let's say a quarter percent or a half a percent or 1%. So they get paid 50 basis points on that million dollars every single year that the client stays with them. So they're incentivized to keep their clients with them for 20, 30 years and have annual conversations and conversations every six months to create value on a continuous basis for that client. So if you could insert yourself into that process, into their sales process with their clients. Then you become the integral part of that advisor relationship and you don't need 50 relationships, you only need maybe five or six great relationships, because these clients are going to be very loyal to the advisors that they're working with right. So if you can be part of that team, that's really what makes this a unique partnership.

Stephanie Budnik:

If you're looking to continue to, you know, make the most of this referral source as a loan officer. What types of different topics do you feel that they could be bringing to? First of all, maybe educate themselves on, but also bringing that knowledge to the financial advisor so that they're more well-versed, you know, throughout conversations and as they add these partnerships and parts of their teams together, yeah, that's another fantastic question, because it's almost like speaking a foreign language, right?

Gibran Nicholas:

If you're going to go to Spain on vacation, it would be useful to know a little bit of Spanish, to be able to navigate, get around Barcelona, go to the market or whatever.

Gibran Nicholas:

So same thing with financial planners. If you're going to work with a financial advisor, it's really useful to understand their language. So they speak the language of taxes. Everyone is concerned about taxes. How do we save money on taxes? So the best way to learn that language is to learn about mortgage and real estate taxation. So, for example, one of the things that we do at our company is we have the certification course and it teaches you all the things that you would need to know to work with financial planners.

Gibran Nicholas:

And one of the topics is tax deductibility of mortgage interest. Another topic is the capital gains tax. You is tax deductibility of mortgage interest. Another topic is the capital gains tax. People are waiting. Should we wait to sell our house or should we sell now? If they wait, they're going to have a much bigger capital gains tax bill, especially if some of these proposals come into place. We're going to increase capital gains taxes.

Gibran Nicholas:

Understanding capital gains tax. Understanding deductibility of mortgage interest there's special rules. Understanding deductibility of mortgage interest, their special rules. Understanding the opportunity cost of money If you have a mortgage at 6%, what's the after-tax cost, how to calculate the after-tax cost of that and how does that compare with the after-tax rate of return on investment. So the opportunity cost of money.

Gibran Nicholas:

Understanding retirement accounts and the different types of IRAs Roth IRAs and conventional IRAs. And what if somebody is pulling money out of a Roth to buy a house versus a conventional? How is that taxed and why might that not make sense for the client? And understanding blended interest rates. If somebody's got a 3.5% mortgage, why would they go to a 6% or 7% mortgage? Well, the reason is, if their blended interest rate is higher with their current debt structure, with their credit cards and their car loans and all these things, if you roll that into the mortgage, even at a 6%, they're going from a 3% to a 6% mortgage. It couldn't make sense financially. So understanding blended interest rates. So these are the types of conversations you end up having with financial planners that may be different than the kind of conversations you might be having right now with real estate agents.

Stephanie Budnik:

Yeah, I would definitely say that those would be not as similar of topics to cover from a real estate agent referral partnership versus the financial advisor partnership there.

Gibran Nicholas:

Yeah, another one is pulling cash out of a primary home to buy a vacation home. A lot of people want to do that and it might not make sense. So it might actually make more sense to put a mortgage on a vacation home, even if you have to pay PMI, because of the fact that if you take the cash out of your primary home to pay cash for the vacation home, the mortgage interest is not deductible anymore, right? So understanding things like that is really important when you talk to a financial planner, and these are the types of things that we cover in our CMPS certification course.

Stephanie Budnik:

As we close out the episode, I want to give you an opportunity. Just anything else that you can think of that would really help loan officers take that first step and take the initiative to try something new and really tap into this market.

Gibran Nicholas:

Yeah, that's a great question.

Gibran Nicholas:

I think one of the things that I would do really quick, if it's something you're interested in exploring, is talk to your clients.

Gibran Nicholas:

Talk to your favorite clients, call up your top 10 favorite clients and ask them hey, do you have a financial planner that you work with? Say you know what? I'm expanding my partnerships here at my company and I'm looking to meet some great financial planners to refer my clients to do you have any great financial planners that you work with? And if they say yes, great, see if you can get a referral to one of the advisors they work with. Or if they say no, ask them hey, listen, would you be interested in getting referred to a financial planner? If I find a really great one to bring on board with my team, would you be interested in a referral to a planner? So now you win both ways A, you can get an introduction to a great financial advisor. Or, b, if they don't work with one, you have a referral ready to give to the first great financial planner that you meet with. So that would be a super simple way to get started if you're interested in this topic.

Stephanie Budnik:

I really like that approach because it also allows the loan officer to stay connected to their past clients, and I think that sometimes that's a struggle too to think of different things, to differentiate yourself, to still be thought of after the transaction, and so that's another great way to just tap into the wide network or the wide resources of networking. So very, very cool. Well, Gibran, thank you so much for your time today. I think this was very insightful. I hope that people really take the opportunity to investigate this and to look into it and see if it would work for them. This brings us to the end of our episode. So for a recap of this episode and quick access to related content, visit MortgageConconnects. com and you can subscribe for email alerts so that you can be among the first to know about new episodes. Thank you so much for tuning in.