Mortgage

Why do some mortgage professionals fail in their first year?

The factors that convince loan officers to leave the business

At XINNIX, The Mortgage Academy, we have developed thousands of new loan officers entering the industry, and their first year is one of the most pivotal times of their career. It is when they develop the habits, practices and strategies that will determine their future success.

This time should be incredibly exciting for new professionals as they consider the potential rewards, benefits and satisfaction that come with a career in mortgage lending. However, any seasoned manager can attest that for many rookies, their first year will be their only year in the business. What should be a period full of growth, development and learning is instead an experience that convinces them to get out of the industry for good.

The 2017 Retention Report from Work Institute, a Tennessee-based retention consulting agency, states that 34% of all turnover is from first-year employees. Additionally, a 2014 study across multiple industries from BambooHR, a top HR software provider, states that roughly one third of employees quit within the first six months of starting a new job.

Out of these, 16% to 17% quit within their first three months. That means one out of six employees lasts three months or less after accepting a new position. 

A similar trend of high turnover has impacted the mortgage industry for decades. While many executives report a yearly turnover around the national average of 30%, some companies report rookie turnover between 60% and 80%. 

We are losing loan officers, particularly new loan officers, faster than we can replace them. Our industry needs to be working diligently to raise up the next generation of originators. We cannot afford to lose the majority of our rookies year over year if we are to build the business of tomorrow. 

We must energize our efforts to nurture and retain the new talent that comes through our doors. The first step toward reaching a higher rate of retention is understanding what factors are causing our first-year loan officers to leave. 

You might think these factors would be related to pay or benefits. However, BambooHR reports that 23% of professionals who quit their jobs within six months said they would have been more likely to stay if they had been given clear direction on what their job expectations and responsibilities were. 

Another 21% said they might have stayed if they had received more effective training. According to these numbers, 44% of new employees leave their jobs because they do not feel properly equipped to succeed.If our loan officers do not feel like they are being primed for success, what is the specific reason they are experiencing failure? 

To answer this question, XINNIX has looked to pioneering researchers George Dudley and Shannon Goodson and their book “The Psychology of Sales Call Reluctance.” According to their research, 80% of salespeople who fail in their first year do so because of a lack of prospecting, an issue that affects mortgage professionals of all experience levels. 

Prospecting is still a difficult task for seasoned originators. How much more challenging is it for our newest loan officers?

Stacy Wayman is a XINNIX performance specialist who works with first-year mortgage professionals through ORIGINATOR, XINNIX’s training program for new loan officers. 

According to Wayman, “First-year loan officers don’t always realize that prospecting is the most important factor in building their business. They get a little activity and start to slack on calling and meeting potential partners. 

“Prospecting always has to be their priority, especially when they are first trying to establish name recognition in their market. Everything else in their day has to revolve around it.” 

She has also seen firsthand the way sales call reluctance can be especially difficult for new originators. “Most rookies are hesitant to make phone calls because they’re not confident yet. They might have come out of another industry where they were the resident expert. 

“Now, they’re brand new and don’t know everything, so they’re nervous about putting themselves in front of a client who is going to ask them a tough question.” 

Wayman says the first step toward overcoming call reluctance for rookies is education. “At XINNIX, we start by teaching the foundations of the mortgage industry. They cannot effectively go out into the marketplace and have important conversations that will lead to business if they don’t confidently know what they’re talking about. 

“Then they need practice to speak with clients more effectively. We’re not talking about knowing products or compliance. They have to learn how to actually hold an effective mortgage sales conversation.”

Ralph Remy, training manager at XINNIX, says an additional contributing factor to the high failure rate of first-year employees is the absence of a business plan. “When new loan officers don’t have a business plan, they are essentially trying to drive to a new location without a GPS. They need a guide to help them reach their destination. 

“And creating the plan shouldn’t just be a one-time activity. Unexpected things are going to come up, and they will need to make detours and find alternate routes. Especially very early in their career when they’re learning their market, they are going to need to pivot. A consistent review of their business plan is crucial, at least quarterly, if not monthly.”

I have been in the mortgage industry for over 30 years and trained thousands of new loan officers. Simply put, first-year originators cannot thrive in their careers without guidance from seasoned, successful mortgage professionals. 

Our investment in the upcoming generation must be stronger than ever if we want our industry to continue into the next era. Businesses in nearly all fields are struggling to retain their rookie workforce. However, if we take the time to develop our new loan officers with dedicated mentorship and powerful training, we can make the mortgage business the exception and transform our industry.

 

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