[J.Celifarco]

I think he meant that they send out deals, without being a 'DIRECT' funder, meaning that they do syndicate.

My numbers that I gave are just rough based on what I know of some of the people I speak to and by no means exact but I would guess I am definitely in the ballpark

[Triton]

My numbers that I gave are just rough based on what I know of some of the people I speak to and by no means exact but I would guess I am definitely in the ballpark

That's pretty much the kind of input I was looking for. Out of the 3 scenarios, I would eliminate the independent offices of direct funders because they are the same company and focus on the other 2 types of brokers. Whether or not you are syndicating doesn't change the fact you are a broker in my opinion. Only when you directly and fully fund a merchant.

With all that being said, take away all the fly by night one man shops and the ones who disappear just as quick as the show up. What's the rough estimate of actual competition in the broker sector? 100 shops? 1000?

[J.Celifarco]

That's pretty much the kind of input I was looking for. Out of the 3 scenarios, I would eliminate the independent offices of direct funders because they are the same company and focus on the other 2 types of brokers. Whether or not you are syndicating doesn't change the fact you are a broker in my opinion. Only when you directly and fully fund a merchant.

With all that being said, take away all the fly by night one man shops and the ones who disappear just as quick as the show up. What's the rough estimate of actual competition in the broker sector? 100 shops? 1000?

Not a clue

[AndyYSCISOdept]

Not a clue

I have a clue and still could not give you a very accurate number. I will tell you that of the 36MM I originated last year through ISO shops that funded inhouse at YSC 85% of it came from 5 shops. So take that as you will.

[Triton]

I have a clue and still could not give you a very accurate number. I will tell you that of the 36MM I originated last year through ISO shops that funded inhouse at YSC 85% of it came from 5 shops. So take that as you will.

That's pretty interesting. Wonder if that number runs true with more of the A-B paper shops.

[jotucker1983]

That's pretty much the kind of input I was looking for. Out of the 3 scenarios, I would eliminate the independent offices of direct funders because they are the same company and focus on the other 2 types of brokers. Whether or not you are syndicating doesn't change the fact you are a broker in my opinion. Only when you directly and fully fund a merchant.

With all that being said, take away all the fly by night one man shops and the ones who disappear just as quick as the show up. What's the rough estimate of actual competition in the broker sector? 100 shops? 1000?

It's completely impossible to estimate because the reality is (as John Celifarco touched on), in a lot of cases you don't just have "straight broker shops" anymore. You can have a shop that might broker 70% of their deals, syndicate on 20% of their deals and fund the other 10% completely in-house. What do you call that shop? Is that a broker, a broker/syndicate or a direct funder/lender?

My definition of a direct funder/lender is one that has created their own internal platform to underwrite deals, but the reality is that you can have a shop that has done that but still only fund about 10% - 20% of said deals in-house, and broker or syndicate on the remaining deal-flow. But without a shadow of a doubt, said shop is going to market themselves as a direct funder.

Here's the reality though (from my perspective), we do not have as many "consistent and stable players" in this industry as people might think we do. The majority of people in this industry are revolving door individuals, they come in on January 5th and they are gone by March 20th.

Our industry has way too much "waste" within it on the labor side, because you have way too much damn recruiting going on with rah rah speeches of making $200k a year, and not enough damn human capital investment in training and other resource allocation so folks can actually MAKE $200k a year.

When I see these recruiting ads they remind me of the mid-2000's late night infomercials about how everybody should come to this real estate fix/flip seminar, because you are missing out on getting "rich". Everybody and their "momma" was a damn real estate expert all of a sudden lol, even though many of them had never owned, operated or maintained a piece of real estate ever in their life. Those ads were flat out insane and our recruiting ads are even more insane.

[SCP]

It's completely impossible to estimate because the reality is (as John Celifarco touched on), in a lot of cases you don't just have "straight broker shops" anymore. You can have a shop that might broker 70% of their deals, syndicate on 20% of their deals and fund the other 10% completely in-house. What do you call that shop? Is that a broker, a broker/syndicate or a direct funder/lender?

My definition of a direct funder/lender is one that has created their own internal platform to underwrite deals, but the reality is that you can have a shop that has done that but still only fund about 10% - 20% of said deals in-house, and broker or syndicate on the remaining deal-flow. But without a shadow of a doubt, said shop is going to market themselves as a direct funder.

Here's the reality though (from my perspective), we do not have as many "consistent and stable players" in this industry as people might think we do. The majority of people in this industry are revolving door individuals, they come in on January 5th and they are gone by March 20th.

Our industry has way too much "waste" within it on the labor side, because you have way too much damn recruiting going on with rah rah speeches of making $200k a year, and not enough damn human capital investment in training and other resource allocation so folks can actually MAKE $200k a year.

When I see these recruiting ads they remind me of the mid-2000's late night infomercials about how everybody should come to this real estate fix/flip seminar, because you are missing out on getting "rich". Everybody and their "momma" was a damn real estate expert all of a sudden lol, even though many of them had never owned, operated or maintained a piece of real estate ever in their life. Those ads were flat out insane and our recruiting ads are even more insane.

Well if that isn't the truest thing I've read all day, lol. Very well said, John! I've been saying since I entered the industry a couple years back that we need more professionalism, reputability, clear and concise standards, proper sales training, and (can I say it?) regulation.. I warmly accept much of the regulatory demands that will inevitably come knocking on our door and think it will help better create a distinction between the real shops and the basement brokers.

Size is one thing. Stability is quite another. Do right for your clients and they'll come back to you with a smile. You'll never have to worry about your base and can focus solely on client retention. If someone's game is "jack the rates up" / one-time transactional thinking, they've got quite a long way to go and some expectations that need to be more properly met.

[bsmith]

Well if that isn't the truest thing I've read all day, lol. Very well said, John! I've been saying since I entered the industry a couple years back that we need more professionalism, reputability, clear and concise standards, proper sales training, and (can I say it?) regulation.. I warmly accept much of the regulatory demands that will inevitably come knocking on our door and think it will help better create a distinction between the real shops and the basement brokers.

Size is one thing. Stability is quite another. Do right for your clients and they'll come back to you with a smile. You'll never have to worry about your base and can focus solely on client retention. If someone's game is "jack the rates up" / one-time transactional thinking, they've got quite a long way to go and some expectations that need to be more properly met.

The problem with a lot of up and coming ISOs is that they are so focused on customer acquisition, that they fail to realize that customer retention is where you make your money. If I'm not mistaken it is about 70% cheaper to retain a client than it is to acquire one, and I believe that retained clients are about 6 times more valuable than new clients. I have a poor memory so my figures may be off but the fact of the matter is if more ISOs conducted business in a manner that would increase their client retention, a lot of "shadyness" would go away and the need for regulation would drop significantly. It's not about getting rich quick, it's about getting really rich in the long run by helping your clients meet their goals.

[SCP]

Agreed sir. Slow and steady wins the race in many cases. Hitting "hockey stick" growth and becoming an "overnight success" is often the result of years of hard work on the back end that went subtly unnoticed