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p>The clash of perspectives between risk-led underwriters and profit focused BDMs can often produce the dreaded “Yes- well actually- no. ” from lenders.
In order to limit deals getting declined further down the line, some have proposed that the profit-orientated BDM role should be fused with cautious perspective of an underwriter.
Bob Sturges of Omni Capital said that BDMs and underwriters have distinct roles, serving discrete purposes. “The end objective might be the same - to produce profitable business - but the means by which it is achieved requires a different approach and a different set of skills. To attempt to blend the two is both difficult and, in our view, undesirable,” he said.
Bob noted that there is nothing wrong with BDMs taking a sales-orientated approach to their work, stating that otherwise, what is their purpose? He added that a healthy lending business will see disputes and that sometimes important credit decisions can only be made later on in the approval process.
“Both usually have the best interests of the business in mind - although this can be adversely influenced by the presence of overly-generous and ill-considered incentive schemes - and any tensions are, in our experience, usually temporary and easily resolved.
“While unlikely that such tensions can be eliminated altogether - they are, after all, part of the fabric that's always existed between sales and risk - they can be mitigated by having a strong business culture that permeates from the top down.
Richard Deacon of Masthaven said you can’t have one without the other, when referring to BDMs and underwriters. “BDMs and underwriting work together to get the deal done as a team,” he said.
Stephen Burns of Adapt Finance also agrees that BDMs are more sales orientated. “We see BDMs as strikers – they score all the goals and get the credit.
“Underwriters are like defenders and goalkeepers – protectors of funders, who like to keep clean sheets,” he said, “We don’t think any change is required.”
Stephen agrees that the battle between both the BDM and the underwriter can result in the lender looking bad if they have to decline a deal further down the line because of the underwriter spotting risk.
He also believes that BDMs are getting better at their jobs, but argued that some responsibility should be with the introducer. “Why put deals to lenders which do not fit criteria?” he questioned.
John Waddicker of Positive Commercial Finance said that being sales-orientated can complicate a deal going through, if the BDM or underwriter doesn’t communicate with the broker effectively.
John said that “underwriting can often throw up concerns, so it would be naive to think it’s a ‘done deal’ after the BDM has taken an initial look at the case.” John added that the lender could look bad if a deal is declined due to risks being present from day one.
Paul Wertheim of Mint Bridging believes that a BDM should stick to the selling-part of their role, and leave the risk element to the underwriters. Paul said that in his opinion, a good BDM should open doors and introduce and leave the art of underwriting to those that do it on a daily basis.
“It is far too easy to get excited about a deal and see the pound sounds at the end of the month/deal. Whereas an underwriter will see the door if they lose money. The two roles are like oil and water,” he added.
Also in agreement that BDMs should focus on the sales and not the risk, Yasin Patel of Mayfair Bridging said: “A lot of BDMs are naturally sales-oriented - after all, they are Sales and that’s why you recruit them”.
Yasin added that a good BDM is one that knows the deals and knowing which one fits into the criteria.
He also stated that all BDMs will try and get the deal over the line, as they are mostly target-driven.
“If risks aren’t highlighted to the lender, either via the BDM or more importantly, on the application form, underwriting finding a potential risk further down the line should not reflect bad on the lender. If it was disclosed and not spotted by the BDM or early on with the underwriter, then [the] lender can be blamed.”
When describing what their role should include, Ashley Ilsen of Regentsmead said that their job is to “generate business by knocking on doors and meeting introducers/clients. A good BDM will [often] service old contacts and open new streams of business,” adding that a bad BDM will be more focussed on asking for more commission and a nicer car. “We like self-starters,” he concluded.
D’mitri Zaprzala, Head of New Business at Dragonfly believes that the two aspects - sales and risk - should be aligned in order to ensure the deals are paid out as quickly as possible. “It isn't in the interest of the BDMs to gain applications for applications sake,” he added.
“It's a very interesting time within the sector and our BDMs know that this is a great time to make the most of new opportunities."
The clash of perspectives between risk-led underwriters and profit focused BDMs can sometimes produce the dreaded "Yes- well actually- no. " from lenders….
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