When I was a humble banker my starting point was always listening to what the client wanted. Then I would set about trying to achieve that. There is a fundamental flaw in that approach which I will explain later.
Let me start by telling you of one of my favourite parental experiences.
My older son, when he was a toddler, would always ask to go to the beach. In summer it wasn’t a problem. I’d happily take him to the beach and he’d have a ball all day. He especially liked to eat by the beach.
In winter, he couldn’t understand why I wouldn’t take him. He would not stop asking as only kids can…over and over again. So, one cold, grey and windy winter’s day I took him to the beach.
He was dressed in his boardies and excitedly raced out of the car at Newport Beach. The cold wind hit his tiny bare chest but he wasn’t perturbed. He asked if he could wear a rashie. No problem. Out he went trudging in the sand with me closely behind. As his bare feet touched the water’s edge he understood why he couldn’t go in. It was a combination of the cold water, the surf which was violent and foamy and the bleakness of the day. He turned around to me and said “it’s not fun daddy”.
I was ready with a towel. I wrapped him up carried him to the warmth of the car. Lesson learned.
As the weather warmed he got more and more excited as beach weather approached.
I didn’t derive any joy from my son’s experience but sometimes explanations don’t get through to a two year old and experience is what’s required to get your message across.
Now before you call DOCS I had no intention of letting him go into the water. No sooner had the water touched his toes he’d jumped back.
Client’s aren’t two year-olds. But sometimes the mystery of how a bank operates is not always clear to them. No amount of explaining will talk them around. They know what they want and they will pursue it with the passion of a two year-old.
A client approached us for a commercial loan about nine months ago. We assessed their income, expenses, assets and liabilities and explained to them that what they wanted was likely to be declined by a bank. We suggested another way forward.
Our way forward would’ve given the client the funding they required but involved a structure that was slightly more complicated than what they wanted and would’ve cost them an additional 0.40% in interest. The client told us he was also talking to another broker.
As soon as we heard that we didn’t want to progress any further. Having two brokers in the market selling the same deal is not a good idea. It confuses lenders if both are trying to fund the same transaction with different structures.
Further the lender will always choose the structure that best suits them rather than the client. In that spirit – of giving the client the best chance to achieve what they want – we withdrew.
The other broker had told the client there was no reason they couldn’t get the funding they required. The credit was declined by the client’s own bank and by the bank the broker had taken the client to.
Nine months later the client came back to us after shopping the transaction around and having two declines against their credit record. All they achieved was to make our job much harder and possibly reduced their chance of success by 50%.
My then two year old son was smart enough to realise that the advice Dad had been giving him was accurate. I wish some clients were as smart as him.