In this week’s episode of the Loan Officer Wealth podcast, we sit down with author and motivational speaker, Todd Duncan.
During this powerful episode, you learn what the perfect mortgage team looks like, the different production levels, and the support needed at each level as you grow. The most important task is to delegate so you and your business can grow and much more!
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Listen to the Podcast Below
Todd Duncan And Chris Johnstone Podcast
We have a very special episode for you. We have Todd Duncan on the show. Todd, thank you so much for being so generous with your time.
Chris, I can’t wait to hang out with you. It’s good to be part of helping LOs build wealth and helping them win and get better. I’m excited about our journey together. Thanks for having me.
A journey is right because I know you’ve got so many things that you can cover on the show. Let’s dive in. We’re in changing market conditions. I’m wondering if there’s any guidance or leadership that you could give to our audience on how to approach the market and what they should be leading in the industry.
The thing that I would like to say to everybody first is there’s probably not a human being in the world that understands the market that we are in that understands it better than I do. I don’t say that to gloat or I’m an economic expert. I say it because when I became a loan originator, we were in that economy that everybody is referring to many years ago.
I started doing loans in 1980. Interest rates were double-digit. Prime was 20% in the US. The cost of funds was off the grid. Doing 1st and 2nd mortgages combined. Piggyback loans were 18.5%. It’s ridiculously hard. Unemployment was the highest ever. Consumer confidence was the lowest ever. We were in a full-blown recession. This is the direct answer to the question. I had to make a decision.
I’m in this market. It is a hard market but if everybody thinks it’s hard and somehow I can think it’s good, I wouldn’t have any competition. My grandmother taught me very early on to always have a positive attitude. I’m scratching my head thinking, “What do I do in a market where everybody thinks nobody’s going to buy, sell and finance? What do we do?”
I went to my friend’s parents who owned a print shop and I had a button made up that was about 4 inches big. I wore it on my jacket and it said, “Rumor has it. We’re in a recession. I’m not participating.” It was a statement to everybody that saw that button that I have chosen positivity. Mindset is critical. The markets and uncertainty are hard. We don’t have a lot of confidence.
It’s probably going to go up before it goes down. It’s probably going to get harder before it gets easier. Anybody reading can choose the mindset they will have in any market. I feel very strongly that hard markets cleanse the market of bad professionals. That’s an oxymoron, bad professionals. People that can’t handle and weather the storm are not going to last.
Those of us that can weather, because we have the right attitude and knowledge and we’re producing value in the marketplace, we have a market that’s less competitive even though we’ve come out of a massively competitive market. That’s the truth. Mindset’s everything. I chose not to let the market define me. I chose to define myself in the market I’m in. That’s a big shift. I don’t think a lot of people get that.
Mindset beats market every single time so that’s incredibly valuable. We normally focus on typically looking at the systems or processes that loan officers should have in place in their business so that they are doing the fundamentals and making sure that they’re the professional that is winning the market and that they are going to continue to thrive and grow. When you look and go into a loan officer’s organization or business, what are the key systems that you like to see in place where you know that person’s a successful loan officer and they’re going to do okay?
The things that come right off the top of my head are architected and massive delegation. Any wealthy loan officer has gotten to a point where they’re doing fewer things that are the most important things for the longest period of each day that they allocate to the business. There is a dynamic efficacy around building a team.
The backdrop of that and what we tell people is there’s only one thing if you’re in the commission world, which loan officers are, that you have to pay attention to and it’s an exchange rate. The exchange rate is hours in and revenue out. If you’re a business person first and a loan officer second, which is the way it should be, then you’re going to run the business.
You’re going to run the business with a business plan and marketing plan. You’re going to run it with a solid customer experience system, producing 9s and 10s or 4.5 and 5s on 5-star scales and you are going to have a consultant-based business. You’re going to meet with borrowers and people that need financing and you are going to have a consultative practice around building wealth for your borrowers through real estate loans and managing those loans.
When we look at revenue out and labor in, what we’re looking for is what do you build your cashflow on? There are two things that I would say specifically to anybody reading. 1) The faster you get away from low-dollar productivity activities, the more time you will have for the activities that produce revenue. That’s an age-old suggestion but people don’t get it until they start to analyze, “Where’s my time going?”
I spend two and a half hours on email. If I make $4,000 an hour, it takes me 1 hour to convert, get trust, get a loan packaged and then the team takes over. If I make $4,000 an hour and I spend 2.5 hours on email, maybe I could have an assistant for $1,000 a day. It gets down to what are you doing. The irony is that people don’t think of business necessarily when they’re loan officers.
I’ll give you an example. People complain about how inundated they are with communication and email. I look at people and say, “Do you know the more email you send, the more you will get?” It’s like this self-fulfilling prophecy. You don’t like being involved in email. 8 out of every 10 emails are info emails or replies to all. You’re sitting here giving two hours of your life labor in to something that doesn’t produce revenue out.
What we do in our coaching company is measure your hourly rate every two weeks because we want to see that trend line go up and up. It’s not uncommon for loan officers to get into coaching to start somewhere around the lowest, which we’ve ever seen if you can imagine is $19 an hour. The highest we’ve seen coming into coaching has been about $350 an hour.
It will be 10X your hourly rate within 12 months of coaching. You can go from $300 an hour to $3,000 an hour or $19 an hour to $1,900 an hour in 12 months because all we’re doing is pairing back and getting rid of everything non-essential to revenue generation. It still has to happen but you’re not the guy or gal that has to do it. I see that as being important. Right behind that is operational brilliance.
It is setting the systems in place, setting it and forgetting it and being one and done. If you can create massive trust with borrowers and referral partners and all you do is facilitate the conversation with people that are going to use your products and services and you do that for 6 or 7 hours a day, you’ll make over $1 million a year in commissions as a loan officer regardless of what the market is doing.If you can create massive trust with borrowers and referral partners, all you do is facilitate the conversation with people who will use your products and services. You'll make over a million dollars a year in commissions as a loan officer. Click To Tweet
Todd, you mentioned your coaching program. Where do people go to get more information about that?
Come to ToddDuncan.com. The coolest thing is you can look at our resources and services, sign up and have a 30 to 40-minute consultation with one of our coaches and see if it’s right for you. We have two different levels. We have an entry-level called the producer level. It’s $700 a month. You get to talk to our coaches every two weeks. You have one assigned coach for the year. We do a four-hour onboarding with you and make sure we know your business plan, your vision, your goals and the things you want to achieve. If you’re a team leader and you have other people on your team, assistants or other LOs reporting to you, then we have a master-level program that’s about $1,100 a month.
Our commitment is to make that money back times 10X within 90 days of starting and coaching. Check it out. The whole reason I created the coaching company was I didn’t wake up one day and say I want to have a coaching company. I felt this moral and ethical responsibility that when people came out of a learning moment with us, they would have a track that they could run on if they so choose. We launched the coaching company years ago and the results are phenomenal. It’s beautiful. It feels good to watch people’s lives get better with health, money, wealth and relationships because they’ve tamed the business.
When you come in, there are important things and tasks that you like to see loan officers focused on that get them out of the minutia of the $15-an-hour work and take them up to that next level. What would you say are the most important things that you see loan officers getting sucked into those time sucks and the things that they should look at delegating right away if they haven’t already done that in the business?
The first thing I want to say is most people have to get over initially the self-proclaimed idea that they are control freaks. The biggest excuse that we hear from people is, “If I want it done right, I got to do it myself.” That’s flawed thinking. The people that say that have not adequately either hired or trained or both somebody on their team to do that.
People need to understand that if you ever want to get to a point where you’re making more residual income than you are earning income, the difference is residual income is people doing work for you. Earned income is the work you do for yourself. We want to get away from, “A hundred percent of the revenue I make is based on my labor.”If you ever want to get to a point where you're making more residual income than you are earning income, the difference is residual income is people doing work for you. Earned income is the work you do for yourself. Click To Tweet
What you want to do is get to a point where maybe 25% of the revenue you make is because of your direct labor input and 75% of the revenue you make is because you are effectively delegating to a team that when you’re there or not there, they still make the cashflow happen. The better way to answer the question would be anything other than these three things should be delegated.
The first thing that you should be doing for the biggest part of the day as a doctor meets with patients is you should be meeting with borrowers. Whatever that number is for your business plan, you’ve got to make that commitment to generate that kind of borrower activity per day. If you have four conversations a day with potential borrowers that have the ability to qualify and have the desire and the motivation to borrow money to finance real estate. You have four of those calls a day and they take half an hour each. One of those, if they say yes and go into contract and close 90%, 95% of the time, you’ve got an $18-loan a month kind of deal. That’s pretty good.
If you’re making $2,000 a deal, you’re getting $36,000. If you’re making $4,000 a deal, you can see the revenue. 20 loans at $4,000, think about that. That’s $80,000 a month in revenue if I’m doing my math right. You have to have a consulting business. The second efficiency on that is not a separate activity. Don’t make the mistake of thinking that to double your volume, you need to talk to eight people a day. Rather, talk to four but get better at what you do, better at the questions and creating trust and value.
Instead of getting 1 out of 4 to say yes, get 2 out of 4 to say yes. It is the same time commitment. At 30 minutes each, it’s still 2 hours but you’re getting 2 people to say yes. You’re going to be at about 360 families that you serve a year and fundings and settlements that you serve. You could do the math real quick. 360 deals times $4,000, you figure it out. You’re over $1 million.
If you do the same math, talk to 4 and then get 3 because got better referral sources and value exchanges, you’re asking new and different questions and you got a better reputation than you did before, not that it was bad, it’s just bigger and better and out there, what would it be like if 3 out of 4 said yes and you go to 540 loans a year? Anybody in this business can make a fortune by focusing on the value interchange and advice for borrowers because you are a mortgage professional lender.
The second thing you should do is you should every day spend 30 minutes to 1 hour checking in with 3 to 4 partners. Who are the people that refer business to you? Who are the people that you need to nurture? What are the business reviews look like if you’re working with a real estate professional or a developer, a builder or even somebody in the financial market, an insurance professional or a wealth manager, whatever it is? Connect with the people that you are going to rely on to give you a constant flow of referrals. That’d be the second thing.
The third thing is I would oversee operational efficiency. I would probably allocate half an hour a day. Maybe it’s a 15-minute huddle in the morning with your team or maybe a 15-minute huddle at the end of the day but every day, I want to be part of the customer experience. I want to be the cheerleader. I want to encourage my team to crush it with our customers because then we unleash the referral universe, which we have patented as the circle of cashflow.
Once you blow the mind of a customer, you need to activate them in the new world of mortgage lending. In this new economy that we’re in, you need to activate them to be on your salesforce. If you’ve got 1,000 borrowers that you’ve helped finance real estate, you should have 1,000 people out there singing your praises and recruiting more borrowers for you and then you’ll make money.
The top mortgage professional that we coach is a branch manager who makes $6 million a year in commissions. We have a group of 33 loan officers that I coach. In 2021, 33 loan officers made $91 million in commissions. That’s what’s at stake for everybody reading this, $2 million a year or more by doing these things that you and I are talking about.
You see it in the mortgage industry all of the time. It’s about systems and processes. For the loan officer who’s out there thinking, “I’m doing my ten loans a month. I want to get to that next level but I’m feeling overwhelmed. I don’t know what to do first.” Is there a first action step that you normally see people at that level needing to take to start the ball rolling and get momentum?
Yes. Somewhere between 7 and 10s loans a month is where the efficiency stress starts to occur. Most people run into what we call the ceiling of complexity, which means somewhere there, it’s very self-evident that if I want to scale and I don’t want to scale by adding hours to an already incredibly busy work week, I’ve got to start offloading some of these things. One of the pieces of advice and it’s hard to hear the first time but it makes all the sense in the world when you understand it, we tell people to hire capacity in advance of demand as a strategy for creating demand.
Let me explain that. If you are slammed to the gills, you are going to automatically stop bringing in business. Why? It’s because you can’t handle it anymore. You got to close what you got and end up running into these cycles where you have a good settlement month and a good funding month and then one that’s not so good and then you build the pipeline back up. You do that for a whole year and you end up working for 12 months but you’re only productive for 6.
Instead, we say, “What would it be like if you were to allocate 1/2 of 1 loan commission per month to have somebody on your team that can take these things off your plate?” When capacity is there but there’s no volume, I got money in. I got skin in the game so I got to go bring in more volume. If I don’t have that and I’ve got to do everything, it’s not sustainable. We always tell people that. We coach that $91 million group to be 1 or 2 bodies heavy all the time, more than you need.
Start with 1 and then get 2. You want to scale and then stairstep it. You got to have people on your team that you can delegate to. This is never going to change. The idea of simplifying to amplify your revenue and volume, you got to own the idea that if you’re doing it all, you’re never going to go anywhere, except where you are and you’re going to get stuck there because there’s only so much you can do. Let people train people. Overtrain them so you have confidence in them so you don’t swoop in and overmanage. People do not like to be micromanaged. They like to be empowered. You can’t empower people if you haven’t trained them the right way.You have to have people on your team that you can delegate to. And this will never change the idea of simplifying to amplify your revenue and volume. You have to own the idea that if you're doing it all, you're never going anywhere. Click To Tweet
From a growth perspective, what does an ideal team look like to you? Let’s say we go from 10 loans a month to 20 loans a month in a hypothetical situation. What does that team look like? How many business development reps do you have? How many processors do you have? What does that business structure look like?
Part of the answer depends on the technology a company has or doesn’t have. I can’t get into that because everybody’s a little bit different. I can tell you that from our vantage point, a $100 million producer would have him or herself an executive assistant that would be 100% admin managing your calendar, managing your time, giving you freedom and all those kinds of things.
You would have a transaction coordinator that would interact with processing because you need to stay out of the weeds and let people that know transaction management interact with the borrower and get everything that might be needed, making sure the technology’s working. For twenty loans a month, you could overpay and have a dedicated processor. That’s not a very hard job at twenty loans a month, especially with automation.
You would want a client concierge and the client concierge would be the person that takes over and helps you manage the database for all borrowers who have closed loans. Once you have all that done so you, an executive assistant, a transaction coordinator, a processor and then a client concierge, the next piece you would add would be the production partner. The production partner would be your junior. Maybe they’re 5 years, 10 years or 15 years younger than you.
You’re going to build a practice. This could be a succession plan. While you are not there, you want somebody that can be your production partner. While you are there, they can still help you hunt and go get business. With the business they help support that you bring in, they get a different commission. The business they self-gen, they get a higher commission. Having somebody that’s a production partner is a very smart move.
I’ve got one guy whom I coach. He made $3.8 million in 2021. He’s got three pods in his business. He’s going to build it to 8 pods and do $1 billion a year with 8 units that follow the same model I gave you. They’re not loan officers. They’re loan production partners. He’s chosen to help them build their business unit and then he gets paid for that without doing anything. That would be the recommended team size.
I used $100 million as the building force. If you have a high loan volume, it could be more or less. The bottom line is in our High Trust Sales Academy, there are about 126 things that most loan officers don’t do every month and it’s because they don’t have the team. That team allows you to do in a decade what most loan officers take four decades to achieve.
I couldn’t agree more. Todd, thank you for being so generous with your time and being with us here. It’s incredibly insightful for our readers. Todd, could you tell us a little bit about what you brought for the readers?
We’re celebrating 2022 as the 20th anniversary of High Trust Selling, which is one of my three New York Times bestselling books. I’m very proud that this book is still in print and purchased every month. Most business books don’t make it past three years before they’re out of print so we’re grateful for that. The reason why it is still doing well is that the laws work.
They were written with the idea that if I were to die the day after the book was published, the laws would last for at least 100 years. Even though we’re twenty years past the day it was published, every single law is so relevant. We’re going to allow your tribe to download for free two different documents. One is called the High Trust Interview, which is the holy grail of the High Trust system. About 95% of loan officers don’t do it. Those that do convert at about 78% lead to deals and about 95% deal to funding. That’s one.
We innovated the High Trust Interview to go a little bit deeper and we have a sixteen-page white paper that is called TALK Less, SELL More. It’s a complete playbook for changing the dynamic of how you interact with potential borrowers. What’s amazing is we have data that shows we’re shaving off an average of seventeen minutes in a lender-borrower conversation before they say yes.
Imagine what you could do if you’d get somebody in seventeen minutes. The fastest has been four and a half minutes. One question, four and a half minutes. Let’s do it. Let’s go and do the deal. Download that too and you’ll have a lot of fun with it. Other than that, just hang out. I’m @ToddDuncanOfficial on every social channel. Follow us. Let us impact your life and help you make a difference. It’s been good hanging with you, Chris. Thank you for the chance.
Likewise. Thank you for being here.
Thank you so much for reading. I hope that you enjoyed our guest. This is a reminder that we have finished taking the greatest lessons from all of our guests and packaging them together into a brief online video presentation that’s going to teach you the ten most profitable ways to grow your mortgage business. We show you how to automate those processes in your business with people and systems so that you get the results without you having to do the work every day.
This is quite a blueprint so that you walk into your mortgage business every day with pre-booked appointments, with borrowers that want to meet with you and referral partners that want to send you business so that you are spending your time inside your mortgage business on the highest dollar per hour activities and you truly become the executive of your business, a true business owner rather than just somebody who’s going to a job every day and making a wage on the way through.
This is an incredibly powerful training for you and I cannot wait for you to experience it. Head on over to ChrisWebinar.com to get that free training. If you could do me another favor. If you enjoyed this episode, please head on over to iTunes. Search the Loan Officer Wealth Podcast and give us a five-star rating and review on any platform that you’re using.
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