It’s no secret that there’s currently a great deal of anxiety over the market. Inflation is up. Mortgage rates are above seven percent. There’s uncertainty with the Ukrainian war, and people are worried about a recession. Fear is at a premium.
Despite widespread concern, WFG Executive Chairman and Founder and title industry veteran Patrick F. Stone views this as a time of great opportunity for those who choose to seize it. Here are some insights he shared with members of WFG’s title agent network during a recent WFG Spark22 conference.
Focus on What You Can Control
“A famous quote from my favorite philosopher Epictetus is ‘know what you control, and what you don’t control.’ Epictetus also counseled, ‘if you want to be happy, you need to put your time, energy, and effort into things you can control rather than spending time, energy, and effort on things you can’t control,’” Stone said. “How many people here control the economy? Nobody, right? But how much time do we spend worrying about it? That’s wasted time.”
Stone went on to share that he firmly believes this challenging market will present one of the most significant opportunities for title agents who step up and take the necessary actions to ensure success, including:
- Stepping up your activities and creating value for your customers
- Having metrics and plans in place to respond to market shifts
- Proactively managing expenses and converting fixed costs to variable ones
- Focusing on the available market
- Reorganizing and re-engaging your team
Step Up Your Activities and Create Value for Your Customers
“If we surveyed the industry right now, I would guarantee you the activity level, including the number of client engagements and the focus on the business, is going down because people are turning inward,” Stone said. “And I’ll guarantee you, the industry will do 20 percent less sales calls overall this year. Compared to last year, the industry will slow down. That’s because people focus on things they don’t control and that don’t make them any money instead of doing what they should be doing. And that’s stepping up their activity level, focusing on their clients, and bringing something to the table that nobody else is bringing. If you don’t fall into this trap, you win.”
According to Stone, the biggest problem we have in this industry is finding ways to differentiate ourselves, since we all have the same products at the same prices. So how can you stand out?
“We have to add value for our clients,” Stone said. “You can clearly differentiate yourself by increasing your activity level, focusing on your clients’ needs, and improving your communication with them. Look for ways to engage in your clients’ processes and ask them what you can do to help them be more successful. Become an asset to their business. By helping them succeed and make more money, you make more money as well. It’s a true win-win.”
Have Metrics in Place to Maintain Margins
Stone also stresses the importance of employing metrics to track productivity, revenue, and margins and adjusting accordingly. Doing this is particularly relevant in a declining market. Three of the key performance metrics Stone recommends tracking are:
- Open files/Net revenue per full-time employee
- Personnel costs per full-time employee
- Pretax margin/Total revenue
“The biggest mistake people make, and the reason some fail, is that they get emotional. They sit back and don’t take action,” Stone said. “I’ve been in this business 47 years, and one thing that always amazes me is that people do not use metrics or have an adjustment methodology in place prior to an event. If you figure this out ahead of time, you’ll react quicker and more effectively than your competitors. Conversely, if you don’t plan for it, you’ll have an emotional adjustment period, which usually takes anywhere from three to nine months. Some companies never adjust. They go out of business. To avoid this, get a set of management metrics in place so you can see when your business is going the wrong way and then have a plan for adjusting to it, so you don’t get caught up in an emotional moment. Emotion will kill you. It will slow you down and render you ineffective. However, if you manage your operation proactively, you’ll come out of this ahead and take market share away from your competitors.”
Control Expenses and Convert Fixed Costs to Variable Costs
Stone also points out the importance of actively managing and reducing expenses wherever possible. This process starts with categorizing expenses as follows:
- “Fluff”: Unnecessary expenses, or nice-to-haves
- Discretionary: Expenses that can be reduced or scaled
- Essentials :Required expenses for which costs may be renegotiated or shopped for savings
- Variable:Scalable expenses tied directly to new orders and revenue
- Personnel:The most significant expense; typically in the 45-60% range
“By actively tracking operational metrics, you can objectively manage staffing requirements and adjust, as needed, based on volume. It’s also important to take a hard look at your financial statement,” Stone advises. “In addition to cutting, scaling, and renegotiating expenses wherever possible, it’s important to identify the fixed expenses that can be converted to variable ones, as tying these expenses to business will help ensure your survival in a tough market.”
WFG offers an innovative program called WFG Blocks, which is specifically geared to help title agents and others convert their fixed costs to variable ones. Comprised of six programs, or “Blocks,” the WFG Blocks program provides solutions for today’s economy, helping agents leverage WFG’s collective buying power, internal resources, and extensive industry expertise to manage costs in the following areas:
- Expense Management
- Marketing and Sales
- Title and Settlement Services
- Information Security
- Compliance Solutions
- HR Management
While the WFG Blocks program was initially created to benefit the company’s independent title agency network, many of the program’s services, including the discounted purchasing program, are also available to individuals and non-agent companies. For a detailed overview of the WFG Blocks program and its associated benefits, download WFG’s white paper, “Creating a True Partnership Between Title Agencies and Underwriters,” here: https://wfgblocks.com/
“I encourage you to take a hard look at the WFG Blocks program, as it can save you a significant amount money and also arm you with the tools you need to be competitive,” Stone said. “For example, you can receive substantial discounts on services, such as car rentals, shredding services, and office equipment licenses by leveraging the collective buying power through WFG’s purchasing program. We can also teach you how to leverage technology to increase your marketing activities without adding additional expenses through our Marketing and Sales Block. It’s a win-win.”
Focus On the Available Market
When volumes are down, Stone stresses the importance of looking for areas of opportunity and adjusting your business strategy to focus on the available market.
“While refinance business has dried up this year, home equity is at an all-time high and, with that, is a need for home equity loans,” Stone said. “Our Lender Services division has been an innovator in this space for more than a decade, so we’re shifting our focus and leaning into this market. We’re investing money, time, and effort into growing our home equity services group so we can support our clients’ growing needs in this segment. I encourage you to look at your market in the same way, identifying what you do best, who you do it with, and how you do it to see if you can identify opportunities or areas where you can distinguish yourself and add value for your clients.”
Reorganize and Re-engage Your Team
To close the session, Stone also shared one of his secrets to operational success: leveraging reorganization to re-engage and energize your team.
“During times of change, I’ve found it’s beneficial to do something under that banner of reorganization,” Stone said. “It may be mental, but when you do a reorganization, everybody wakes up and pays attention, and your employees will be much more attuned to what you’re doing and why you’re doing it. The change doesn’t have to be huge, but get everyone together and say, ‘we need to figure out how to operate better,’ and actively engage them in the process. A reorganization will reset, reenergize, and refocus your people. I’ve been beating this drum myself internally at WFG. We should be making more calls and taking more action now than ever. The opportunity is there for all of us to be part of our clients’ process, and by seizing it now we will ensure we come out on top.”
About WFG National Title Insurance Company
WFG National Title Insurance Company, a Williston Financial Group company, is a
new breed of national real estate settlement service providers. A national
underwriter with a Financial Stability Rating of A’ (A prime) Unsurpassed as
assigned by Demotech, Inc., WFG NTIC leverages innovation and collaboration to
create and deliver comprehensive services and technology solutions that take
time and cost out of the real estate transaction, creating a better experience
for all transaction participants. WFG’s Agency network includes more than 1,700
independent title insurance agents in 49 states.
For more information visit http://www.wfgtitle.com/.