Is The Bottom Line Better As A Boss?

Become a non-producing manager? Grow a team? Or focus on originations?

A businessman counts money at his desk, thinking deeply.

The decision to halt production is tied to the long-term career goals of a producing manager.

Insider

Contributing Writer

Well over ninety percent of the production managers in this industry are what we call “producing managers or owners.” That is—they carry a personal pipeline of production in addition to managing other producers. Why is this so?

Most producers become managers not because of their potential to become great managers, but because of their success at personal production. The personal production makes the producer a target for recruiting and the management slot is a tool for this recruiting.
The personal production of a manager helps support the branch economically. It provides a base of income for the branch that the company can leverage towards profitability. If the branch needs six million in monthly production to be profitable and the manager producers three million monthly, the branch is that much closer to profitability.
Most companies that hire branch managers provide a compensation plan that encourages personal production. That is, the salary is a lower level and the overrides do not provide major income unless the branch grows very large. Keep in mind that a high producer may be used to earning $100,000 to $500,000 or more annually. A base salary in the $20,000 to $40,000 range is not going to be significant part of their income.

Of course, explaining why we have producing managers dominating the industry does not at all help us make a decision as to whether a manager should halt personal production in favor of growing the branch larger. As a matter of fact, for the most part the industry assumes the manager is producing and attempts to reconcile both goals instead of making it an “either/or” decision.

However, some managers will face this decision within their careers—either as their branch grows larger and/or they move up to manage more than one branch or even become an owner of their own company. One of the motivations for producers to become managers from a monetary perspective is to make their monthly income less variable. What if they become sick for an extended period of time? There is no protection for a loan officer whose sole source of income is based upon how many loans they close next month. Obviously, a manager’s income is subject to cycles—but it is not based upon the success of one person.

On the other hand, so not to assume that giving up one’s production to build a large production organization is always the safe route. Generally, as a manager “moves-up” to higher level positions, the more susceptible they are to loss of job through mergers or acquisitions. When two large companies merge, there may not be a need for every regional manager. When the producing manager gives up their personal production, they lose security in this respect.

The bottom line is that the decision to halt production is tied to the long-term career goals of a producing manager. A manager that garners 80% of their income through their own personal production will always be seen more as a producer, rather than a manger. On the other hand, if one builds their own production team to become a super-large producer, that path may bring the largest potential income to the table. The larger that team, the more management skills will be needed.

LoanSimple's Andrew Taylor smiling on the cover of NMP's February 2021 edition.

This article originally appeared in National Mortgage Professional, on the week of February 1, 2021.

More from NMP Magazine

NMP

The Hidden Risk Inside Mortgage Tech Consolidation And How Lenders Can Stay In Control

platforms consolidate and vendors gain leverage, the lenders who stay disciplined about data, adoption, and exit terms will be the ones who keep control of their own tech stack

Josh Glantz

NMP

The Race To Reinvent Mortgage Origination

Automation promises to strip away administrative work while raising expectations for production, conversion, and human advice

Katie Jensen

NMP

Masters Of Military Branding

How Veterans United’s rise and legal fight are testing the power and risk of military trust

Katie Jensen

NMP

Chrisman: Why Do Mortgage Rates Care About Inflation?

When prices rise, bond values fall — here’s the mechanics behind why inflation drives mortgage rates higher

Rob Chrisman

NMP

Underwriters Don’t Slow Down Loans. They Eliminate Uncertainty.

ndustry’s biggest bottleneck is not underwriting itself — it is the uncertainty that reaches underwriting too late in the process. When validation happens upstream, speed follows naturally.

Gerald M. Green