More sub-aggregators are coming to market as brokers seek lower barriers to market entry, but do they have a viable value proposition?
The term ‘sub-aggregation’ is being bandied about a lot recently.
Emerging names like Brass Aggregation and Viking, alongside established players like Purple Circle, MoneyQuest and National Lending Group, are carving out their own niches amid an increasingly busy broking industry.
Other sub-aggregators on the market include My Local Broker, Hai Money, Vision and Mortgage House.
For new brokers, sub-aggregators offer a way to enter the market without needing to meet the high entry requirements of major aggregators.
At their core, sub-aggregators operate under a parent aggregator, giving broker members of the sub-aggregator access to the parent’s lender panel.
While it may seem like an unnecessary extra layer in the origination process, the proliferation of sub-aggregators on the scene suggests they have some genuine benefits.
According to Brass Aggregation managing director Marcus O’Brien, a sub-aggregator can offer a more hands-on, bespoke experience for brokers tailored around service and support.
This creates a value proposition for brokerages that might not be ready to join a major aggregator.
Sub-aggregators tend to specialise in a particular field, whether that’s asset and equipment finance, residential home loans or first-home buyers.
Furthermore, provided a sub-aggregator holds an Australian Credit Licence, members could gain access to specialist lenders alongside the lender panel provided by a parent aggregator.
“Parent aggregators fill a void subject to bank criteria by providing overall access to many mainstream lenders." O’Brien said. "Depending on the group or size, sub-aggregators may hold their own Australian Credit Licence, which can also provide options for further direct lender agreements with perhaps a funder who is not on the parent aggregator panel of lenders.”
For its part, Brass Aggregation, which sub-aggregates under outsource Financial, provides branded and full access to 70 additional lenders/funders through Brass Broker Asset Hub for additional direct asset finance lending solutions.
Are sub-aggregators becoming more popular?
“There seems to be some growth in this space at the moment to provide an alternative for brokers to choose from,” said O’Brien of the sub-aggregation space.
“Whilst the big-name groups will always continue to effect either acquisitions and/or mergers to take a dominant stance on market distribution share, this also opens up opportunities for sub-aggregator groups and others to have a point of difference,."
Aggregation heavyweight AFG has certainly been on an M&A spree, having snapped up stakes in three separate brokerages this year, most recently Sydney-based brokerage Loan Path Finance.
Currently at less than 10 brokers, Brass Aggregation is a minnow in the grand scheme of things, although the group has a long-term plan to cater for up to 100 brokers.
Growth for growth’s sake is clearly not the strategy. “The overall goal is not to be the biggest but rather be good and best known for what we offer and do for mortgage brokers,” O’Brien said.
As smaller outfits compared to the majors, O’Brien believes sub-aggregators’ business development managers tend to be more accessible while dedicating more time to their brokers when support is required.
“Often BDMs are much closer to their brokers and have a good understanding of both their business plans and structure,” he said. “Developed rapport can also be of a more personal connection and hands on learning approach.”
How do sub-aggregators earn money?
O’Brien explained that most sub-aggregation groups operate through commission splits, being a percentage share paid on settled loans.
Sub-aggregators may also charge a monthly fee to cover joining costs, training, credit representative appointment and software access.
In Brass Aggregation’s case, it offers options for both monthly cap fee or commission split choices, but without any set up or joining fees.
“It is important to have a good working relationship with your parent aggregator and CEO as they provide a lot of the backend support as required, for example lender accreditations and processing,” added O’Brien.
But while there are commercial arrangements for commissions and lender access between aggregator and sub-aggregator, the latter is able to maintain its own brand and identity for its brokers.
How did Brass Aggregation come about?
Brass Aggregation was founded by managing director Marcus O’Brien after leaving SFG – a major aggregator – in 2024.
“It has been exciting to forge a new name that was both solid and easily recognisable, whilst landing another player in the Australian aggregation market for mortgage brokers,” said O’Brien.
As for the name? That refers to O’Brien’s love of some fine brass music.
Key value propositions of a sub-aggregator
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Access to aggregator panels: Providing brokers with access to a wide range of lenders and mortgage products that are typically only available through larger aggregators
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Support and training: Offering tailored support, mentoring and training to brokers, especially those new to the industry or operating small businesses
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Simplified compliance and administration: Handling much of the compliance, administration and back-office work
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Commission structures: By pooling the volumes of several brokers, sub-aggregators can negotiate better commission rates and incentives from aggregators or lenders
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Technology and tools: Providing access to CRM systems, loan lodgement platforms and other technology tools that would be costly for individual brokers to source independently
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Lower barriers to entry: For new brokers or small businesses, sub-aggregators offer a way to enter the market without needing to meet the high entry requirements of major aggregators
