The following is an excerpt from Chapter 12 of Volume III of The Mortgage Professional's Handbook:


David Lykken, President and Managing Partner
Transformational Mortgage Solutions


It is important to point out that most brokers are perfectly content staying as brokers. Knowing where their strengths lie, they do not feel the need to take steps toward becoming bankers.  But for those that do, there are probably as many motivations to convert from broker to banker as the number of company owners who set out to make the transition. While it certainly doesn't encompass all possible motivations, in this section we are going to discuss the three most predominant reasons mortgage brokers make the broker-to-banker transition.

 Is it a Desire to Make More Money?

There is no question that you can make more money as a mortgage banker, and this is a very common reason why mortgage brokers desire to make the broker-to-banker transition.  But is money alone enough of a reason to make the transition? 

In the 1987 movie Wall Street, fictional character Gordon Gekko (played by Michael Douglas) makes this statement: “Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind…”  For most of us, the word "greed" conjures up negative associations. And yet, from a business perspective, we are all in a “for profit” business for the sake of profits.  The more profit we make, the better off we are as professionals. 

So, it is more than understandable that a mortgage broker would be financially motivated in seeking to transition to the role of a banker. In and of itself, that isn’t a bad thing. But there is so much more that goes into becoming a banker. Yes, you are typically able to make more money as a banker; but many are surprised to discover during or after the transition that it isn't nearly as lucrative as they think. Really, whether or not you can make more money isn't the question. The real question, the question that many forget to ask in an eager rush to make the transition, is this: is the amount of money you will gain by making the transition from broker to banker worth the additional costs incurred in that transition?

The costs of becoming a banker take on many forms, some financial and some otherwise. Most poignant, though, is the added risk that a mortgage broker takes on after the conversion.  The “risk/reward” relationship comes into focus many times after the fact.  However, the driving force “to make more money” can blind sales-oriented individuals with sanguine temperaments from the risks involved until it is too late.  So while “making more money” is a legitimate motivation for making the transition, it shouldn't be the sole reason.

In this era of ever increasing operational costs due to the complexities brought on by increased regulations, the desire to make more money may not be realized.  After helping hundreds of mortgage brokers make the broker-to-banker transition, I have learned from observation that if making more money is the sole reason for making the transition, the probability of success decreases immeasurably. Money can be a great motivator. But those who successfully make the transition from broker to banker do not let the financial incentives blind them to the realities of additional risk and responsibility embodied in the role of mortgage banker.

 Is It about Having More Control?

I had a client in Midtown Manhattan that was highly motivated to make the transition from broker to banker. Before I let him retain me to help him make the transition, I challenged him on his motivation for going through with the conversion. However, for him the primary motivation was to “have more control over the process”, especially when it came to dealing with all the “ridiculous underwriting conditions" he was getting from investors. He was convinced that going from broker to banker would eliminate this problem. And, if making the transition from broker banker allowed him to make a little extra money, that was just icing on the cake. 

My client decided to go ahead and go through with the transition. However, after operating as a mortgage banker for four agonizing months, he realized that being a full-fledged mortgage banker wasn’t all that he thought it would be.  He told me that he wished that he had listened to me more closely when I was challenging him on his reasons for making the transition.  He finally came to the decision that going back and operating as a mortgage broker would allow him to do the “one thing” that he could do best.

While my client acknowledged that he didn't make as much money or have as much control as a broker, he came to believe that it was the right place for him to be. He gladly gave up his warehouse lines because the personal guarantees were keeping him awake at night. He was constantly worrying about buy-back risk and other operational risks.  He told me, "It just wasn't worth the added hassle and risk either for the amount of money I was making or for the amount of control I had over the operations of the business.” 

When my client went back to being a mortgage broker, his volume actually increased because he was once again able to focus only on what he did best. He told me, "I'm back in my sweet spot — right where I need to be."  After experiencing the headaches and hassles that "more control" can bring, my client now has a greater appreciation for what bankers have to go through to get loans funded. Just like the financial incentives, while having more control over your operations can be a great motivator, it can also be a great challenge if you aren't prepared for the additional responsibility it entails.

Is It about Career Growth and Development?

Finally, there are mortgage brokers who want to make the transition into bankers, not in order to have more money or control, but rather to have opportunities for professional growth. Many brokers seek the complexities of the banking world for its areas of career growth and professional development, both for themselves and for their staff. 

For my friend in midtown Manhattan, about the only thing he gained from making the transition was an education that "the grass is not always greener on the other side of the fence." Yet for others, the hunger to grow and learn as much as they can draws them deeper into the intricacies of the mortgage industry. For these brokers, becoming bankers is like going back to school and getting a graduate degree.  For these folks, making the broker-to-banker transition provides intellectual stimulation, feeding their desire to learn all that they can learn, achieve all that they can achieve, and be all that they can be.  

I had a client in Arizona who was all about career growth and development, but less so for himself and more so for his people. He had a really strong operational staff, and a number of them wanted to become underwriters. He realized that if he did not make the transition from broker to banker, he was going to lose those key employees to a mortgage banker who could help them reach their professional goals. So part of his motivation for making the broker-to-banker transition was to keep his valued personnel working for him instead of someone else.
Whether it is the broker or the broker's staff, the organization making the transition into banking must have an attraction to complexity. Psychologists call this a "need for cognition." It's the natural desire to be intellectually challenged and learn more about difficult subjects. From my experience, brokers who have that sort of intellectual curiosity often turn out just fine in making the transition. But those who dislike and are unprepared for the complexities of banking often find that making the transition isn't all that they thought it would be, regardless of how much money or power it affords them.

Read the rest of David Lykken's chapter in The Mortgage Professional's Handbook!

David Lykken, President of Transformational Mortgage Solutions and a 43-year industry veteran, has been an owner-operator of three mortgage banking companies, a software company and several leading consulting companies. Today and for the past 15-years, David has been helping companies grow through consulting, executive coaching, and communications. He works with C-Level executives and business owners primarily focusing on business strategies, sales, and marketing strategies as well as helping companies create operational efficiencies via streamlining business workflow processes, resulting in a competitive market advantages while increasing bottom-line profitability, customer satisfaction, and overall organizational health. 

David is a regular guest on FOX Business News as well as guest appearances on CNBC, and currently hosts his own weekly radio podcast, “Lykken on Lending,” ( that can be heard “LIVE” Mondays at noon (Central Time). Also, he produces a daily one-minute consumer-facing market commentary video called “Today’s Mortgage Minute” ( that appears on hundreds of radio, television and newspaper websites and is viewed by millions of Americans each month.  David publishes articles that appear weekly and monthly in a number of leading industry publications. He may be reached at (512) 759-0999 or by e-mail at