00:00.000 --> 00:03.480 Johny Fernandez: A video online for our 2019 Broker Fair that 00:03.480 --> 00:07.920 has a panel discussion regarding underwriter's deals. So the 00:07.920 --> 00:12.570 first thing for that one Sean is let's talk about the differences 00:12.570 --> 00:14.640 between an underwriter and someone that's in sales. 00:15.420 --> 00:19.200 Sean Murray: Okay, so underwriter's job is to minimize 00:19.230 --> 00:24.990 the risk undertaken in a deal that they fund, approve the ones 00:24.990 --> 00:27.300 that meet the company's parameters decline the ones that 00:27.300 --> 00:30.630 don't. And that's basically it. 00:31.050 --> 00:32.670 Johny Fernandez: Do you know why they call it underwriting? 00:32.729 --> 00:33.239 Sean Murray: Why? 00:34.350 --> 00:36.180 Johny Fernandez: Because he's probably writing under us cause 00:36.180 --> 00:36.900 he's scared. 00:39.780 --> 00:43.320 Sean Murray: Good one. Okay, that's going on the Instagram 00:43.320 --> 00:46.470 story. Johny Fernandez, dad jokes. 00:50.580 --> 00:52.350 Johny Fernandez: All right, so sales, let's talk about sales. 00:52.380 --> 00:54.270 Sean Murray: Yeah in sales, their job is just to get every 00:54.270 --> 01:00.030 deal approved. Right? If we're referring back to that 01:00.030 --> 01:02.610 particular panel from two years ago, this kind of just 01:02.610 --> 01:05.160 piggybacks off of what we were just talking about, is that the 01:05.160 --> 01:09.390 underwriter is not necessarily is not really marketing or 01:09.390 --> 01:12.180 business development for the funding company. Right? You kind 01:12.180 --> 01:14.370 of have a divide. The underwriter is like how can I 01:14.370 --> 01:18.030 minimize the risk of loss? Yeah, and how can I do deals that fit 01:18.030 --> 01:22.050 our criteria, and weed out the ones that don't? And sometimes 01:22.050 --> 01:26.130 salespeople can lose sight of that. They're like, you know, 01:26.130 --> 01:29.580 why I don't understand I send you all this business. Right? 01:29.610 --> 01:31.890 How come you won't do this deal? For me? They're talking to the 01:31.890 --> 01:34.980 wrong person. Yeah. Right. They need to be talking to someone in 01:34.980 --> 01:38.340 like business development, or sales or marketing or the CEO. 01:38.370 --> 01:39.990 Johny Fernandez: What, tell me because I think when when 01:39.990 --> 01:44.070 someone in sales, when they're in that mode in that process, a 01:44.070 --> 01:47.460 salesperson is very driven. They're like, focused like this, 01:47.460 --> 01:49.980 I'm gonna do this. And then when you have the underwriter who 01:49.980 --> 01:52.740 unfortunately is the bearer of bad news, it's like, hey, we 01:52.740 --> 01:57.660 can't approve this for X, Y and Z. I feel like a lot of 01:57.660 --> 02:00.600 salespeople, they may take it, they don't take it personally. 02:00.600 --> 02:04.860 But they're like, like, you messed up the flow, like of, you 02:04.860 --> 02:07.620 know, the rhythm that they were going and having people come in 02:07.620 --> 02:10.110 and doing business. And like you said, like, hey, I gave you a 02:10.110 --> 02:13.800 bunch of deals, what happened? Yeah. And unfortunately, the 02:13.800 --> 02:17.220 underwriters just always been the bearer of bad news when they 02:17.220 --> 02:20.670 don't get approved or, you know, whatever the situation is. So do 02:20.670 --> 02:23.250 you think the tension between those two groups, do you think 02:23.250 --> 02:27.150 it's something that has changed throughout the years? Like, is 02:27.150 --> 02:29.580 there less tension? Do you think there's a little bit more 02:29.880 --> 02:32.220 tension between the two groups? 02:32.760 --> 02:35.280 Sean Murray: You know, I'm not on either side of it now. So 02:35.280 --> 02:37.920 it's hard for me to give my particular opinion. I think, 02:37.950 --> 02:41.610 though, that both sides would ultimately benefit from spending 02:41.610 --> 02:45.990 a moment, have you ever signed shoes? Yeah, because sales had a 02:45.990 --> 02:48.420 hard time understanding why underwriting does certain 02:48.420 --> 02:52.110 things. And underwriters can look at salespeople as like, 02:52.560 --> 02:56.730 these people, you know, these people who are are not willing 02:56.730 --> 03:03.690 to follow the guidelines and out of control, and, you know, tough 03:03.750 --> 03:06.270 to deal with, right and like they don't understand what the 03:06.270 --> 03:08.040 other side is. Yeah. And. 03:08.040 --> 03:10.140 Johny Fernandez: I laugh I'm not laughing at you. Okay. I'm 03:10.140 --> 03:12.600 laughing because I would probably be the sales guy 03:12.600 --> 03:15.660 calling the underwriter like, what the heck, man? You broke 03:15.660 --> 03:19.020 the flow. Yeah. I would be the guy like every 20 minutes like 03:19.020 --> 03:22.020 what happened? And the underwriter would probably hate 03:22.020 --> 03:22.200 me. 03:22.890 --> 03:25.290 Sean Murray: Yeah, well, yeah, that's a perfect example. And 03:25.320 --> 03:27.150 it's good for people to understand what it's like being 03:27.150 --> 03:29.970 on the other side a long, long, long time ago, back in the days 03:29.970 --> 03:32.460 when I was an underwriter. I remember. How many decades ago? 03:32.790 --> 03:36.360 How many decades? I'm just kidding. This is more than 10 03:36.360 --> 03:37.050 years ago. 03:37.140 --> 03:38.310 Johny Fernandez: All right so it's a decade. 03:38.340 --> 03:39.210 Sean Murray: Fifteen years ago. 03:39.240 --> 03:41.610 Johny Fernandez: Were the dinosaurs out like. 03:41.970 --> 03:42.810 Sean Murray: The dinosaurs? 03:42.810 --> 03:43.920 Johny Fernandez: Yeah like walking the earth? 03:44.130 --> 03:46.590 Sean Murray: No, but this is like this is, this is almost 15 03:46.590 --> 03:50.040 years ago, but I was an underwriter back in those days. 03:50.370 --> 03:54.450 And I do recall taking a meeting with a broker shop, I guess they 03:54.450 --> 03:56.880 brought in their top execs. And they wanted to sit down and talk 03:56.880 --> 03:59.640 with me and a few of the other underwriters on my team. And we 03:59.640 --> 04:03.210 were all in a conference room. And they were talking about the 04:03.210 --> 04:05.460 deals that we declined and the ones that we approved, and there 04:05.460 --> 04:09.090 were more that we declined and approved. Why? Oh, well, they 04:09.090 --> 04:11.400 just didn't, they didn't meet the criteria. It didn't meet the 04:11.400 --> 04:14.220 criteria. And they're like, they're like, and they were 04:14.220 --> 04:16.980 like, I don't understand, don't you want to grow this 04:16.980 --> 04:18.900 relationship? And I was like, I don't care about the 04:18.900 --> 04:24.060 relationship. I'm just here to minimize the company's risk. You 04:24.060 --> 04:27.120 know, maybe that's not what I was supposed to say. But I 04:27.120 --> 04:29.880 didn't have any incentive. Yeah. To do anything with the 04:29.880 --> 04:30.570 relationship. 04:30.570 --> 04:32.460 Johny Fernandez: See like here's my point of view as a 04:32.460 --> 04:38.460 salesperson because I guess I'm technically a salesperson. I 04:38.460 --> 04:41.970 would want to murder the underwriter cause it's like if 04:41.970 --> 04:44.790 you don't want to grow the relationship, you know, like, 04:44.850 --> 04:46.740 what are we doing here then like, why are we in business 04:46.740 --> 04:50.040 together? Because clearly, you're denying all my, my 04:50.040 --> 04:53.490 transit I would kind of take it personally to be quite frank 04:53.490 --> 04:56.730 with you. I was like everything I said we did not. Maybe I'm 04:56.730 --> 04:58.140 special. I don't know. 04:58.380 --> 05:01.710 Sean Murray: Yeah, but yeah, it was eye opening for them. Yeah. 05:01.860 --> 05:05.160 Because they actually thought I was paid commission on like, I 05:05.160 --> 05:09.060 literally just get a salary. If I kill them all, nothing changes 05:09.060 --> 05:10.650 for me. But if. 05:10.680 --> 05:13.740 Johny Fernandez: But those guys they're living off of these 05:13.740 --> 05:14.040 deals. 05:14.100 --> 05:15.780 Sean Murray: I know what I said, here's the thing, I only have 05:15.780 --> 05:20.460 downside risk even on my pay. If my deals perform extremely well, 05:20.520 --> 05:23.250 nothing happens today I get paid the same amount if my deals 05:23.250 --> 05:26.550 perform extremely bad I get fired. So what's my incentive? I 05:26.550 --> 05:29.310 say, I only want to find the deals that are good. But they 05:29.310 --> 05:32.790 were there, they were shocked by that dynamic they're like, so 05:32.790 --> 05:35.760 you don't have incentive to fund deals. I said, I have incentive 05:35.760 --> 05:39.960 to only fund deals. Parameters if I fund too many bad ones, I 05:39.960 --> 05:42.120 get fired if I fund a lot of good ones nothing happens. 05:42.120 --> 05:43.590 Johny Fernandez: But what about the guys that live off of 05:43.590 --> 05:46.080 commission? I mean, they're gonna push it. 05:46.830 --> 05:49.110 Sean Murray: But they were pushing me all the time. Right? 05:49.410 --> 05:50.730 And I was like, you know, it's. 05:50.730 --> 05:53.280 Johny Fernandez: But at what point is a relationship? Because 05:53.310 --> 05:56.550 now now I'm kind of invested into this. At what point is it 05:56.550 --> 06:03.810 like? Like, can you just like, approve what I give you, like. 06:04.020 --> 06:04.830 Sean Murray: I said. 06:04.950 --> 06:06.180 Johny Fernandez: Cause eventually like. 06:06.900 --> 06:08.280 Sean Murray: If you want to change the parameters and like 06:08.280 --> 06:10.320 you got to talk to someone other than me, I don't set the rules. 06:10.320 --> 06:13.350 I only I only follow them here. That's why you have somebody in 06:13.350 --> 06:15.660 business development, by the way. All right. There's a whole 06:15.660 --> 06:19.230 other department that that handles the relationship. So 06:19.260 --> 06:23.010 explain that role. The business development is the go between 06:23.010 --> 06:26.460 underwriting and the salespeople to alleviate some of that 06:26.460 --> 06:29.160 tension, bring people to both sides, where they could say, I 06:29.160 --> 06:31.620 understand that you decline the deal, right? And it didn't meet 06:31.620 --> 06:34.260 the parameters, but we're gonna lose the relationship. And the 06:34.260 --> 06:37.560 underwriter says I don't care. Right. See what business 06:37.560 --> 06:41.220 development says. Let me let me speak with this happens all the 06:41.220 --> 06:43.710 time. Yeah, let me talk to the CEO, because you're not gonna 06:43.710 --> 06:47.010 have deals to underwrite. Yeah, right? If you decline the deal, 06:47.100 --> 06:49.620 I understand why you declined it, you had to decline it, but 06:49.620 --> 06:51.750 that's the problem. Because if we don't do this deal, we don't 06:51.750 --> 06:53.670 do deals like it we're gonna lose all this business you're 06:53.670 --> 06:55.530 gonna have no deals to underwrite. So we're gonna have 06:55.530 --> 06:58.710 to go to some other person in the company to change the 06:58.710 --> 07:00.660 parameters. Yeah. And oftentimes, the underwriter 07:00.660 --> 07:03.330 doesn't have that discretion. It works differently. Every single 07:03.330 --> 07:05.220 company if you like, Sean Murray doesn't know what he's talking 07:05.220 --> 07:08.640 about. Doesn't work like that here, but everything is so it's 07:08.640 --> 07:11.100 literally like this bunch of people bantering about whether 07:11.100 --> 07:13.140 or not the deal is going to kill we're going to lose the 07:13.140 --> 07:15.930 relationship the CEO is going to overrule the underwriter and 07:15.930 --> 07:18.540 then it turns out the ISO line about the deal on the deal goes 07:18.570 --> 07:20.910 bad and CEO says you know what, we're not working with them 07:20.910 --> 07:22.590 anymore. And then the underwriters caught in between 07:22.590 --> 07:25.410 like, and this is why I didn't make any exceptions is why I was 07:25.440 --> 07:27.690 trying to follow the rule. This is what's all this is what 07:27.690 --> 07:29.520 happens all day in all these companies. 07:29.550 --> 07:32.280 Johny Fernandez: See Sean like honestly I would have blown up 07:32.280 --> 07:32.700 your phone. 07:33.540 --> 07:35.250 Sean Murray: Exactly. And the underwriters like you know, I 07:35.250 --> 07:37.350 can't handle this guy you know, I'm just gonna kill the next 07:37.350 --> 07:40.980 deal just because you called me too many times, literally that's 07:40.980 --> 07:47.220 what happened that's what happens but guess what, you know 07:47.220 --> 07:49.380 what happened after I was an underwriter whatever I went into 07:49.380 --> 07:53.130 sales you want to know what happened? All my deals were 07:53.130 --> 07:55.290 getting killed and you want to know we want to know what I 07:55.290 --> 07:59.550 wanted to do? What. I wanted to go to the underwriter I said I 07:59.550 --> 08:01.830 don't understand I sent in 25 deals in a row you killed them 08:01.830 --> 08:04.200 all. How is this gonna happen? They're like they're like Sean 08:04.200 --> 08:06.270 your deals didn't meet the criteria sending in garbage 08:06.270 --> 08:08.670 deals. I mean, these are the only deals I have, their like 08:08.700 --> 08:10.620 they're not good enough. They didn't meet the criteria and 08:10.620 --> 08:14.100 what am I supposed to do is to get deals there are good I'm 08:14.100 --> 08:16.110 like the underwriter I can't work with this guy anymore. 08:17.010 --> 08:20.130 You're like you turned into the person that you hated, right? 08:20.820 --> 08:23.190 They're like they're like you're a total hypocrite but I 08:23.190 --> 08:26.820 appreciated it so much. Yeah. Now I truly understood both 08:26.820 --> 08:30.000 sides and I thought that was such a valuable experience being 08:30.000 --> 08:32.850 literally the extreme, I was the extreme on both sides. 08:32.850 --> 08:36.540 Johny Fernandez: Yeah. So you'd recommend if any of you know 08:36.540 --> 08:40.110 anyone that are that are in place in the positions you know 08:40.110 --> 08:43.920 underwriter or sales to maybe visit the other department? 08:43.920 --> 08:45.569 Sean Murray: Yeah. And you have to have a go between there 08:45.569 --> 08:47.669 really needs to be a business development person in between 08:47.669 --> 08:50.069 because if the salesperson is coding up with the underwriter? 08:50.099 --> 08:52.619 Yeah. You create that potential for conflict of interest for the 08:52.619 --> 08:56.159 salesperson can be bribing the underwriter you don't want well, 08:56.159 --> 08:58.499 I don't want to speak for everybody. Everyone has their 08:58.499 --> 09:01.859 own does it their own way. But you do create the potential if 09:01.859 --> 09:05.729 the salesperson is cozying up to the underwriter. I have heard of 09:05.729 --> 09:09.959 it happening, where there can be you know, some type of bribe, 09:10.019 --> 09:13.049 even indirectly, where if they get too cozy with each other, 09:13.079 --> 09:16.679 it's really good to have that go between the ISO and and the 09:16.679 --> 09:20.339 underwriter who can facilitate all that me and the business 09:20.339 --> 09:23.429 development person as the go between is oftentimes I don't 09:23.429 --> 09:27.689 want to say blanket generally, is oftentimes incentivized by 09:27.689 --> 09:30.299 getting a getting a commission it's usually not all commission 09:30.299 --> 09:32.609 based but they will get a commission to incentivize 09:32.609 --> 09:35.579 getting the deal flow while trying to be the go between the 09:35.579 --> 09:38.399 person who's just following or following the guidelines. 09:38.820 --> 09:39.480 Johny Fernandez: Interesting.