1 00:00:00,000 --> 00:00:03,480 Johny Fernandez: A video online for our 2019 Broker Fair that 2 00:00:03,480 --> 00:00:07,920 has a panel discussion regarding underwriter's deals. So the 3 00:00:07,920 --> 00:00:12,570 first thing for that one Sean is let's talk about the differences 4 00:00:12,570 --> 00:00:14,640 between an underwriter and someone that's in sales. 5 00:00:15,420 --> 00:00:19,200 Sean Murray: Okay, so underwriter's job is to minimize 6 00:00:19,230 --> 00:00:24,990 the risk undertaken in a deal that they fund, approve the ones 7 00:00:24,990 --> 00:00:27,300 that meet the company's parameters decline the ones that 8 00:00:27,300 --> 00:00:30,630 don't. And that's basically it. 9 00:00:31,050 --> 00:00:32,670 Johny Fernandez: Do you know why they call it underwriting? 10 00:00:32,729 --> 00:00:33,239 Sean Murray: Why? 11 00:00:34,350 --> 00:00:36,180 Johny Fernandez: Because he's probably writing under us cause 12 00:00:36,180 --> 00:00:36,900 he's scared. 13 00:00:39,780 --> 00:00:43,320 Sean Murray: Good one. Okay, that's going on the Instagram 14 00:00:43,320 --> 00:00:46,470 story. Johny Fernandez, dad jokes. 15 00:00:50,580 --> 00:00:52,350 Johny Fernandez: All right, so sales, let's talk about sales. 16 00:00:52,380 --> 00:00:54,270 Sean Murray: Yeah in sales, their job is just to get every 17 00:00:54,270 --> 00:01:00,030 deal approved. Right? If we're referring back to that 18 00:01:00,030 --> 00:01:02,610 particular panel from two years ago, this kind of just 19 00:01:02,610 --> 00:01:05,160 piggybacks off of what we were just talking about, is that the 20 00:01:05,160 --> 00:01:09,390 underwriter is not necessarily is not really marketing or 21 00:01:09,390 --> 00:01:12,180 business development for the funding company. Right? You kind 22 00:01:12,180 --> 00:01:14,370 of have a divide. The underwriter is like how can I 23 00:01:14,370 --> 00:01:18,030 minimize the risk of loss? Yeah, and how can I do deals that fit 24 00:01:18,030 --> 00:01:22,050 our criteria, and weed out the ones that don't? And sometimes 25 00:01:22,050 --> 00:01:26,130 salespeople can lose sight of that. They're like, you know, 26 00:01:26,130 --> 00:01:29,580 why I don't understand I send you all this business. Right? 27 00:01:29,610 --> 00:01:31,890 How come you won't do this deal? For me? They're talking to the 28 00:01:31,890 --> 00:01:34,980 wrong person. Yeah. Right. They need to be talking to someone in 29 00:01:34,980 --> 00:01:38,340 like business development, or sales or marketing or the CEO. 30 00:01:38,370 --> 00:01:39,990 Johny Fernandez: What, tell me because I think when when 31 00:01:39,990 --> 00:01:44,070 someone in sales, when they're in that mode in that process, a 32 00:01:44,070 --> 00:01:47,460 salesperson is very driven. They're like, focused like this, 33 00:01:47,460 --> 00:01:49,980 I'm gonna do this. And then when you have the underwriter who 34 00:01:49,980 --> 00:01:52,740 unfortunately is the bearer of bad news, it's like, hey, we 35 00:01:52,740 --> 00:01:57,660 can't approve this for X, Y and Z. I feel like a lot of 36 00:01:57,660 --> 00:02:00,600 salespeople, they may take it, they don't take it personally. 37 00:02:00,600 --> 00:02:04,860 But they're like, like, you messed up the flow, like of, you 38 00:02:04,860 --> 00:02:07,620 know, the rhythm that they were going and having people come in 39 00:02:07,620 --> 00:02:10,110 and doing business. And like you said, like, hey, I gave you a 40 00:02:10,110 --> 00:02:13,800 bunch of deals, what happened? Yeah. And unfortunately, the 41 00:02:13,800 --> 00:02:17,220 underwriters just always been the bearer of bad news when they 42 00:02:17,220 --> 00:02:20,670 don't get approved or, you know, whatever the situation is. So do 43 00:02:20,670 --> 00:02:23,250 you think the tension between those two groups, do you think 44 00:02:23,250 --> 00:02:27,150 it's something that has changed throughout the years? Like, is 45 00:02:27,150 --> 00:02:29,580 there less tension? Do you think there's a little bit more 46 00:02:29,880 --> 00:02:32,220 tension between the two groups? 47 00:02:32,760 --> 00:02:35,280 Sean Murray: You know, I'm not on either side of it now. So 48 00:02:35,280 --> 00:02:37,920 it's hard for me to give my particular opinion. I think, 49 00:02:37,950 --> 00:02:41,610 though, that both sides would ultimately benefit from spending 50 00:02:41,610 --> 00:02:45,990 a moment, have you ever signed shoes? Yeah, because sales had a 51 00:02:45,990 --> 00:02:48,420 hard time understanding why underwriting does certain 52 00:02:48,420 --> 00:02:52,110 things. And underwriters can look at salespeople as like, 53 00:02:52,560 --> 00:02:56,730 these people, you know, these people who are are not willing 54 00:02:56,730 --> 00:03:03,690 to follow the guidelines and out of control, and, you know, tough 55 00:03:03,750 --> 00:03:06,270 to deal with, right and like they don't understand what the 56 00:03:06,270 --> 00:03:08,040 other side is. Yeah. And. 57 00:03:08,040 --> 00:03:10,140 Johny Fernandez: I laugh I'm not laughing at you. Okay. I'm 58 00:03:10,140 --> 00:03:12,600 laughing because I would probably be the sales guy 59 00:03:12,600 --> 00:03:15,660 calling the underwriter like, what the heck, man? You broke 60 00:03:15,660 --> 00:03:19,020 the flow. Yeah. I would be the guy like every 20 minutes like 61 00:03:19,020 --> 00:03:22,020 what happened? And the underwriter would probably hate 62 00:03:22,020 --> 00:03:22,200 me. 63 00:03:22,890 --> 00:03:25,290 Sean Murray: Yeah, well, yeah, that's a perfect example. And 64 00:03:25,320 --> 00:03:27,150 it's good for people to understand what it's like being 65 00:03:27,150 --> 00:03:29,970 on the other side a long, long, long time ago, back in the days 66 00:03:29,970 --> 00:03:32,460 when I was an underwriter. I remember. How many decades ago? 67 00:03:32,790 --> 00:03:36,360 How many decades? I'm just kidding. This is more than 10 68 00:03:36,360 --> 00:03:37,050 years ago. 69 00:03:37,140 --> 00:03:38,310 Johny Fernandez: All right so it's a decade. 70 00:03:38,340 --> 00:03:39,210 Sean Murray: Fifteen years ago. 71 00:03:39,240 --> 00:03:41,610 Johny Fernandez: Were the dinosaurs out like. 72 00:03:41,970 --> 00:03:42,810 Sean Murray: The dinosaurs? 73 00:03:42,810 --> 00:03:43,920 Johny Fernandez: Yeah like walking the earth? 74 00:03:44,130 --> 00:03:46,590 Sean Murray: No, but this is like this is, this is almost 15 75 00:03:46,590 --> 00:03:50,040 years ago, but I was an underwriter back in those days. 76 00:03:50,370 --> 00:03:54,450 And I do recall taking a meeting with a broker shop, I guess they 77 00:03:54,450 --> 00:03:56,880 brought in their top execs. And they wanted to sit down and talk 78 00:03:56,880 --> 00:03:59,640 with me and a few of the other underwriters on my team. And we 79 00:03:59,640 --> 00:04:03,210 were all in a conference room. And they were talking about the 80 00:04:03,210 --> 00:04:05,460 deals that we declined and the ones that we approved, and there 81 00:04:05,460 --> 00:04:09,090 were more that we declined and approved. Why? Oh, well, they 82 00:04:09,090 --> 00:04:11,400 just didn't, they didn't meet the criteria. It didn't meet the 83 00:04:11,400 --> 00:04:14,220 criteria. And they're like, they're like, and they were 84 00:04:14,220 --> 00:04:16,980 like, I don't understand, don't you want to grow this 85 00:04:16,980 --> 00:04:18,900 relationship? And I was like, I don't care about the 86 00:04:18,900 --> 00:04:24,060 relationship. I'm just here to minimize the company's risk. You 87 00:04:24,060 --> 00:04:27,120 know, maybe that's not what I was supposed to say. But I 88 00:04:27,120 --> 00:04:29,880 didn't have any incentive. Yeah. To do anything with the 89 00:04:29,880 --> 00:04:30,570 relationship. 90 00:04:30,570 --> 00:04:32,460 Johny Fernandez: See like here's my point of view as a 91 00:04:32,460 --> 00:04:38,460 salesperson because I guess I'm technically a salesperson. I 92 00:04:38,460 --> 00:04:41,970 would want to murder the underwriter cause it's like if 93 00:04:41,970 --> 00:04:44,790 you don't want to grow the relationship, you know, like, 94 00:04:44,850 --> 00:04:46,740 what are we doing here then like, why are we in business 95 00:04:46,740 --> 00:04:50,040 together? Because clearly, you're denying all my, my 96 00:04:50,040 --> 00:04:53,490 transit I would kind of take it personally to be quite frank 97 00:04:53,490 --> 00:04:56,730 with you. I was like everything I said we did not. Maybe I'm 98 00:04:56,730 --> 00:04:58,140 special. I don't know. 99 00:04:58,380 --> 00:05:01,710 Sean Murray: Yeah, but yeah, it was eye opening for them. Yeah. 100 00:05:01,860 --> 00:05:05,160 Because they actually thought I was paid commission on like, I 101 00:05:05,160 --> 00:05:09,060 literally just get a salary. If I kill them all, nothing changes 102 00:05:09,060 --> 00:05:10,650 for me. But if. 103 00:05:10,680 --> 00:05:13,740 Johny Fernandez: But those guys they're living off of these 104 00:05:13,740 --> 00:05:14,040 deals. 105 00:05:14,100 --> 00:05:15,780 Sean Murray: I know what I said, here's the thing, I only have 106 00:05:15,780 --> 00:05:20,460 downside risk even on my pay. If my deals perform extremely well, 107 00:05:20,520 --> 00:05:23,250 nothing happens today I get paid the same amount if my deals 108 00:05:23,250 --> 00:05:26,550 perform extremely bad I get fired. So what's my incentive? I 109 00:05:26,550 --> 00:05:29,310 say, I only want to find the deals that are good. But they 110 00:05:29,310 --> 00:05:32,790 were there, they were shocked by that dynamic they're like, so 111 00:05:32,790 --> 00:05:35,760 you don't have incentive to fund deals. I said, I have incentive 112 00:05:35,760 --> 00:05:39,960 to only fund deals. Parameters if I fund too many bad ones, I 113 00:05:39,960 --> 00:05:42,120 get fired if I fund a lot of good ones nothing happens. 114 00:05:42,120 --> 00:05:43,590 Johny Fernandez: But what about the guys that live off of 115 00:05:43,590 --> 00:05:46,080 commission? I mean, they're gonna push it. 116 00:05:46,830 --> 00:05:49,110 Sean Murray: But they were pushing me all the time. Right? 117 00:05:49,410 --> 00:05:50,730 And I was like, you know, it's. 118 00:05:50,730 --> 00:05:53,280 Johny Fernandez: But at what point is a relationship? Because 119 00:05:53,310 --> 00:05:56,550 now now I'm kind of invested into this. At what point is it 120 00:05:56,550 --> 00:06:03,810 like? Like, can you just like, approve what I give you, like. 121 00:06:04,020 --> 00:06:04,830 Sean Murray: I said. 122 00:06:04,950 --> 00:06:06,180 Johny Fernandez: Cause eventually like. 123 00:06:06,900 --> 00:06:08,280 Sean Murray: If you want to change the parameters and like 124 00:06:08,280 --> 00:06:10,320 you got to talk to someone other than me, I don't set the rules. 125 00:06:10,320 --> 00:06:13,350 I only I only follow them here. That's why you have somebody in 126 00:06:13,350 --> 00:06:15,660 business development, by the way. All right. There's a whole 127 00:06:15,660 --> 00:06:19,230 other department that that handles the relationship. So 128 00:06:19,260 --> 00:06:23,010 explain that role. The business development is the go between 129 00:06:23,010 --> 00:06:26,460 underwriting and the salespeople to alleviate some of that 130 00:06:26,460 --> 00:06:29,160 tension, bring people to both sides, where they could say, I 131 00:06:29,160 --> 00:06:31,620 understand that you decline the deal, right? And it didn't meet 132 00:06:31,620 --> 00:06:34,260 the parameters, but we're gonna lose the relationship. And the 133 00:06:34,260 --> 00:06:37,560 underwriter says I don't care. Right. See what business 134 00:06:37,560 --> 00:06:41,220 development says. Let me let me speak with this happens all the 135 00:06:41,220 --> 00:06:43,710 time. Yeah, let me talk to the CEO, because you're not gonna 136 00:06:43,710 --> 00:06:47,010 have deals to underwrite. Yeah, right? If you decline the deal, 137 00:06:47,100 --> 00:06:49,620 I understand why you declined it, you had to decline it, but 138 00:06:49,620 --> 00:06:51,750 that's the problem. Because if we don't do this deal, we don't 139 00:06:51,750 --> 00:06:53,670 do deals like it we're gonna lose all this business you're 140 00:06:53,670 --> 00:06:55,530 gonna have no deals to underwrite. So we're gonna have 141 00:06:55,530 --> 00:06:58,710 to go to some other person in the company to change the 142 00:06:58,710 --> 00:07:00,660 parameters. Yeah. And oftentimes, the underwriter 143 00:07:00,660 --> 00:07:03,330 doesn't have that discretion. It works differently. Every single 144 00:07:03,330 --> 00:07:05,220 company if you like, Sean Murray doesn't know what he's talking 145 00:07:05,220 --> 00:07:08,640 about. Doesn't work like that here, but everything is so it's 146 00:07:08,640 --> 00:07:11,100 literally like this bunch of people bantering about whether 147 00:07:11,100 --> 00:07:13,140 or not the deal is going to kill we're going to lose the 148 00:07:13,140 --> 00:07:15,930 relationship the CEO is going to overrule the underwriter and 149 00:07:15,930 --> 00:07:18,540 then it turns out the ISO line about the deal on the deal goes 150 00:07:18,570 --> 00:07:20,910 bad and CEO says you know what, we're not working with them 151 00:07:20,910 --> 00:07:22,590 anymore. And then the underwriters caught in between 152 00:07:22,590 --> 00:07:25,410 like, and this is why I didn't make any exceptions is why I was 153 00:07:25,440 --> 00:07:27,690 trying to follow the rule. This is what's all this is what 154 00:07:27,690 --> 00:07:29,520 happens all day in all these companies. 155 00:07:29,550 --> 00:07:32,280 Johny Fernandez: See Sean like honestly I would have blown up 156 00:07:32,280 --> 00:07:32,700 your phone. 157 00:07:33,540 --> 00:07:35,250 Sean Murray: Exactly. And the underwriters like you know, I 158 00:07:35,250 --> 00:07:37,350 can't handle this guy you know, I'm just gonna kill the next 159 00:07:37,350 --> 00:07:40,980 deal just because you called me too many times, literally that's 160 00:07:40,980 --> 00:07:47,220 what happened that's what happens but guess what, you know 161 00:07:47,220 --> 00:07:49,380 what happened after I was an underwriter whatever I went into 162 00:07:49,380 --> 00:07:53,130 sales you want to know what happened? All my deals were 163 00:07:53,130 --> 00:07:55,290 getting killed and you want to know we want to know what I 164 00:07:55,290 --> 00:07:59,550 wanted to do? What. I wanted to go to the underwriter I said I 165 00:07:59,550 --> 00:08:01,830 don't understand I sent in 25 deals in a row you killed them 166 00:08:01,830 --> 00:08:04,200 all. How is this gonna happen? They're like they're like Sean 167 00:08:04,200 --> 00:08:06,270 your deals didn't meet the criteria sending in garbage 168 00:08:06,270 --> 00:08:08,670 deals. I mean, these are the only deals I have, their like 169 00:08:08,700 --> 00:08:10,620 they're not good enough. They didn't meet the criteria and 170 00:08:10,620 --> 00:08:14,100 what am I supposed to do is to get deals there are good I'm 171 00:08:14,100 --> 00:08:16,110 like the underwriter I can't work with this guy anymore. 172 00:08:17,010 --> 00:08:20,130 You're like you turned into the person that you hated, right? 173 00:08:20,820 --> 00:08:23,190 They're like they're like you're a total hypocrite but I 174 00:08:23,190 --> 00:08:26,820 appreciated it so much. Yeah. Now I truly understood both 175 00:08:26,820 --> 00:08:30,000 sides and I thought that was such a valuable experience being 176 00:08:30,000 --> 00:08:32,850 literally the extreme, I was the extreme on both sides. 177 00:08:32,850 --> 00:08:36,540 Johny Fernandez: Yeah. So you'd recommend if any of you know 178 00:08:36,540 --> 00:08:40,110 anyone that are that are in place in the positions you know 179 00:08:40,110 --> 00:08:43,920 underwriter or sales to maybe visit the other department? 180 00:08:43,920 --> 00:08:45,569 Sean Murray: Yeah. And you have to have a go between there 181 00:08:45,569 --> 00:08:47,669 really needs to be a business development person in between 182 00:08:47,669 --> 00:08:50,069 because if the salesperson is coding up with the underwriter? 183 00:08:50,099 --> 00:08:52,619 Yeah. You create that potential for conflict of interest for the 184 00:08:52,619 --> 00:08:56,159 salesperson can be bribing the underwriter you don't want well, 185 00:08:56,159 --> 00:08:58,499 I don't want to speak for everybody. Everyone has their 186 00:08:58,499 --> 00:09:01,859 own does it their own way. But you do create the potential if 187 00:09:01,859 --> 00:09:05,729 the salesperson is cozying up to the underwriter. I have heard of 188 00:09:05,729 --> 00:09:09,959 it happening, where there can be you know, some type of bribe, 189 00:09:10,019 --> 00:09:13,049 even indirectly, where if they get too cozy with each other, 190 00:09:13,079 --> 00:09:16,679 it's really good to have that go between the ISO and and the 191 00:09:16,679 --> 00:09:20,339 underwriter who can facilitate all that me and the business 192 00:09:20,339 --> 00:09:23,429 development person as the go between is oftentimes I don't 193 00:09:23,429 --> 00:09:27,689 want to say blanket generally, is oftentimes incentivized by 194 00:09:27,689 --> 00:09:30,299 getting a getting a commission it's usually not all commission 195 00:09:30,299 --> 00:09:32,609 based but they will get a commission to incentivize 196 00:09:32,609 --> 00:09:35,579 getting the deal flow while trying to be the go between the 197 00:09:35,579 --> 00:09:38,399 person who's just following or following the guidelines. 198 00:09:38,820 --> 00:09:39,480 Johny Fernandez: Interesting.