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The Next Generation of Professionals in Mortgage and Housing

Editor's Note: This piece originally appeared in the May issue of DS News magazine.

The makeup of the American workforce is changing. Multiple distinct generations are currently filling out the employee rosters of most American businesses: the Baby Boomers approaching retirement, Generation X already well into their career trajectories, and the Millennials still relatively early in their careers. Even companies that work hard to encourage a diversity of age groups must be prepared to refresh their rosters as boomers move into retirement.

According to an April 2017 article by Accenture’s Talent and Organization Blog for Financial Services, the baby boomer generation topped out as 45 percent of the workforce in 2005 but had dropped to 38 percent by 2010. Millennials made up only 25 percent of the workforce in 2005, but that number increased to 36 percent in 2010. By 2015, Boomers were down to 31 percent and millennials up to 45 percent. The wheel keeps on turning.

However, within the unique spectrum businesses that make up mortgage, housing, and the various financial services firms that support them, there’s a common narrative that the workforce is aging up, but without enough new blood coming in behind to fill those gaps. Having run across this preconception often, DS News set out to test the validity of it. We spoke to a cross-spectrum of experts and professionals from various corners of the industry to try and determine if it’s true that the world of mortgage is in dire need of fresh faces. And if so, what are these companies doing to try and bring in the next generation of mortgage and housing?

Is the Industry Trending Older?

Perry Hilzendeger, Head of Home Lending Retail at Wells Fargo, told DS News he had not necessarily seen this trend of an aging workforce within Wells Fargo. Hilzendeger says, “We strive to attract, develop, motivate, and retain the most talented people we can find, regardless of age—people who care about customers and each other, and who work together as partners across business units and functions.”

However, it makes sense that Wells Fargo—an organization that counted around 239,000 fulltime employees as of March 2017, according to data from Statista.com—would, by virtue of its size, be better equipped to maintain a diverse workforce than some smaller organizations.

Five Brothers Asset Management Solutions provides field services to mortgage servicers across the nation, with with a focus on default management and property preservation. Five Brothers President Nickalene Badalamenti-Kalas agrees that she has seen a general trend toward an aging workforce both in the company’s internal employee pool and within the contractors who provide their field services. “We work diligently at retaining our older employees while attracting and hiring the next generation of our workforce,” Badalamenti-Kalas says. “This involves talent assessments, filling talent gaps, and designing programs that maximize years of experience. The key in these programs is in transferring and retaining the knowledge base so that we can consistently deliver a superior client experience.”

“I have not seen a trend towards older workers. What I have seen, however, is a trend towards consolidation,” says William L. Robinson, Jr., President, ATA National Title Group. Robinson explained that, within his subindustry of title services, there are simply fewer independent companies providing those services than in the past. As that part of the industry has contracted, the remaining companies have naturally looked to consolidate their workforces. When consolidation happens, two related phenomena occur: fewer growth opportunities exist because senior employment positions are consolidated, and those remaining positions tend to be filled by older employees. Positions are consolidated to save money, and older workers fill them because seniority or experience often tends to be the leading criteria for placement.”

This leads to a few serious side effects, explains Robinson. “Employees are much more portable than in previous generations,” Robinson says. “Folks don’t wait around indefinitely for career growth opportunities to present themselves. If positions are consolidated, and fewer opportunities for advancement are available, younger workers tend to move on to other companies or even other careers.”

“One of the biggest challenges for the mortgage industry is bringing in new blood for valuation,” says Curtis Knuth, President and CEO, National Credit-reporting System, Inc. (NCS), citing a 2017 National Association of Realtors survey of appraisers. Of the more than 2,200 appraisers surveyed, the average length of time they had worked in the field was 21.7 years. Additionally, fewer than one in five said they trained new appraisers to move them into the field. “It will be interesting to see if technology, such as automated valuation models (AVMs), can close the gap quickly enough to lessen the chances for a critical valuation shortage from veteran appraisers retiring and technology becoming acceptably predictive and reliable,” Knuth said.

“There is a clear trend in the demographics of our workforce that we have to address,” says Amy Keyser, VP of Human Resources for Arch Mortgage Insurance Company (Arch MI). “People who are newer to the workforce these days tend to work in a different way than people have historically. They’re more flexible; they move more frequently. This also isn’t an industry that always comes to people’s top of mind, in terms of where they want to work. It’s not one of those industries that people think of right when they’re coming out of school.”

“There’s a lot of press out there that millennials and the younger generations, they don’t care about benefits, they don’t care about pay, but I don’t think that’s true,” Keyser continued. “There’s a point in everybody’s life where they value other things more than that. The flip side of that is, having seen the whole financial debacle, I do think our younger generations realize what financial instability looks like. That’s why I always say; I think they do value good pay and good benefits. But maybe not just right away.”

“The people I have interacted with both within Fiserv and at mortgage conferences have overwhelmingly been on the older side,” says Gary Yeh, a Business Analyst at Fiserv. “From that, however, there is an excitement that comes from meeting younger people in the industry— almost an immediate camaraderie.”

Yeh adds that he likes working in an industry filled with workforce veterans. “Being on the younger side, it is encouraging to be able to learn from those that have been in this industry for decades and to gain perspective on how mortgages and tech have changed over time.”

Regardless of how widespread a problem it may be within mortgage and housing’s universe, the shifting demographics as the Boomers and Generation X move into retirement ages can’t be denied. The question then becomes how the industry adapts to attract new blood and set the foundations for the decades to come.

“There is a fixed mindset around how a business culture must be by many later generation leaders,” said Louis Efron, the author of Purpose Meets Execution: How Winning Organizations Accelerate Engagement and Drive Profits. “They simply believe the reported statistics that millennials and younger generations will only stay at companies and in jobs for a short period. Rather, they should be thinking about how they can create a culture that attracts and retains the best of the next generations.”

Attracting the Next Generation

“Younger recruits are bringing new ideas and solutions to the table every day,” Five Brothers’ Badalamenti-Kalas says. “They have grown up on technology, so if an application or process is not intuitive, they can almost instantly provide feedback for improvements. They are also extremely proficient at using technology to enhance communication and relationships with our partners, contractors, and clients, thus delivering a better and more transparent user experience.”

“It’s not like Field of Dreams where you build it and they will come,” says Keyser. With so many industries and companies competing for the attention of qualified young workers, companies have to figure out how to attract those workers, and how to communicate the benefits of working within this industry. “They believe it is an ‘us versus them’ battle,” Efron says. “They take the attitude that the next-generation worker is not set up for success or doesn’t live in a world of reality. In fact, the reality of the next-generation worker will soon be the reality of the world. The change needs to come from industries and businesses, not the other way around.”

One way Arch MI does so is by making contributions toward the principal of their employees’ student loan debt. “That shows our commitment to them and that we value their education that they got,” Keyser says.

Keyser explains that Arch MI also has a Leadership Development Program “so people know as they become managers or move up, there are programs there to support their development.” Keyser says that the program helps new employees “see a future” with the company and know “they’re not going to come in and take an entry-level job and think that’s all they’re ever going to be able to do here.”

Each year, Wells Fargo processes nearly three million applications and hires more than 100,000 people. “We aspire to hire the best talent,” says Hilzendeger. “We also aspire to increase our diverse representation, because a workplace that reflects the diversity of the customers we serve is a competitive advantage in the marketplace.”

Hilzendeger explains that Wells Fargo creates targeted outreach programs to recruit within demographics such as U.S. veterans or within the LGBT community. They have also built Executive Recruiting and Risk Recruiting Centers of Excellence to “provide a coordinated and consistent experience for our executive candidates and much-needed talent for critical risk jobs.”

Robinson says that ATA Title Group has not necessarily implemented any specific initiatives to recruit younger workers, but does strive to retain and promote those it has. “We’ve had the benefit of growing our operations while other companies have often been consolidating,” Robinson says. “We’ve been able to promote younger staff members from other companies that we’ve acquired into key management positions within our company. Approximately 50 percent of our senior management group are below 45 years of age. When younger employees see that trend, they tend to stay and make their careers with us.”

Although NCS is a small company with around 35 employees, they describe their recruitment efforts as “fairly traditional.” Knuth says that “We do make it a priority to balance new blood with seasoned staff. Not only is this a
great way to train new hires to meet our unique company standards but it establishes a ‘family’ culture in supporting our growth as a team effort.”

“It begins with embracing diversity within the multi-generational workforce,” says Badalamenti-Kalas. “We must keep leveraging the knowledge and experience within our organization and create a culture that is open to new ideas that the younger generation brings to the table.”

Badalamenti-Kalas also credits Five Brothers’ approach to management development for helping them attract younger workers. “We invest heavily in our management training and development,” Badalamenti-Kalas says. “It creates a culture of coaching and mentoring from our experienced employees to our younger ones. This allows our younger employees to gain valuable experience and learn multiple areas of the business, which in turn accelerates their ability to take on more responsibility.”

Providing employees with the training, tools, technology, and resources to be successful is also key, according to Badalamenti-Kalas. “The younger generation wants to be part of something bigger than just themselves,” Badalamenti-Kalas continues. “They are looking for companies that have a culture that they see themselves fitting into. One that embraces social responsibility, the environment, and is involved in their local communities.”

“It’s important to understand what drives younger workers to companies and industries where people under 30 outnumber those above 30,” Yeh says. “Startups and a lot of tech companies, for example, offer flexibility and fun work environments that are important to millennials. I want to be able to go to work every day being able to treat it like my second family, and that comes from having a good culture where I’m not just there to clock in and out from 9-5.”

“We’re not a one-generational workforce, we’re multi-generational,” Keyser says. “We can’t build everything to appeal to one particular generation. It has to appeal to our entire workplace. There are some jobs that just naturally require more experienced workers. We need to be able to attract and attain that group as well.”

Fiserv Analyst Vincent Weir recommends companies adopt leadership rotation programs. “You need a contingency of young people to form a foothold in your business if you want others to join. I suspect that the kinds of young leaders who will attract other young employees are the kind of folks who want to join a management rotation program, and won’t settle for less.”

Weir also recommends that companies think outside the box and recruit from liberal arts colleges. “Students from top liberal arts schools are often under-recruited because they have majors like English or Art History. Liberal art programs prepare the student to adapt to a variety of backgrounds. They are highly adaptable and often more willing to take risks on new careers as a result.”

“Focus on the purpose of what your industry does over the financials of what it generates or targets,” Efron advises. “In the housing market, it is not about selling more homes; it is about giving more people a chance to own their dream home, families a chance to fulfill a dream of homeownership, creating financial security and stability for more people and ultimately making life better for people. The more of these buckets the industry can fill for each client, the more the industry will thrive. When recruiting and retaining talent for the industry, this focus on purpose is the marketing platform that will reinforce the meaning and value of jobs in the industry. This life meaning is of top importance to the younger workforce. Industry leaders need to steer clear of fixed mindsets that believe the housing industry is not ‘flashy,’ because, in reality, it has the power to build dreams and create safety and comfort for people around the world at every social and economic level. Not to mention, the millions it positively impacts and feeds through job creation.”

The Right Stuff

But what makes for the right candidate to join this industry?

“In today’s financial services market we are being inundated with a flood of new rules and regulations, strict service-level agreements, disruptive technology advancements, and ever-changing market conditions,” says Five Brothers’ Badalamenti-Kalas. “Therefore, one of the first skills we look for to see if someone is suited for this industry is the ability to embrace change. They have to be able to adapt to constantly changing work conditions.”

“It is to everyone’s advantage for our team members to be enthusiastic and committed to a mindset of continual innovation, allowing them to not only able to perform their jobs better, but also able to provide an exceptional customer experience,” says Wells Fargo’s Perry Hilzendeger.

ATA Title Group’s William L. Robinson, Jr. points to how technological advances are transforming how the industry interacts with its customers, with a shift toward mass communications with the customer base via platforms like social media. “Our younger workforce is much more adept at transitioning to these types of trends,” Robinson says. “Stereotypes often come from some grain of truth and our younger employees are more skilled at that form of communication. Interestingly, however, I think some of our older staff members have helped the younger ones at interpersonal communication skills. Ultimately, we need to be effective in all forms of communication, and I believe our goal of having a balanced workforce helps us to achieve that result.”

“We need to keep pace with how people want to buy a house,” says Arch MI’s Keyser. “People don’t want to be called on the phone, they want you to text them. Younger workers grew up in a whole other environment, a whole other world. Young workers bring that understanding of how to leverage the technology, how to use social media in a way that engages with the customer. That helps us how we do business.”

“I’ve always had an interest in financial technology for its ability to reach large amounts of people and impact the day-to-day of large organizations,” says Fiserv’s Gary Weh. “While I didn’t specifically pursue a career in the mortgage industry, I was excited to join Fiserv in this business because owning a home and taking on a mortgage is often the biggest life decision people make. It’s exciting to work at a company that helps make that experience as seamless as possible.”

“People and the way they think, act, or behave, and also what they believe in, creates cultures,” Efron says. “Transformation happens when there are enough people who collectively believe in something different or new. This is what will ultimately happen to the housing industry and other industries holding on to the past. The alternative is extinction which won’t happen in such a foundational industry as housing. In housing, the transformation will be forced by an influx of the only talent that will be available on the market—the younger generations who believe in a different world order. Ultimately, industry innovation will come from the younger generation workforce who believe in this new world, but individually think differently about how to get there.”

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].

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